Microsoft's Nadella begins reshaping his inner circle

Microsoft's Nadella begins reshaping his inner circle

Summary: Microsoft's new CEO will be announcing changes to the company's Senior Leadership team as soon as this week, according to reports.


Two members of Microsoft's Senior Leadership Team are leaving the company, according to a report from Re/code. And Microsoft's new CEO Satya Nadella is said to be wasting no time in replacing them with current company execs.

Tony Bates, the Executive Vice President (EVP) of Business Development and Evangelism, and Tami Reller, the EVP of Marketing, are both leaving the company, Re/code said on March 2. Bloomberg also said the same. Bates was among a handful of former candidates for the Microsoft CEO spot who were expected by some to depart after not getting the nod. Reller, a 13-year Microsoft veteran, was appointed last summer to lead a cross-company marketing group along with Executive Vice President Mark Penn (Mr. Scroogled).

Penn is currently EVP of Microsoft's Advertising and Strategy Group. But according to Re/code and Bloomberg, he will become EVP of strategy only, with Chief Marketing Officer Chris Capossela becoming the new head of advertising (while also retaining his consumer/retail marketing responsibilities, I'd think).

Last week, Microsoft officials announced Julie Larson-Green would be leaving her EVP role to take a new job as Chief Experience Officer under EVP Qi Lu. That meant she'd also be vacating her seat on the Senior Leadership Team (SLT), Microsoft's inner circle, replaced by Stephen Elop, the new EVP of Devices and Studios.

Bates and Reller also will be vacating their SLT seats (if the reports about their departures are true, of course). Replacing Bates -- at least temporarily -- will be Eric Rudder, EVP of Advanced Strategy. Rudder is already on the SLT. It's not clear if Capossela will now be part of the SLT, but I'd think so.

It's also not clear whether the shift in Penn's responsibilities means the end of Microsoft's anti-Google Scroogled ad campaign. According to the New York Times, Penn -- a controversial hire by former Microsoft CEO Steve Ballmer -- will have a bigger hand in deciding in which markets Microsoft should invest.

Microsoft officials aren't commenting on the rumored changes. But lots of people "with knowledge of the matter who are not authorized to speak because the changes are not yet announced" are....

Update (March 3): Here's Nadella's mail to the troops about the new leadership changes.

The summary: Bates is out, Reller is out, Penn has the aforementioned new Chief Strategy Officer gig, plus the EVP title, but also will continue to have input on "competitive research and analysis." That said, he's not going to be Mr. Scroogled any more. (Capossela will be). 

Capossela is a new member of the SLT -- the inner circle/top management brain trust -- and now the single, central top contact on advertising and marketing. Penn stays on the SLT, as does Rudder.

From: Satya Nadella
Sent: Monday, March 3, 2014
Subject: Leadership Update

In the past month, I’ve had the opportunity to talk with many of you – in person, on Yammer, and in groups in Redmond as well as in our Boston and Northern California offices. (Thank you for all the questions and please keep the input coming!) I’ve also been able to get on the road meeting with customers and investors, which has been really helpful as well.

One of my consistent themes has been a point I made in my original mail – we all need to do our best work, have broad impact and find real meaning in the work we do. Coming together as teams fuels this on a day-to-day basis. And having the Senior Leadership Team (SLT) set both pace and example means a lot to me.

I have discussed this point in various forms with the SLT and have asked for their “all in” commitment as we embark on the next chapter for the company. We need to drive clarity, alignment and intensity across all our work. With that as a backdrop, I want to share a set of changes to the leadership team:

Tony Bates has decided this is the right time for him to look for his next opportunity. Tony came to the company via the Skype acquisition, where he was CEO of Skype, and did a great job of successfully landing that team and continuing to build the service in a high impact way. He also stepped up to the new opportunity of leading the Business Development and Evangelism team over the past eight months. I’ve appreciated Tony’s insights and perspective, and wish him well in his journey. I know he is just a Skype call or message away. Eric Rudder will serve as interim leader responsible for Business Development and Evangelism, while continuing in his role on Advanced Technology.

I have decided we need a single leader running marketing for the company, and have asked Chris Capossela to take on this role as EVP and Chief Marketing Officer, reporting to me. I have talked about the premium we need to place on getting very, very focused on things that we can uniquely do. How we articulate our value, how we market our message, how we deliver that value to customers through our advertising and other channels, all have to tie into an overarching strategy. Chris brings a wealth of experience to this need, serving in senior leadership roles across the marketing function for many years. He is a strong organizational leader, and the work he has done with retailers, operators and OEMs on a global basis gives him real visibility and insight into how consumers are buying and using our products. He has been at the center of our devices and services transformation in SMSG as the worldwide leader of the Consumer Channels Group (CCG), starting with the formation and building of CCG, to overseeing the launch of numerous consumer products from Windows 8/8.1, Surface and Xbox One. Chris will be promoted to EVP and join the SLT as a part of his new role and will remain as acting lead for CCG until his replacement is named.

This change in marketing structure provides an opportunity for Mark Penn to play a new leadership role at the company as EVP, Chief Strategy Officer. Mark brings a blend of data analysis and creativity that has led to new ways of working and strong market outcomes such as the “Honestly” campaign and the Super Bowl ad, both of which were widely cited as examples of high impact advertising across the industry. His focus on using data to quickly evaluate and evolve our campaigns has driven new insights and understanding. Mark and his team also will continue to provide input in the area of competitive research and analysis. I am looking forward to applying Mark’s unique skill set across a broader set of challenges facing the company, from new product ideas to helping shape the overall areas of strategic investment. He will be a member of and an advisor to the SLT and will continue to report to me.

Tami Reller agrees with the go-forward approach of a single marketing leader and will support Chris through his transition into his new role. She will then take time off and pursue other interests outside the company. Tami’s contributions to Microsoft are significant; she’s held multiple CFO jobs across the company, for Microsoft Dynamics, the Product and Services Division and Windows. She led marketing, finance and business strategy for Windows including Surface and partner devices. Over the past eight months, she’s led the Marketing Group, bringing many distinct teams together to form a cohesive organization. I have had the good fortune of working with Tami ever since she joined Microsoft and have valued her contributions and look forward to seeing what she does next.

Lastly, I wanted to share a final thought from a book I recently finished about the University of Washington rowing team that won the Olympics in 1936 that was written by Daniel James Brown, who worked at Microsoft for over a decade. It’s a great story of how commitment, determination, and optimism among groups can create history. There is a very evocative description in the book about a team of rowers working together at the highest level – he calls it “the swing of the boat”:

“There is a thing that sometimes happens in rowing that is hard to achieve and hard to define. Many crews, even winning crews, never really find it. Others find it but can’t sustain it. It’s called ‘swing.’ It only happens when all eight oarsmen are rowing in such perfect unison that no single action by any one is out of synch with those of all the others….Poetry, that’s what a good swing looks like.”

As a company, as a leadership team, as individuals, that is our goal – to find our swing. As an SLT and across the company we are on our way.


Topics: Windows 8, Google, Microsoft


Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • Getting rid of the crappy people

    I like that Satya is either getting rid of or demoting the crappy people. Trust me, exciting times ahead.
    • Have to agree, especially about Marketing.

      Microsoft's marketing stinks. Maybe this will help.
      • MS recent marketing has been very good

        The Bing-"Brave" ad is stirring. The "Honestly" campaign is real and effective at contrasting and highlighting product advantages with instant brand awareness. The Super Bowl ad was inspirational and inclusive. The "Siri" Windows ads were also biting, funny, and effective at highlighting the unique qualities of their products.

        Compared to what MS advertising used to be this is a huge improvement in the past year. They can still get better, but they've already turned things around in my opinion.
  • A View of a Sad Future

    Looks like he's keeping EVP Mark Penn, the creep who runs the negative advertising and smears campaigns; indeed it looks like his job is even more focussed on the negative, with positive stuff taken from him.

    This tells us that far from being cancelled, the company is, if anything, going to expand the campaign.

    This is sad for Google (and any other targets he has in his sights), sad for the tinfoil hatters that he's creating and promoting, and sad for Microsoft, as it's a confession that they really don't have a positive message to replace it with.

    But what angers me is the damage his campaign does to people's views of science and technology. He certainly isn't hurting Google - they laugh about being MicroShafted, and we all know size matters - but he's actively promoting a fear of innovation and giving legitimacy to some of the nastier conspiracy theories. The guy is an unforgivable creep.
    • Penn's new job

      Hi. As I note in the post above, Penn's rumored to be dropping the advertising/marketing part of his responsibilities. That's why it's not clear what happens to the Scroogled campaign. We don't know if it will continue without Penn steering it. MJ
      Mary Jo Foley
    • Google is creepy - talk about it

      I like Google Glass as technology, but the public is leery of it. It would be dumb for Microsoft not to use the public opinion and distrust of Google against them. Google does nothing to put the public at ease. Something as common sense simple as a bright LED recording light on Glass could go a long way to ease people's fears. Same thing with reading people's Google Docs and email for advertising purposes. How about some public disclosure and honesty when they sign up for these free services. And why the heck do developers of Android apps get so much information about the people who download from them? Google and Facebook have time and again shown a complete lack of respect for consumer privacy. I don't even think they understand the desire for privacy and anonymity. Look at Google and Facebook requiring people to use their real names on their online services. This stuff is wrong and should be heavily attacked.
  • I hope you're right ..

    "Penn ... he will become EVP of strategy only"

    Your reading of the tea leaves should be better than mine!

    • Everyone's reading skills are better

      than yours.
      • Nice to hear from a Penn Fanboi

        All of the slime, all of the gratuitous ignorance ....

        ... just fewer brain cells.*

        *Aassuming that's even possible.
        oooh look ... here come the MicroShaft Shill Team to flag me ...

        • Of course - the "fanboi" accusation

          So someone points out your blatant, negative, bias against anything MS, and they become a shill or fanboi?

          You guys are boringly predictable, anymore.
      • LOL!

        That caught me off guard, and did make me laugh.
  • Terry and Belfiore should be next

    while I think it is great they are getting rid of the windows 8 fiasco team as well as Bates, which lets face it, couldn't even get his skype team to ship a WP or Win8 client on time, the WP guys should be next.

    if you think win8 is a disaster, then WP is the father of the disaster. At least Win8 has a chance at redemption while WP is basically dead. How Terry and Joe, which basically flunked MSFT phone chances are still with the company remains a mystery.
    • Wake Up

      Its being morning for a while today:)
      Wake up. WP is the thing that is driving the main OS now! That's the most interesting thing happened in consumer market before Xbox One (considering Surface too)
    • Not so sure.

      The only problem with WP is that it was late to the party. You can chalk that miss up to Ballmer and possibly whoever was responsible for Vista.

      Unlike Windows 8, the design language and direction of Windows Phone were universally praised. Windows 8 is a two headed monster and still doesn't have a clear direction going forward. Windows 8 took what WP/Metro looked like, but trashed all the good interactions.

      There would be no Metro without Belfiore and Meyerson. On client-side, that's really the only forward thinking feather in MS's cap these days.
  • I hope Penn does not continue the

    negative political type ads, because I just have no tolerance for that sort of thing - in political ads or the scroogled type ads. Although I already dislike microsoft very strongly. This as microsoft is apparently gearing up for ad supported windows or something. Scroogled appears to be a distraction to that. The only thing MS doesn't do is put in ad links in the email. But what they do, I noticed is put ads in the Xbox 360 dashboard, even after I've paid $60(?) for the year.
  • WP is alive and growing

    To neonspark, a not very bright one, it seems to me.

    WP "basically dead"? How so?

    Yes, I have a WP8 phone and no, I do not work for Microsoft. You clearly never used a WP8 device properly.
    Just another armchair commentator...
    • Clarity

      "You clearly never used a WP8 device properly."

      I disagree. He/she never used one at all.
  • A dirty tricks artist- Mark Penn

    How utterly appropriate that he works for Microsoft.
  • You can shuffle people in and out all day long ...

    but unless they are listening and providing value add for customers in a competitive market place, nothing will change. For example, I went out and purchased Windows 8.1 laptop (basic Windows 8.1), but cannot RDP that laptop as Windows 8.1 version DOES NOT SUPPORT RDP. I know there are a host of other ways to Remote into that OS that ARE free, but this is an example of Microsoft NOT thinking about it's home customers and wanting them to spend more money for bells and whistles (I don't consider RDP a bell and/or whistle, I consider it BASE functionality which should be there) !
  • Yammer staying in Microsoft but going it's own way?

    Mary, under One Microsoft reorg, I was under the impression that the Yammer, Bing, Exchange and SharePoint teams were going to be moving closer together but there was a rumor yesterday that Yammer is going on its own (but still within Microsoft). Do you have any intel on this?