Microsoft's impossible dream: A lean mean, integrated machine

Check your enthusiasm for Microsoft's latest, greatest reorg at the door. Moving the execs and products are the easy part. The execution is a new ballgame entirely.
Written by Larry Dignan, Contributor

Microsoft is planning a reorganization designed to make the company more nimble, flatter and aligned behind software and services. Doesn't every large company dream of being flatter yet enjoying the scale girth brings?

The drumbeat for this reorganization, which is expected to be sweeping, has been picking up in recent days. Kara Swisher noted that Microsoft may outline its executive changes on Thursday. Bloomberg has also been on the case. ZDNet's Mary Jo Foley said a few days ago:

Think this through: Microsoft is in make-over mode. The company needs to make sure it can create services running across a family of devices -- not just its own, but non-Windows-based ones, too -- at a quicker pace. It needs to make sure its own platforms, like Windows PCs/tablets, Windows Phones and Xbox consoles, share a common interface, common code repository, common check-in process and common stores (when and if this commonality makes sense).

Under the current siloed structure, products which have increasing interdependencies and commonalities (like Windows and Windows Phone, for example) are not in the same business units. They should be for greater speed and efficiencies.

Add it up and Microsoft is chasing the flatter structure to improve collaboration. Shouldn't Windows 8, Windows RT and Windows Phone be roughly the same unit revolving around operating systems? Wouldn't it make sense to drop cloud services in the same place? Even better, a Microsoft reorganization could highlight what's really working at the company: Its enterprise businesses.

Morgan Stanley analyst Keith Weiss said:

Microsoft likely moves towards a flatter structure to better address the integration among its products. Microsoft has not commented, but we may soon see changes that should sharpen investors' focus around key Cloud and non-PC Enterprise assets.

On the white board, this reorg makes perfect sense. Microsoft's structure is a bit jumbled. Weiss produced the following graphic based on reports and Directions on Microsoft:



The chart is so much cleaner. Of course, Microsoft will execute better. Right? Not so fast. Large companies are always launching reorgs to move faster. Some companies---like Cisco---tend to get the drill down once they get bloated. Other companies reorganize and never quite cut it. Microsoft has reorganized many times throughout the years, but managed to miss the smartphone and tablet curves and now has to catch up. At some point, a company gets too big. Meanwhile, the conglomerate approach---similar to GE---does make sense even though there are silos. Microsoft's challenge is to integrate various products that may not quite go together.

I'm not saying that Microsoft's upcoming reorg is akin to moving deck chairs around on the Titanic. What I am saying is that a new structure isn't likely to change Microsoft's integration DNA among product lines that have been in separate units. In other words, check your enthusiasm for this reorg at the door. Moving the execs and products are the easy part. The execution is a new ballgame entirely.

Editorial standards