With Ballmer’s big (and I mean, seriously grande-sized) restructure mail, we all have an idea of what the future will look like, at least functionally for the company. Over the course of today, I had several friends and readers ping me, giving me a virtual nudge in the ribs, and saying something to the effect of “I can’t wait to hear what you are going to say about this!,” as if the news of celeb breakup just hit the wires.
Well, I may disappoint because I’m not going to forecast Microsoft’s doom. Sure, a few concerns immediately come to mind and I tweeted them this morning. It looks a lot like an attempt to return, at least structurally, to the heyday of twenty years ago, when the company was a third of its current size, Windows was a king rising, and money flowed down the hallways, sprouting millionaires at every office. Back then, Apple was struggling to find its way, Google and Facebook didn’t exist and clouds were still something we laid on our backs to gaze up at. Those days are gone and as Don Henley sang, “Don’t look back, you can never look back.”
Microsoft is going totally functional- it’s a rigid, sterile model that Sinofsky championed in Windows and Office, and that now is being pushed to its extremity by re-centralizing everything, including Marketing and Finance. It is a stifling model that forces people to be incredibly narrow, albeit deep in their skills development, at the risk of stunting creativity and well-rounded thinking. Further, it’s been my experience that it takes a tremendous amount of work to build respect and communication across disciplines. Engineering cannot be the only voice in the room- the competition is too fierce and engineering has been pushed to think myopically about technology for too long already.
As I said in an earlier blog post, there will be several more cards dealt in this hand over the coming months- this is just the opening ante. One great strength of this restructure is that it puts “everyone in one room,” so that all the finance or engineering or marketing people can be viewed as a whole and no doubt, a lot of the redundancies will be eliminated. I think this is a tacit acknowledgement that this needs to happen and the functional structure will make that process easier.
But once that’s done, will this model truly make Microsoft nimble, communicative, collaborative, decisive, and motivated, as Steve confidently stated? It remains to be seen and despite my criticisms, I sincerely hope so.
There were a few glimmers of promise including a watershed moment for the senior leadership team (SLT). As part of today’s announcement, we saw something wonderful (no, not the NSA revelations– that was NOT wonderful)- three women hold key positions within the top tier of leadership! Amy Hood as CFO, Tami Reller in charge of Marketing, and most significantly, Julie Larson-Green as the head of the Devices and Studios Group- with some already crowning her heir-apparent. Julie in particular has a reputation for driving collaboration and communication and if she can truly work that magic, it will be a huge boon to her new organization and to the SLT. I couldn’t be pulling harder for Amy, Tami, and Julie to be successful in their new roles.
I do not want to predict the failure of this new structure nor sell short the strengths of the “new” leadership team- that would be akin to toasting a couple at their wedding and then predicting their divorce over cake. Yes, there are flaws, there is a heck of a lot of baggage, there are monumental challenges competitively- but there are also thousands of smart, dedicated people within the company who are betting their careers on this turn around- and I DO believe in them. On THIS day, I will look toward the future and wish the company every success. Prost!
But let’s talk in 9 months.
Like many in the investor community and the public, I have read the news stories of impending “restructuring” at Microsoft with a mix of relief, anticipation, and impatience. It’s like watching a friend, who has been languishing in a bad relationship, finally decide to end it. I’m thrilled to hear that it’s going to happen and now’s the time to get on with it! And similar to a broken relationship, I would expect that person to shed some of the bad habits they picked up over the years and either, reacquaint themselves with lapsed good habits or create new ones. So it goes with Microsoft.
The company is a bloated mess. Just read one of the myriad articles decrying its decline. It’s behemoth and unwieldy- slow off the block and even slower to respond to competition. Microsoft doesn’t need a “restructuring,” it needs renewal. As part of this process, whatever it is ultimately called, there will be layoffs or “RIF’s” (reduction in force) in the Microsoft parlance. But lopping off a couple of waving tentacles is not sufficient- that just gives you wounded tentacles spewing blood or red ink everywhere. Ewwww.
There is a far better way to do this- and it’s going to sound radical but bear with me. Voluntary RIF’s. Yep- ask for volunteers to get off the boat and give them the life raft to do it in. Microsoft is famous (and should be commended) for its historically generous layoff packages. There is usually a substantial severance, medical premiums coverage, sometimes the acceleration of stock grant vests, and placement assistance. Lately, the number of my former colleagues and friends privately hoping to be RIF’d has reached epic proportions. So, Microsoft, I’ll borrow from another epic company- Just. Do. It.
Microsoft should implement a voluntary severance program. It should be company-wide, across all levels, and should have a significant magnitude- I’d like to see 20,000- 30,000 spots. Make the severance offer similar in scope to the existing packages: 1 month pay for every year of service (up to 12- 15 years), automatic vest of stock grants in the 2013 calendar year, insurance premiums through 2013, and job placement services. But there is no carrot without a stick, so people who take this option can’t work for the company again for 2- 3 years.
Still reading? Good! I’ve mentioned this to several people who have said, “Microsoft will lose all its best people.” That’s both true and it’s not. Microsoft will loose a LOT of great talent, but that’s in part because it has an incredible pool of talent. 20+ years of technical and industry leadership has stocked the pond at Microsoft chock FULL of incredible talent, but the pool is painfully overcrowded and few, if any, of those people truly get to flex their muscle or stretch to their potential.
Further, because of the generous severance, over the next 6- 12 months, there would be a hot bed of innovation happening right here in the Northwest, where after a recovery period, Microsoft would be in a fantastic position to reacquire, invest in, or partner with the companies created from this watershed event. If Microsoft handled this momentous event with tact and generosity- they would win on the brand front, on the people front, on the innovation front (long term) and give the remaining business and people a chance to breathe again. Imagine being able to take a full, deep breath after years of recycled stagnant air- that’s what it would feel like for those who choose to remain. Further, I believe this could be a powerful boost to the local economy, if supported properly, and I would recommend Microsoft host events and provide logistical or tactical support to the newly created “expat” community.
Next objection, “But what if everyone from one group or product signs up to leave?” Yes, yes, yes! What if everyone in one group is so burned out, used up, out of faith, or out of ideas that they all want to leave? That doesn’t sound like a tragedy- that sounds like an opportunity to find a meaningful, healthy way to trim the company’s sprawling scope. “But what if it’s profitable?” So what?! Profitable today is not a growing business tomorrow- a dangerous myopia that Microsoft has clung to, far too many times.
“What about those left behind?” Another good question! There should be a reward for that choose to stay- give a 5% base raise to everyone who elects to stay. In another post, I’ll share my ideas for how to completely overhaul Microsoft’s calcified and damaging review system- but suffice to say, it’s gotta go. Also, not a single CVP slot should be backfilled for at least a year- there are over 100 (a completely mind-blowing number) at the company. Being an executive (CVP or higher) at Microsoft is rarified air- it’s like being “made” in some kind of technology Mafia. You have so much power within your organization and so much money as an individual, it is difficult for even the best and most grounded of them to have a good grip on reality or to make decisions beyond what serves their personal best interests.
This wouldn’t fix it all- there would still need to be thoughtful restructuring of remaining businesses and a rebalancing of people and priorities. Microsoft would probably need 12 to 18 months to see this kind of radical change through and it wouldn’t be easy. But it would be WORTH IT.
Finally, I’d say, this is Ballmer’s chance to restore his reputation and legacy to the company and to investors. If Steve B. and Lisa B. (Chief People Officer) had the wherewithal to oversee this type of transformation, my view of them would be radically improved. I’d induct them into the leadership hall of fame. They would be viewed as visionaries within the tech community, business schools would write case-studies on their incredible transformation of the company, and the tech community in Seattle would be forever changed for the better. The alternative? Their successors do it and it’s ugly, messy, and takes years to recover from.
Microsoft will fare far better in the long run by taking brave and bold steps to unleash both its people and businesses to grow and thrive unencumbered by the hulking overhead of 100,000 souls. Microsoft has an amazing history, and I desperately hope that its best years are still to come- but that will only be the case with courageous and visionary leadership.
As always- please share and comment! I appreciate your readership and support!