Satya Nadella consolidates roles and trims Microsoft leadership team

The new CEO of Microsoft, Satya Nadella, has taken the next step in consolidating power to a small Senior Leadership Team (SLT). He has also made it clear that he is not staying the course on Ballmer’s gradualist approach to slowly reformulating the business atmosphere at Microsoft. Nadella is reinforcing what appears to be an entrepreneurial start-up mindset. From a March 3 memo,

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.

To parse that closely, the two paragraphs are very different sides of the equation. The first talks about personal motivation, for the members of his SLT and everybody at Microsoft. The second is a demand for alignment around his newly emerging strategy and organization plans: a ‘my way or the highway’ line in the sand. And he’s starting to quell what must be no small amount of dissent in the organization by pushing out those that don’t sign up.

At the end of the memo he casts this degree of perfect alignment — the collective ideal where everything is subordinated to the team winning — in terms borrowed from The Boys In The Boat by Daniel James Brown, a non-fictional account of an Olympic rowing team:

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.

And Nadella is holding that out as an aspirational goal for the company. It’s the entrepreneurial vision: a small elite acting as coach and coxswain, and everyone else acting as crew, rowing in cadence and direction set by the coxswain.

And now, he starts by getting various folks off the boat, and reorganizing the elite running the show.

To that end, Tony Bates — the former CEO of Skype who has been the head of the business development and eveangelism team — is leaving the company. It’s almost ineveitable that Bates would leave after having been passed over for the CEO spot. He has a great reputation and experience, and will likely be CEO elsewhere very soon.

Tami Reller will be leaving the company (although Nadella said ‘taking time off’?) after leading the marketing group at Microsoft. She was always an odd choice, since prior to this last go at marketing she held various CFO jobs in the company. Maybe she’ll be back in a financial role. We’ll see.

Chris Capossela has been elevated to EVP and CMO. He was SVP of Microsoft Information Worker Product Management Group for the past few years, which runs the Microsoft Office Group. He’s been at Microsoft for 20 years. Obviously, Nadella has been working with Capossela during the leveraging of Office into the cloud, which was Nadella’s last role at Microsft, as head of the servers and tools group.

And behind it all, I believe, is Mark Penn, who is now EVP and Chief Strategy Officer. Penn is a former Clinton family advisor — a skilled political operative — who joined Microsoft in 2012, and made a name for himself running adverting with project like the much discussed ‘Scroogled’ campaign against Google. Nadella said in his memo,

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.

But Penn is yielding control of advertising to Capossela, so this is a shrinking of his direct control. My bet is that Nadella thinks of Penn as a laser beam to cut through old ways of thinking, but not someone to let run marketing.

Nadella has taken decisive steps to reanimate Microsoft, and create an organization very unlike that he inherited from Ballmer. We’ll have to see what else this means in strategic outcomes, but it seems likely to be a very different machine than the one they had a few months ago, and that’s a necessary — but not sufficient — precondition for Microsoft turning the corner.

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Stowe Boyd

Stowe Boyd

Lead analyst Gigaom Research

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