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Microsoft's reorg does accomplish one thing

It may not fix any problems or set Microsoft up for the future, but the reorg does one thing well: mask its failures.

Microsoft's most recent reorganization isn't sitting well with the punditocracy, who feel the that it does nothing to solve some functional problems Microsoft has, nor establish a successor for Steve Ballmer as CEO. The one thing it does seem to do is hide failure.

Ballmer said he was trying to tear down walls that led to the problems of past years, such as the Windows 8 incompatibility issue. Windows 8 shares a similar look and feel with other recent Microsoft products, but uses a different underlying architecture that prevents an application from working across multiple hardware platforms. Taking an app from a PC to a tablet to a smartphone, in theory, should have been as easy as a recompile. It wasn't.

Some new power players emerge, and there is one very telling decision: the Office group is now a part of the Online Services division headed by ex-Googler Qi Lu. I guess Office's days as an installed piece of software on your computer are definitely over.

Microsoft is definitely a case of the right hand not knowing what the left hand is doing. That's not surprising, given its massive size. Most employees have to worry about their own jobs, as we learned from Vanity Fair last year. They don't have time to keep up with the other groups.

I have a friend inside the company who once fed me some really juicy news, which this person found on an unsecured SharePoint server. Yep, things were that sloppy. Since then, this person has moved around and is so disconnected that I am their official source of news for happenings within the company. When Steve Sinofsky left, it was me who informed my friend...three days after it happened.

While this reorg is designed to make Microsoft operate in a more cohesive, holistic manner than before, it leaves more problems than it fixes. To wit:

  • It doesn't change the toxic culture: I saw no mention of changing the atrocious review system that consumes an inordinate amount of time and pits Microsoft employees against each other. I'll caveat this with the admission that just because it's not on paper doesn't mean it won't be addressed. 
  • It hides failure: With the restructuring, Microsoft will change its financial reporting as well. You always knew how much money Bing and Windows Phone lost every quarter because it was broken out. Now, that won't be the case. Microsoft Chief Financial Officer Amy Hood told the Wall Street Journal the company plans to "investigate changes over time to reporting structures." That means hiding the failure that is Bing, which makes it even less likely to be addressed head-on.
  • It puts no number two in place: Ballmer is lucky to still have his job. I think this is due in part to the fact that there aren't many people out there fit to run a 100,000-person, $300 billion company. If executives like that were more plentiful, he might be on the outside looking in. And yet this reorg puts no one in place ready to step up and run things should a change come to the company. Even Steve Jobs and Larry Ellison, comparable workaholics like Ballmer, had number twos waiting in the wings: Tim Cook for Jobs, Safra Catz for Ellison. All of the people who could have taken over for Ballmer - Sinofsky, Ozzie and Bob Muglia - are all gone.
  • There are no cost savings: All they did was shuffle the deck chairs. They did not cut staff, like Mini-Microsoft has advocated for years. They aren't jettisoning money losers or spinning off products that bring in too-little revenue. Reorgs usually mean job cuts. Microsoft remains a monstrous, bloated entity, too big for its own good.

All of these indicate that despite Ballmer's intentions and plans, little will change because the systemic problems at Microsoft remain unaddressed, and, in some cases, buried.

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