Memo from Steve Ballmer to Microsoft Employees: Let’s go!

Microsoft CEO Steve Ballmer today announced a reorganization of the company around four areas: operating systems; devices and studios; applications and services; and cloud and enterprise.

Credit: REUTERS/Robert Galbraith

Microsoft CEO Steve Ballmer today announced a reorganization

of the company around four areas: operating systems; devices and studios;

applications and services; and cloud and enterprise.

He says in a memo to all Microsoft Employees that the

reshuffling will give priority to corporate custom

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The sweeping changes will be phased in over the rest of

2013, keeping existing teams that are in charge of Windows 8.1, Xbox One,

Windows Phone and other top-priority products firing on all cylinders until a

smooth transition can be made, he says.

After the reorganization teams that span groups will be in

charge of key technologies and services with each team headed by a champion who

reports directly to Ballmer or to someone else who reports directly to Ballmer.

“We will also have outgrowths on those major initiatives

that may involve only a single product group,” he says. “Certainly, succeeding

with mobile devices, Windows, Office 365 and Azure will be foundational. Xbox

and Bing will also be key future contributors to financial success.”

Here’s the full note Ballmer sent to employees to describe

the reorganization:

From: Steve BallmerTo: Microsoft – All EmployeesDate: July 11, 2013, 6 a.m.Subject: One MicrosoftToday, we are announcing a far-reaching realignment of the

company that will enable us to innovate with greater speed, efficiency and

capability in a fast changing world.

Today’s announcement will enable us to execute even better

on our strategy to deliver a family of devices and services that best empower

people for the activities they value most and the enterprise extensions and

services that are most valuable to business.

This company has always had a big vision — to help people realize

their full potential. In the earliest days, it was by putting a PC on every

desk and in every home. We’ve come farther than we could have imagined. The

impact we have collectively made on the world is undeniable, and I am inspired

when talented new hires say they chose Microsoft because they want to change

the world — that’s what we do today, and that’s what we’ll do tomorrow. 

Sharpening Our Strategy

About a year ago, we embarked on a new strategy to realize

our vision, opening the devices and services chapter for Microsoft. We made

important strides — launching Windows 8 and Surface, moving to continuous

product cycles, bringing a consistent user interface to PCs, tablets, phones

and Xbox — but we have much more to do.

Going forward, our

strategy will focus on creating a family of devices and services for

individuals and businesses that empower people around the globe at home, at

work and on the go, for the activities they value most. 

We will do this by leveraging our strengths. We have powered

devices for many years through Windows PCs and Xbox. We have delivered

high-value experiences through Office and other apps. And, we have enabled

enterprise value through products like Windows Server and Exchange. The form of

delivery shifts to a broader set of devices and services versus packaged

software. The frontier of high-value scenarios we enable will march outward,

but we have strengths and proven capabilities on which we will draw.

This memo shows you how far we have developed our

thinking on our strategy for high- value activities based on devices and

services delivery.

Driving Our Success

It is also clear to me and our leadership that we must do an

extraordinary job to succeed in this modern world. We have delivered many great

products and had much success in market, but we all want more. That means

better execution from product conceptualization and innovation right through to

marketing and sales. It also means operational excellence in cloud services,

datacenter operations, and manufacturing and supply chain that are essential in

a devices and services world. To advance our strategy and execute more quickly,

more efficiently, and with greater excellence we need to transform how we

organize, how we plan and how we work. 

Improving our performance has three big dimensions: focusing

the whole company on a single strategy, improving our capability in all

disciplines and engineering/technology areas, and working together with more

collaboration and agility around our common goals.

This is a big undertaking. It touches nearly every piece of

what we do and how we work. It changes our org structure, the way we

collaborate, how we allocate resources, how we best empower our engineers and

how we market. 

One Strategy, One Microsoft 

We are rallying behind a single strategy as one company —

not a collection of divisional strategies. Although we will deliver multiple

devices and services to execute and monetize the strategy, the single core

strategy will drive us to set shared goals for everything we do. We will see

our product line holistically, not as a set of islands. We will allocate

resources and build devices and services that provide compelling, integrated

experiences across the many screens in our lives, with maximum return to

shareholders. All parts of the company will share and contribute to the success

of core offerings, like Windows, Windows Phone, Xbox, Surface, Office 365 and

our EA offer, Bing, Skype, Dynamics, Azure and our servers. All parts of the

company will contribute to activating high-value experiences for our customers.

We will reshape how we interact with our customers,

developers and key innovation partners, delivering a more coherent message and

family of product offerings. The evangelism and business development team will

drive partners across our integrated strategy and its execution. Our marketing,

advertising and all our customer interaction will be designed to reflect one

company with integrated approaches to our consumer and business marketplaces.

How we organize our engineering efforts will also change to

reflect this strategy. We will pull together disparate engineering efforts

today into a coherent set of our high-value activities. This will enable us to

deliver the most capability — and be most efficient in development and operations

— with the greatest coherence to all our key customers. We will plan across the

company, so we can better deliver compelling integrated devices and services

for the high-value experiences and core technologies around which we organize.

This new planning approach will look at both the short-term deliverables and

long-term initiatives needed to meet the shipment cadences of both Microsoft

and third-party devices and our services. 

This means we will organize the company by function:

Engineering (including supply chain and datacenters), Marketing, Business

Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal,

and COO (including field, support, commercial operations and IT). Each

discipline will help drive our overall strategy. Each discipline will also be

charged with improving our core capabilities in its area. We must improve in

all aspects of the business. 

There will be four engineering areas: OS, Apps, Cloud, and

Devices. We will keep Dynamics separate as it continues to need special focus

and represents significant opportunity. We will consolidate our technologies

coherently into these groups pulling together some things that have been spread

out in our current BG structure like cloud infrastructure, operating systems,

mail, and identity, to name a few. Some of these changes will involve putting

things together and others will involve repartitioning the work, but in all

instances we will be more coherent for our users and developers. We have

resolved many details of this org, but we still will have more work to do.

Undoubtedly, as we involve more people there will be new issues and changes to

our current thinking as well. Completing this process will take through the end

of the calendar year as we figure things out and as we keep existing teams

focused on current deliverables like Windows 8.1, Xbox One, Windows Phone, etc.

To improve engineering pace and quality, we will increase

focus on our engineering systems, processes, and tools to improve the

productivity of every engineer and to facilitate engineering collaboration and

contribution across the company. Our engineering culture and new structure will

enable more cross- group contribution, while maintaining confidentiality of

some projects as needed. We will improve the approach we use to get MSR

involved in product development, building on and enhancing our significant

strengths there.

Organizing for Speed and Strategic Alignment

Specifically, our teams and their leaders will be these:

• Operating

       Systems Engineering Group. Terry Myerson will lead this group, and it

       will span all our OS work for console, to mobile device, to PC, to

       back-end systems. The core cloud services for the operating system will be

       in this group.

• Devices

       and Studios Engineering Group. Julie Larson-Green will lead this

       group and will have all hardware development and supply chain from the

       smallest to the largest devices we build. Julie will also take

       responsibility for our studios experiences including all games, music,

       video and other entertainment.

• Applications

       and Services Engineering Group. Qi Lu will lead broad

       applications and services core technologies in productivity,

       communication, search and other information categories.

• Cloud

       and Enterprise Engineering Group. Satya Nadella will lead

       development of our back-end technologies like datacenter, database and our

       specific technologies for enterprise IT scenarios and development tools.

       He will lead datacenter development, construction and operation.

• Dynamics. Kirill

       Tatarinov will continue to run Dynamics as is, but his product leaders

       will dotted line report to Qi Lu, his marketing leader will dotted line

       report to Tami Reller and his sales leader will dotted line report to the

       COO group.

• Advanced

       Strategy and Research Group. Eric Rudder will lead Research, Trustworthy

       Computing, teams focused on the intersection of technology and policy, and

       will drive our cross-company looks at key new technology trends.

• Marketing

       Group. Tami Reller will lead all marketing with the field

       relationship as is today. Mark Penn will take a broad view of marketing

       strategy and will lead with Tami the newly centralized advertising and

       media functions.

• COO. Kevin

       Turner will continue leading our worldwide sales, field marketing,

       services, support, and stores as well as IT, licensing and commercial

       operations.

• Business

       Development and Evangelism Group. Tony Bates will focus on key

       partnerships especially our innovation partners (OEMs, silicon vendors,

       key developers, Yahoo, Nokia, etc.) and our broad work on evangelism and

       developer outreach. DPE, Corporate Strategy and the business development

       efforts formerly in the BGs will become part of this new group. OEM will

       remain in SMSG with Kevin Turner with a dotted line to Tony who will work

       closely with Nick Parker on key OEM relationships.

• Finance

       Group. Amy Hood will centralize all product group finance

       organizations. SMSG finance, which is geographically diffuse, will

       report to Kevin Turner with a dotted line to Amy.

• Legal

       and Group Corporate Affairs Group. Brad Smith will continue as General

       Counsel with responsibility for the company’s legal and corporate affairs

       and will map his team to the new organization.

• HR

       Group. Lisa Brummel will lead Human Resources and map her team to     the new organization.

As part of these changes, Kurt DelBene will be retiring from

Microsoft. Kurt has been a huge part of our success in evolving Office to be a

great cloud service, and is a key member of my leadership team. I can’t express

enough gratitude for the work he’s done for the company, and I will truly miss

him. Kurt is a truly amazing leader and a special person. His contributions to

Microsoft over 20+ years can inspire us all.

Craig Mundie will be stepping off the SLT to devote 100% of

his time to a special project for me through the end of this calendar year.

Beginning in 2014, Craig will continue as a consultant through his previously

agreed upon departure date at the end of calendar 2014.

Also at this time, Rick Rashid will step away from running

Microsoft Research and move into a new role driving core OS innovation in our

operating systems group. Rick created MSR, the most amazing computer science

research institution in the world. We owe him so much for that. He has a great

team to assume the mantle, and it is exciting to have Rick return to his roots

in OS to help propel us forward.

How We Work

The final piece of the puzzle is how we work together and

what characteristics this new Microsoft must embody. There is a process element

and a culture element to discuss. 

Process wise, each major initiative of the company (product

or high-value scenario) will have a team that spans groups to ensure we succeed

against our goals. Our strategy will drive what initiatives we agree and commit

to at my staff meetings. Most disciplines and product groups will have a core

that delivers key technology or services and then a piece that lines up with

the initiatives. Each major initiative will have a champion who will be a

direct report to me or one of my direct reports. The champion will organize to

drive a cross-company team for success, but my whole staff will have commitment

to the initiative’s success. We will also have outgrowths on those major

initiatives that may involve only a single product group. Certainly, succeeding

with mobile devices, Windows, Office 365 and Azure will be foundational. Xbox

and Bing will also be key future contributors to financial success. Our focus

on high-value activities — serious fun, meetings, tasks, research, information

assurance and IT/Dev workloads — also will get top-level championship.

Culturally, our core values don’t change, but how we express

them and act day to day must evolve so we work together to win. The keys are

the following:

Nimble

In a world of continuous services, the timeframe for product

releases, customer interaction and competitive response is dramatically

shorter. As a company, we need to make the right decisions, and make them more

quickly, balancing all the customer and business imperatives. Each employee

must be able to solve problems more quickly and with more real-time data than

in the past. 

Communicative

In the new, rapid-turn world, we need to communicate in ways

that don’t just exchange information but drive agility, action, ownership and

accountability. 

Collaborative

Collaborative doesn’t just mean “easy to get along with.”

Collaboration means the ability to coordinate effectively, within and among

teams, to get results, build better products faster, and drive customer and

shareholder value. 

Decisive

As a global company with literally billions of diverse

customers in an accelerating business environment, we must have a clear

strategic direction but also empower employees closest to the customer to make

decisions in service of the larger mission. This is tricky in a big company,

but it is the key to higher levels of productivity, growth and customer

satisfaction.

Motivated

In our industry, every day brings more challenges and more

opportunities than the day before. But we have a unique chance to make the

lives of billions of people better in fundamental ways. This should inspire all

of us — those who love making products and services, those who love engaging

with customers, and those who love planning and running our company in the most

effective way possible. We want people who get up each morning excited to make

Microsoft better — that’s how we come closer to fulfilling the potential of all

people around the globe. 

Our leadership team has discussed these cultural aspects a

lot and is committed. In my own staff meetings, we are modeling these new characteristics

yet also find ourselves occasionally slipping back. One strategy, united

together, with great communication, decisiveness and positive energy is the

only way to fly.

Seizing Our Unique Opportunity

Together, we have created great products and great success, A

but we all want more. That means a strategy to deliver a family of devices and

services that best enable people for the activities they value most and the

enterprise extensions and services that are most valuable to business.

new structure to bring these to market faster. Stronger centralized services so

we can be more efficient and effective. Priority focus areas, short and long

term. New characteristics of how we work together. In other words, better

execution and innovation through strategy and goal and discipline and

engineering coherence. One Microsoft all the time. 

Across Microsoft, we are facing incredible new

opportunities. As devices become further integrated into everyday life, we will

have to create new and extraordinary experiences for our customers on these

devices. We are going to focus on completely reinventing experiences like

creating or viewing a creative document and what it means to communicate

socially at home or in meetings at work. We are going to immerse people in deep

entertainment experiences that let them enterprise information assurance. We

will make these high-value activities priorities in our strategy have serious

fun in ways so intense and delightful that they will blur the line between

reality and fantasy. And as we develop these new experiences, we will also

support our developers with the simplest ways to develop apps or cloud services

and integrate with our products. We will help businesses that find themselves

in a new world of ever-mounting information to manage that information through

greater. 

Lots of change. But in all of this, many key things remains

the same. Our incredible people, our spirit, our commitment, our belief in the

transformative power of technology — our Microsoft technology — to make the

world a better place for billions of people and millions of businesses around

the world. It’s why I come to work inspired every day. It’s why we’ve evolved

before, and why we’re evolving now. Because we’re not done. 

Let’s go.

Steve