Yesterday Steve Ballmer announced a major reorganization at Microsoft. (Copy of email: here) It’s a fascinating case study in the thinking that leads an organization to become more connected horizontally across the divisions, functions and geographies. The email announcement to all employees carefully doesn’t mention the word matrix, which is interesting in itself, as this is clearly a move towards more matrix working, if not a formal dual reporting line matrix structure.
I will use some of the quotes in the email (in italics) to illustrate why this form of working becomes more important and to identify what are clearly some Microsoft concerns about working in this more complex way.
Microsoft is considered by industry watchers to be very divisionalized organization. It will be fascinating to see how they shift the power balance within the organization to reflect the new strategy. The strategy driving this change is as follows:
“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.
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.
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.”
It’s pretty clear from this section of the announcement that Microsoft sees itself as too ‘divisionalised’ and siloed in the way it works today. Breaking the traditional silos is one of the top reasons that organizations give for becoming more matrixed and integrated.
Interestingly, they then go on to say they will be organizing the business by function, which is one of the classic and enduring “vertical” organization structures. Implicit in this is that even the functions have not been that integrated in the past, but it also recognizes the critical role of capability building that the functions continue to play.
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,”
Up to this point in the email, we haven’t really been discussing matrix working, although we would expect to see much more integrated central functions and engineering groups. But now the announcement moves to increasing more “horizontal” integration across the business – they call this the process element:
“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. “
So it seems there will be senior champions to drive integration, and also specific teams that span the functions. This is going to lead to a significant increase in matrix and virtual working, and will inevitably lead to a shift in power to a more balanced vertical and horizontal situation.
The announcement doesn’t reveal whether these people will have a formal reporting line, or whether they will simply act through their influence and senior stature to encourage cooperation across the business. Either way, making these cross business teams work will be a major element of the success of this change. Although they call this the “process element” our experience with other organizations is that it’s the people element that is the key challenge in making these work.
The announcement goes on to identify some cultural or value keys that are important in evolving the way people at Microsoft will work together. They are illustrative for the topics they focus on, and perhaps the concerns that underlie them. Note that these are not Microsoft’s traditional corporate values but specific things they raised as part of this announcement:
- Nimble –to deliver things fast and allow each employee to solve problems more quickly and.
- Communicative – to drive agility, action, ownership and accountability.
- Collaborative – to get results faster.
- Decisive – empowering employees closest to the customer to make decisions
However, higher levels of collaboration across the business and an increase in matrix and virtual working won’t automatically support these values, and to a certain extent they reflect the classic concerns about this more complex way of working.
Many organizations who introduce a matrix experience delays in decision-making, an increase in poor quality meetings and other forms of communication, higher levels of control getting in the way of empowerment and a reduction in agility.
It doesn’t have to be this way of course, but the solution to these challenges doesn’t lie in structure. It lies in skills and ways of working and it’s good that Microsoft seems to understand that a change in ways of working is critical to making this work.
So to summarize, Microsoft needs to develop:
- more integrated central functions;
- an effective horizontal “structure” of teams and champions to connect the divisions around the world;
- a new way of working that allows them to be agile, fast and decisive, even with this increased level of complexity.
I like Microsoft. We have worked with them on virtual teams a few times over the years. If you are Microsoft HR person or senior manager reading this and would like a copy of my book “Making the Matrix Work” to find out more about how to make this more complex way of working succeed please drop us an e-mail – the first 10 will get a free copy.
As Steve Ballmer says at the end of his email “Let’s go”…..