The sudden departure of powerful Windows boss Steven Sinofsky this week
is the first step in a plan by CEO Steve Ballmer to remodel Microsoft
Corp as a much more integrated operation in an attempt to take on Apple Inc and Google Inc at their own game.
After
nearly 13 years at the helm of the world's largest software maker,
which just launched its first own-brand computer, sources inside the
company say Sinofsky's departure signals Ballmer's new-found focus on
co-operation between its self-sufficient - and sometimes warring -
units.
"What I'm hearing over and over is collaboration and
horizontal integration is the new mantra," said one Microsoft insider,
who asked not to be named. "They (top management) understand that, if
they don't move to a model where devices and software are more
integrated across the entire Microsoft system, they are in a weak
position."
After floundering for most of the last decade,
Microsoft is trying emulate the way Apple's software and hardware - such
as iTunes and the iPhone - work perfectly together; or how Google's
online suite from Web search to YouTube and Gmail are seamlessly joined.
Microsoft
- which Ballmer rechristened as a "devices and services company" last
month - has all the parts, analysts say, but has failed to put them
together. Now Ballmer looks set to reshape the company to try to make
that a reality.
"I certainly expect the org chart to look a lot
different six months from now," said Brad Silverberg, who ran the
Windows unit during its massive growth spurt in the 1990s. "There will
be attrition from Steven's (Sinofsky's) people and Steve Ballmer will
have a chance to create a more harmonious organization."
Ballmer
replaced Sinofsky with two executives with a reputation for
co-operation. The move marks the third time in the last few years that
Ballmer has replaced a single unit head with two leaders sharing
responsibilities.
"Sinofsky really centralized all the power under
himself. We'll see how it shakes out from here," said one manager in
the Windows unit.
More fundamental organizational shifts could be in the cards.
"A
lot of things are up for grabs," said David Smith at tech research firm
Gartner. "How the management is structured - there could be more
changes."
No room for an empire builder
Sinofsky, a 23-year Microsoft veteran, built up a walled empire around his Windows unit.
His
hard-charging but methodical style, which took on the name
"Sinofskyization," alienated other groups in the company, especially the
Office unit, the other financial pillar of Microsoft's success.
"Steven
is a brilliant guy who made tremendous contributions to Microsoft,"
said Silverberg. "But he was also a polarizing guy and the antibodies
ultimately caught up with him."
The decision not to share the
latest internal test versions of Windows 8 and keep the Surface tablet a
secret until just before its announcement especially upset the Office
group, which insiders say accounts for the lack of a fully featured
Office suite on the Surface RT tablet.
"All good leaders create
friction, but my guess is the cost of doing business with Sinofsky ended
up outweighing the benefits," said a former Microsoft staffer who saw
Sinofsky operate at close quarters.
"If you work in Steven's team,
you love him," said a former colleague who now works for a financial
technology firm in Seattle. "If he's outside of your team? That's where
his reputation of being hard to work with came from."
Ballmer has
made it clear that executives have to work together better. Next year,
top managers will get bonuses based on company-wide performance, not
just their own unit, which Ballmer hopes will lead to "deeper
cross-organization collaboration."
But there is no guarantee
Ballmer can radically redirect almost four decades of culture at
Microsoft - which he is partly responsible for - that gave Windows
primacy and intentionally pitted teams against one another to get the
best results.
Nothing will change without new leaders from outside
the company, said Trip Chowdhry, managing director at Global Equities
Research.
"Microsoft is clinging to the past and they keep
bringing in the people from the past. This is a fundamental flaw in the
logic," Chowdhry said.
CEO throne
Despite urging
collaboration, Ballmer - a 32-year Microsoft veteran who took over as
CEO from Bill Gates in 2000 - does not let any junior executive get too
close to challenging his authority.
Sinofsky, widely touted as
Ballmer's successor for the past three years, was just the latest in a
line of would-be CEOs. Over the last five years alone, Ballmer has seen
off a clutch of rising stars that were discussed as potential leaders.
Windows and online head Kevin Johnson went to run Juniper Networks Inc , Office chief Stephen Elop went to lead phone maker Nokia , while Ray Ozzie - the software guru Bill Gates designated as Microsoft's big-picture thinker - left to start his own project.
"They've
gone through quite a bit of senior management talent in the past few
years. The bench is not what it used to be," said Smith at Gartner. "The
overall management structure, career path, replacements, succession
planning - a lot of that is an issue for Microsoft."
Ballmer's
promotion of Julie Larson-Green and Tami Reller to jointly fill
Sinofsky's role may only be temporary, Microsoft-watchers say.
"The
question is what comes after, like in the next three years," said Rob
Helm at Directions on Microsoft, an independent firm that advises
business customers on how to deal with Microsoft.
© Thomson Reuters 2012