Nadella outlines changes coming to Microsoft in email to employees

By Kip Kniskern | In News | Posted July 10, 2014

It’s easy to take today’s email by Microsoft CEO Satya Nadella as not much more than a high level, buzzword filled, overly long communique from a CEO to his some 100,000 employees. In it, Nadella re-describes Microsoft’s core mission, refining Ballmer’s “devices and services” company to the more encompassing (and long winded) “Microsoft is a productivity and platform company for the mobile-first and cloud-first world”. Although the email weighs in at something just over 3,000 words, it’s still hard to glean any concrete information out of the document, other than that Microsoft plans to continue on with Xbox (not surprisingly, many tech sites led with this “news”, as it’s pretty much the only real “news” in the email).

Still, Nadella does provide some hints as to the concrete future of the company, if you know where to look. Microsoft is committed to the “mobile-first, cloud-first” world, but we knew that. However, Nadella takes pains to redefine the company’s core values as including “productivity and platform”, two of the mainstays of Microsoft of the past, and both somewhat swept under the rug in Ballmer’s reorganization. Nadella has heard the pushback from partners, who are leery of a Microsoft bent on delivering “services”, as they’re fearful of building on a Microsoft platform only to be pushed aside by a new Microsoft service. In the email, Nadella seeks to re-assure partners:

Developers and partners will thrive by creatively extending Microsoft experiences for every individual and business on the planet.

Nadella promises that partners will thrive, and the quote is highlighted in the published version of the email on Microsoft’s website. Between Surface, a “devices and services” –first business model, and the acquisition of Nokia’s phones businesses, Microsoft has had partners running scared, and Nadella is doing his best to reel them back in.

Nadella then officially reveals a new product, or at least a new product name: Delve. As Neowin noted last May, Microsoft has filed for a trademark on the name under the heading of “Online computer software as a service”. We should be hearing more about this new product soon, from the looks of it. Microsoft, of course, is strong on Cortana, and Nadella offers a couple of hints as to how that service could grow and change.

Nadella lays out three main areas in what he calls “Our Core”: Digital Work and Life Experiences, Cloud OS, and Device OS and Hardware. While Much of Microsoft’s consumer offerings (Cortana, Skype, Outlook.com, etc.) fall into the first camp, Nadella offers some interesting hints as to the future of Device OS and Hardware. Calling out Xbox individually, Nadella ensures us that Xbox isn’t going anywhere (there were a number of calls, including from new Microsoft Board member Mason Morfit of ValueAct, to sell off the Xbox business). But it’s what Nadella says about Windows Phone that jumps off the page:

That means at times we’ll develop new categories like we did with Surface. It also means we will responsibly make the market for Windows Phone, which is our goal with the Nokia devices and services acquisition.

That Nadella feels the need to “make the market” for Windows Phone, rather than ie: “grow the market”, is telling, and refreshingly truthful. Windows Phone is nowhere near where it needs to be in terms of a game changing market set of devices, and it’s going to have to be up to Microsoft to not only push, but actively create a market where Windows Phone can survive and thrive.

Nadella’s biggest revelations, however come in the “Our Culture” section of the email. When Steve Ballmer announced the “One Microsoft” reorganization vision almost exactly a year ago, he was quick to clarify that jobs wouldn’t be lost. Nadella, while he isn’t calling for cutbacks or some kind of “Mini-Microsoft” consolidation, is letting the troops know not to expect “business as usual”. He starts off, in the 3rd paragraph of the email, announcing that changes are coming:

On July 22, we’ll announce our earnings results for the past quarter and I’ll say more then on what we are doing in FY15 to focus on our core. Over the course of July, the Senior Leadership Team and I will share more on the engineering and organization changes we believe are needed.

(emphasis ours)

Then, in the “Our Culture” section, he starts by saying “(o)ur ambitions are bold and so must be our desire to change and evolve our culture”, and goes on later to tell employees that “yes, this means you”:

Finally, every team across Microsoft must find ways to simplify and move faster, more efficiently. We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes. Culture change means we will do things differently. Often people think that means everyone other than them. In reality, it means all of us taking a new approach and working together to make Microsoft better.

(emphasis ours)

Nadella is insistent that change is coming to the Microsoft culture, and to thrive, employees better get on board:

Nothing is off the table in how we think about shifting our culture to deliver on this core strategy. Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving.

To be honest, it’s what we were hoping Steve Ballmer would have said a year ago, and what needs to be said, and acted upon, now. Microsoft can’t change its culture while beating every decision to death in program manager meetings and going through layers and layers of management to get anything done. Microsoft needs to move faster, and in order to do that, it has to change the way it moves, it’s as simple as that. For Nadella to effect this change (something he’s done all throughout his career at Microsoft, by the way), he’s going to ruffle some feathers and, frankly, piss some people off (if not get rid of them altogether). Good. So be it. It needs to happen, and that it didn’t happen under Ballmer is a big reason why he’s not with the company anymore.

In the next few weeks, we’ll start to hear about these engineering and organization changes, we’ll learn about “Delve”, and hopefully get a first look at how this new Microsoft plans to “make” the Windows Phone business. Can Microsoft remake itself? We’re looking forward to finding out, how about you?

Posted July 10th, 2014 at 10:10 am
Category: News
Tags: CEO, Corporate Strategy