Microsoft Reorganization Reinforces Steve Ballmer’s Clout

The reorganization is so sweeping that the company gave it a brand: One Microsoft. The goal is to “see our product line holistically, not as a set of islands,” CEO Steve Ballmer tells staffers in a memo today. Instead of dividing the company by products, the new structure includes 12 teams that focus on functions including Engineering, Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal, and COO. In addition, Ballmer says, each major initiative “will have a champion who will be a direct report to me or one of my direct reports” and be empowered to “drive a cross-company team for success.” Among other things, Microsoft will “focus on completely reinventing experiences like creating or viewing a creative document” or communicate at work and home. “We are going to immerse people in deep entertainment experiences that let them have serious fun in ways so intense and delightful that they will blur the line between reality and fantasy.” Investors seem to like the change. Microsoft shares are up about 2% in mid-day trading. But BGC Financial analyst Colin Gillis warns that “you don’t make massive sweeping changes like this unless something is wrong.” Microsoft will be harder to break up, he adds, and the reorg “increases the power of the CEO” because it eliminates heads of business groups. “Major reorgs such as this can serve as a negative distraction for months before potentially offering benefits.”

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