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Microsoft Executive Shuffle About Personalities Involved, Not Strategy Shift

The biggest change is the exit of Microsoft devices head and former Nokia CEO Stephen Elop.

Asa Mathat

Microsoft frequently reorganizes itself at this time of year, so it would be easy to assume that Wednesday’s executive changes were a sign that Redmond was shifting around its strategy yet again.


This time, though, it really has more to do with the people than the strategy.

The biggest change is the exit of Microsoft devices head Stephen Elop, the former Nokia CEO who engineered the company’s sale to Microsoft. Elop, who ran Microsoft’s Office unit before leaving for Nokia, had been the man responsible for a deal that Microsoft CEO Satya Nadella inherited and wasn’t necessarily a huge fan of. Nadella has already made deep, deep cuts to the former Nokia operation, shuttering its feature phone business and laying off thousands of its workers.

Nadella indicated in April to expect even more cuts from Elop’s hardware division. That unit will now be under the purview of Terry Myerson, who already runs the Windows software that goes on all of those devices.

Other changes include the exit of two people who had already seen their roles reduced: Longtime engineer Eric Rudder and political hand Mark Penn, who is leaving to start his own investment firm backed by former Microsoft CEO Steve Ballmer.

Rudder, a 25-year Microsoft veteran, rose through the ranks, serving as Bill Gates’ technical assistant, doing a stint in Europe and eventually becoming head of technical strategy and, for a time, business development. He gave up the latter role last year when Microsoft hired former Qualcomm executive Peggy Johnson as head of that function.

Here’s Nadella’s email on the changes:

From: Satya Nadella
To: All Employees
Date: June 17, 2015
Subject: Aligning Our Strategy & Structure


As we approach a new fiscal year, I’d like to share with you how we are aligning our structure to our strategy and the changes to our Senior Leadership Team.

Over the past year, I have said that Microsoft aspires to empower every person and every organization on the planet to achieve more. To do this, building the best-in-class productivity services and platforms for the mobile-first, cloud-first world is at the heart of our strategy, with three interconnected and bold ambitions:

Reinvent productivity and business processes
Build the intelligent cloud platform
Create more personal computing
To better align our capabilities and, ultimately, deliver better products and services our customers love at a more rapid pace, I have decided to organize our engineering effort into three groups that work together to deliver on our strategy and ambitions. The changes take effect today.

Terry Myerson will lead a new team, Windows and Devices Group (WDG), enabling our vision of a more personal computing experience powered by the Windows ecosystem. We will combine the engineering efforts of our current Operating Systems Group and Microsoft Devices Group (MDG) led by Stephen Elop. This new team brings together all the engineering capability required to drive breakthrough innovations that will propel the Windows ecosystem forward. WDG will drive Windows as a service across devices of all types and build all of our Microsoft devices including Surface, HoloLens, Lumia, Surface Hub, Band and Xbox. This enables us to create new categories while generating enthusiasm and demand for Windows broadly.
Scott Guthrie will continue to lead the Cloud and Enterprise (C+E) team focused on building the intelligent cloud platform that powers any application on any device. The C+E team will also focus on building high-value infrastructure and business services that are unique to enterprise customers, such as data and analytics products, security and management offerings, and business processes. Today, we are also moving the development teams who build our Dynamics products to C+E, which will enable us to accelerate our ERP and CRM work even further and mainstream them as part of our core engineering and innovation efforts. C+E will work closely with ASG to ensure the end-to-end experience is cohesive across communications, collaboration and business processes.

Qi Lu will continue to lead the Applications and Services Group (ASG) that is focused on reinventing productivity. This group is leading the charge in building productivity services for digital work that span all devices and appeal to the people who use technology at work and in their personal lives. ASG has already made advancements in these areas, and the only change as part of today’s announcement is that the engineering efforts to build solutions for Education will move to ASG.
Changes of this nature require us to look at our leadership structure overall, and as a result a few Senior Leadership Team members will leave Microsoft at the conclusion of a transition period.

When Stephen Elop returned to Microsoft, he oriented MDG to create the best Microsoft experience through its devices, inclusive of hardware, software and services. He has been a strong advocate of the need to drive focus and accountability around the delivery of these experiences and has helped drive tighter alignment toward the ambition of more personal computing. With the structural change described above, Stephen and I have agreed that now is the right time for him to retire from Microsoft. I regret the loss of leadership that this represents, and look forward to seeing where his next destination will be.

Kirill Tatarinov is going to explore what’s next for him. Under Kirill’s leadership, the Dynamics business has grown to a nearly $2 billion business with an ambitious wave of products on the horizon. Perhaps most important though, Kirill and team have shown us that participating in a meaningful way in the CRM and ERP market opens up new opportunities we can uniquely take advantage of by bringing Dynamics into Microsoft’s mainstream engineering, sales and marketing efforts. I am very thankful for Kirill’s unswerving leadership in bringing Dynamics to this point and building a strong leadership team to carry it forward.

After more than 25 years at Microsoft, Eric Rudder has decided to try something new. Eric has played a number of key roles at Microsoft including founding and growing the Server and Tools business in its early days, leading Microsoft Research, and most recently driving our advanced technology and education efforts. I will deeply miss Eric’s passion, technical and business acumen, and keen intellect, and I appreciate all he’s done for Microsoft.

Lastly, a number of months ago, Mark Penn shared with me that he is planning to leave Microsoft in September to form a private equity fund, among other things. Over the years, Mark has leveraged his talents and insights on Microsoft’s behalf. From helping craft a Super Bowl ad and helping design new business and marketing models to his work in data analytics, Mark has helped me set the company on a new course. I’m thankful for the wise strategic counsel Mark has provided, and I look forward to seeing what he does next.

I’ve worked closely with Stephen, Eric, Kirill and Mark and have incredible respect for each of them and wish them well.

I’m counting on our Senior Leadership Team to inspire innovative products and services and lead excellent execution. Our competition and our customers don’t care about our organization structure — they care about innovation. While we are distinctly aligning our engineering structure and core capabilities, our ambitions are interconnected. Success requires all of us — and particularly the Senior Leadership Team — to work across boundaries as one Microsoft and in harmony with our partners. Here’s the new team effective today:

Chris Capossela, Executive Vice President and Chief Marketing Officer (will now also take on responsibility for Dynamics and Education marketing)
Kurt DelBene, Executive Vice President, Corporate Strategy and Planning
Scott Guthrie, Executive Vice President, Cloud and Enterprise
Amy Hood, Executive Vice President and Chief Financial Officer
Kathleen Hogan, Executive Vice President, Human Resources
Peggy Johnson, Executive Vice President, Business Development (will now lead our partnerships with mobile operators around the world)
Qi Lu, Executive Vice President, Applications and Services Group
Terry Myerson, Executive Vice President, Windows and Devices Group
Harry Shum, Executive Vice President, Technology and Research
Brad Smith, Executive Vice President and General Counsel, Legal and Corporate Affairs
Kevin Turner, Chief Operating Officer (will also now take responsibility for the Dynamics sales and partner organization)
Jill Tracie, Chief of Staff

I’m certain that matching our structure to our strategy will best position us to build products and services our customers love and ultimately drive new growth. Please feel free to send any questions you have to one of the Senior Leadership Team members or me.

Looking forward to what we can do together.


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