* Sinofsky exit signals new collaborative approach
* Major reorganization could be imminent
* Ballmer preaches teamwork, but ejects CEO challengers
By Bill Rigby and Alexei Oreskovic
SEATTLE/SAN FRANCISCO, Nov 16 (Reuters) – 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.
(Reporting By Bill Rigby in Seattle and Alexei Oreskovic in San
Francisco.; Editing by Edward Tobin, Martin Howell and Andre
Grenon)
