“One Microsoft” vision in 2020 hindsight

Lessons drawn from articles about Microsoft’s 2005 and 2013 restructurings and how the company has revitalized itself to stay competitive in 2020.

Vic Danh

--

Geekwire Illustration of the evolution of Microsoft between 2000 and 2013

In 2005, Microsoft CEO Steve Ballmer initiated a corporate reorganization which led to the formation of three separate autonomous divisions: Platforms and Services, Microsoft Business Division, and Entertainment and Devices. Ballmer, in an interview with the Associated Press, was optimistic that a reorganization to divisional structure would allow executives to make faster, crisper actions to help Microsoft stay nimble.

The company’s reorganization will merge seven business units into three divisions. That is aimed at helping the company become more nimble and giving executives broader power to make decisions without bringing in top leaders.

Microsoft in 2005 was facing tremendous competition from different upstarts in different markets, such as Apple for mobile, Google for search engine and PlayStation for entertainment device. Thus, this move was an attempt to help Microsoft focus on different products and stay competitive.

However, as we read in the next three news articles that were published in 2013 (see references), this restructuring did not achieve its intended purposes. Three autonomous divisions were competing for resources, and collaboration was greatly reduced consequently.

A fictional org chart that depicts Microsoft divisions pointing guns at each other.

By 2013, Microsoft had not gained traction in either the mobile phone or search engine markets. They needed a drastic change to stay competitive within the technology sector. Steve Ballmer once more decided that it was in the company’s best interest to revert to functional structure, in which groups are formed based on their activities and expertise.

This strategy was envisioned as “One Microsoft” in which the company would continue to evolve…

--

--

Vic Danh

Senior Research Associate by day and MBA, economically-inclined blogger by night. A life-long learner and observer of technological, health and social trends.