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Co-operation never looked so rough

Nadella, on the other hand, was in charge of one of Microsoft's biggest three business units as group vice president of Server and Tools. Now, while he'll continue developing server and tools for cloud and enterprise, he has lost responsibility for business, marketing and sales of those products.

One person to watch will be Tami Reller - she is now running the entirety of Microsoft's marketing. Previously, marketing had been done by the product groups and also by a central marketing group. Now, Reller will develop communications, branding, and conduct product and market research for Microsoft's consumer and business products and services.

Prior to her new role, Reller had served as head of marketing and finance for the Windows group.

The buck stops... where?

OK, so the model is an engineering organisation, more like Apple and Google. But who is in charge, who is accountable and how will development be channeled into the kind of success Ballmer wants? In the new Microsoft, where would the new Surface come from? And who would take ownership for it?

It's hard to know and, I'd argue, even Microsoft doesn't have an answer. With the old product reporting lines gone, Microsoft is placing great faith on people's willingness to work together at different levels.

Take a new Surface: The operating systems and engineering group under executive vice president Terry Myerson would be responsible for the operating system but the responsibility for hardware is with Julie Larson-Green, EVP of devices and studios engineering.

Xbox is a similar challenge. Larson-Green now runs all Xbox engineering, but the success of Xbox is not the engineering; it's the marketing of the units and the games to partners and the yoof. But marketing now rests with a completely different operation - Reller's group. Neither does Larson-Green own Xbox's software - that's under Myerson.

One former Microsoft source highlighted the communication and management rough edges. "If they take a functional engineering point of view, you will have functional disconnects. Who is developing product strategy and who sets the vision for driving the business or the product forward?"

Worse, who sets - and is accountable for - product business goals, and for profit and losses? In the old group structure, that fell to the group vice president. Sales of Windows were down? Pull in Steven Sinofsky. Sales of Windows Phone are tanking? Bring me the head of Robbie Bach - head of phones as vice president of the Entertainment and Devices group, who retired in 2010. Of course Entertainment and Devices has now been dissolved.

Collaboratation issues

Success in this new model will depend more on individual's having bright ideas that management approves - and, later, on staffers from other departments being willing to collaborate with them.

The incentives for Myerson, Larson-Green, Nadella and the others have changed. Ballmer is expecting they collaborate, but they have a lot less control over their destinies than under the old Microsoft model. The weakest point in the success of their careers and their projects is the worst performer one somebody else's team.

Further, collaboration doesn't come easily to a company culture like that of Microsoft. The firm's culture is notoriously competitive, and insiders say this can mean death by best PowerPoint rather than by best product or most logical argument.

As for those imagined, beautiful synergies of engineers working in a single unit - these don't always flow. For all the success of Apple's iPad and iPhone, there’s also Mobile Me and iOS Maps.

Google encourages techies to channel their creative juices for 20 per cent of their time, but there’s a difference between good ideas and good ideas that work based on the number of dead projects.

Microsoft is supposedly becoming a flat, unified engineering operation. But technology and business success still requires strong vision, leadership and accountability. With the old structure gone, the question will be: who will corral the techies into working together and who will keep the business functioning?

If not Reller, then it’ll be Ballmer rolling up his sleeves.

As one ex-Microsoft source told me: "The amount of work Steve Ballmer is signing up to do is amazing. He wants this to be a gigantic, single business." ®

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