Original URL: http://www.theregister.co.uk/2012/01/12/microsoft_cmg_reorg/

Microsoft sharpening axe for marketing heads - report

Hundreds of jobs at stake in cultural revolution, say sources

By Gavin Clarke

Posted in CIO, 12th January 2012 14:32 GMT

Another year and another shake-up is coming to Microsoft. A restructuring of the team responsible for how Redmond is perceived and sells itself will be announced in the next 30 days, Bloomberg reports.

"Hundreds" of staffers in Microsoft's Central Marketing Group (CMG) may find themselves on the business end of an axe wielded by marketing chief Chris Capossela.

Citing unnamed sources, Bloomberg notes:

Changes may include shifting some of the more technical marketing workers to engineering groups, cutting employees who don't have needed skills or whose work is duplicated by other workers, and revamping how marketing groups are organized and where they fit into the rest of the company.

Microsoft, as you'd expect, has refused to comment on the story.

Change is an annual process at Microsoft. Among notable movements in the last decade or so:

The explanation for this latest change is standard boilerplate: to help Microsoft respond to the competition. In this case that includes Apple, Google and Amazon. In the S&T 2010 rejigger it was VMware, Oracle, Linux, Apache, MySQL and Perl, PHP and Python (LAMP).

This time, there's a bigger story, and it's something that hints a broader cultural change inside Microsoft and beyond the usual brass-shifting. That change is "Sinofskyisation".

Windows and Windows Live group vice president Steven Sinofsky is Microsoft's star, tipped by some as a future chief executive. Sinofsky shipped Windows 7 on time, without fuss and minus the kind of post-release fallout that had plagued past Windows chiefs. Before Windows, he also got the Office release train on track.

The source of the magic is considered to be Sinofsky's re-org of the Windows team grouping softies into programming units called the "triads". These cells comprise developer, tester and program manager and are aimed at speeding up and tightening up coding. The triads are important in the context of the forthcoming re-organisation. This is mainly because they favour Microsoft's engineering class and strip out non-programming generalist staff and those people who've tried to "own" products or technology domains – a category of employee inside Microsoft that's traditionally been a general manager or corporate vice president.

Triads have two important attributes: they flatten Microsoft's structure, putting the top – in the case of the Windows group management, Sinofsky – in direct communication with the do-ers and in control of those coding features. This has closed the gap on specification and delivery.

No more meetings about meetings

The Sinofsky process is hard driving: it's cutting out the Microsoft cancer, the culture of meetings about meetings, as meetings are not over until any hard decisions are taken, ending the tantalising temptation to reschedule for some other time.

Chairman Sinofsky has encapsulated his thoughts in a little orange book here.

All this compacting, stripping down and removing of the pure marketing and business layer is starting to have echoes of what Bloomberg is reporting; circumstantially, at least, signs are positive. The server and tools group's corporate vice president in charge of marketing Robert Wahbe has become the latest veteran to depart, Redmond announced this week. Significantly, Wahbe leaves ahead of the big marketing re-org that Bloomberg reports.

"They've been wiping out the VPs – flattening out," a former Microsoft exec gone within the last 12 months tells us on condition of anonymity. That cull is now being extended up to director level execs, he says.

The weak shall succumb

But what are the chances of a Sinofsky cultural revolution sweeping the bureaucratic body of Microsoft this or any other time? It may come down to how much success and sway those running Microsoft's other product groups claim. One such person is Sataya Nadella, server and tools group president appointed after veteran Bob Muglia's exit in the wake of a 2010 clash with chief executive Steve Ballmer over monetising Azure.

Nadella is considered a strong and consistent performer while S&T has a good track record of delivery, but other groups are not so proud. These include Microsoft's online services division and Windows Phone, which have struggled. Online continues to make a loss under former Yahoo! engineering genius Qi Lu, and Andy Lees was recently shuffled out of his leadership of Windows Phone last year after Microsoft's share of mobile had declined.

Another former senior Microsoft exec who wished to remain anonymous predicted the Sinofsky method will crash over other parts of Microsoft – whether it's needed or not.

"It's only a matter of time that that culture permeates, whether Steven drives it or not, because of the constant culture of engineering talent; every two years you are looking for a new role," the ex-exec told The Reg. "In the last two years, from what I observed from people in server and tools, Windows is the place to be."

This will be helped by the fact the blood at the GM and corporate vice president level is being diluted in the lower ranks by an intake of younger talent that should, over time, move up.

A former Microsoft exec tells us Microsoft had made it a criterion of their annual review to recruit a set number of students straight out of college. He reckons Microsoft last year let go the bottom 10 to 20 per cent of its staff, kept the top 20 per cent and made life "uncomfortable" for the 60 per cent in between. "The plan is to hire in people fresh out of college to get new talent and make Microsoft cool again. It's pretty broad within the company," he says.

A compacting of operations would potentially help Microsoft save money – a big priority since the economy went south, with cuts falling heavily on marketing. Marketing is a fatted cow: former CMG group chief Mich Mathews ran a budget of $1bn across Windows, Bing, Xbox and more. Microsoft spent $13.9bn on sales and marketing in fiscal 2011.

Money gets nothing

Yet, time and again, on awareness at least, Microsoft's brand scores lower than the likes of Apple and Google in surveys of consumer awareness. Now times are even tighter, with sales of PCs – which are responsible for more than $14bn worth of business – stumbling. The sacred cow's finding its pasture reduced.

It is uncertain whether the coming CMG change Bloomberg reports will unleash a Sinofsky revolution on Redmond. A change is certainly coming, however. Whatever happens in the next few weeks, it's significant that the person leading the CMG makeover himself is a newbie: senior vice president Capossela might have worked at Microsoft for 20 years but he spent it mostly in the Office team. Mathews, who was in the role before Capossela took over in April 2011, had joined Redmond 22 years previously to lead the PR team, and had spent her time in communications. ®