Tuesday, November 13, 2012

Functional Organization at Microsoft

@iamjaygreene and @jimkerstetter of @CNETNews are not surprised by the departure of unpopular Windows boss Steven Sinofsky from Microsoft.


Some pundits (e.g. ZDnet's Larry Dignan) had predicted that Sinofsfy would survive if Windows 8 was a commercial success. By letting him go immediately after Windows 8 went live rather than waiting, Ballmer has clearly signalled that it is not about Windows 8 success but about something else.

In pieces written in the weeks before Sinofsky's departure, Greene and Kerstetter mention the following issues.

  • Sinofsky successfully battled with Ray Ozzie for control of Windows Live Mesh. Ray Ozzie left Microsoft immediately after Ballmer folded Windows Live Mesh into Sinofsky's organization.
  • According to unnamed critics within Microsoft, Sinofsky created a rigid product development process that puts more control in his hands and diminishes Microsoft's ability to innovate.
  • In a similar fashion to Scott Forstall at Apple (who also lost his job recently), Sinofsky zealously promoted his group's work at the expense of the rest of the company.
  • Manu Cornet's cartoon of Microsoft's organization chart is thought to be a reference to Sinofsky.

The comic is a set of 6 organizational charts, edges with arrows show who reports to whom. Amazon's is very traditional, each manager has exactly 2 people below her. Google's is colorful (nodes are colored red, green, yellow, blue) and is extremely messy. Edges are overlapping all over the place, it's unclear who reports to whom. Facebook looks like a social network with bidirectional arrows and a distributed structure. Microsoft's is divided in three sub-structures that are pointing guns at each other. Apple's is a circle with a large red dot in the center, and everyone around it reports to that red dot -- the arrow heads are particularly large and even the people two levels away from the center red dot also have arrows point at them coming directly from the red dot. Oracle's is divided into two sections, the first section is labelled 'Legal' and is huge, the second section is labelled 'Engineering' and is tiny.
Original cartoon by Manu Cornet


But this story isn't just about personality clashes and organizational politics. Sinofsky has championed an approach to organization structure, which he calls Functional Organization, and this is described in a book called "One Strategy: Organization, Planning, and Decision Making," (2009) co-written with Harvard Business School professor Marco Iansiti.

The Functional Organization builds management reporting lines around job functions -- such as product management, development, software testing. This may be contrasted with a Product Organization where multi-disciplinary teams work on specific feature sets together.

Sinofsky and Iansiti argue that functional organizations create clearer road maps for workers to march toward a final goal. However, critics within Microsoft disagree. Apparently referring to Sinofsky's Functional Organization, Charlie Kindel, another ex-Microsoft executive is quoted as saying that "it represents a siloed perspective, it represents an us versus them perspective".  Another former senior executive (unnamed) has referred to the approach as "Soviet central-planning", where tight control from the top squeezes out innovative thinking from below.

Announcing Sinofsky's departure, and the appointment of Julie Larson-Green as his successor, Steve Ballmer wrote "The products and services we have delivered to the market in the past few months mark the launch of a new era at Microsoft. To continue this success it is imperative that we continue to drive alignment across all Microsoft teams, and have more integrated and rapid development cycles for our offerings. ...  Her unique product and innovation perspective and proven ability to effectively collaborate and drive a cross company agenda will serve us well as she takes on this new leadership role".

(BBC News 13 November 2012)


So is this the end of the Functional Organization in Microsoft? Martin Fowler talks about the oscillation between FunctionalStaffOrganization and TechnicalStaffOrganization, essentially the same dynamics (he reckons) as drive the boom-bust cycle of EnterpriseArchitecture. (PreferFunctionalStaffOrganization). So perhaps now the cross-company silo-busting agenda will have the ascendency for a little while.

Except that the new organization also seems to attract the label "functional".

In a 2,700-word internal memo rich in management-speak drivel , Ballmer announced a "far-reaching realignment of the company that will enable us to innovate with greater speed, efficiency and capability in a fast-changing world". The various internal warring silos known as "product groups" will be disbanded and the entire company (97,000 employees) is to be rejigged on "functional" lines (engineering, marketing, advanced strategy and research), with the aim of "focusing the whole company on a single strategy".

John Naughton, How Microsoft spent a decade asleep on the job (Guardian July 2013) 




Compare my earlier piece on the Psychodynamics of Leadership at Microsoft (Oct 2010, updated Nov 2012)

See also Jay Yarrow, Tim Cook: Why I fired Scott Forstall (Business Insider, 6 Dec 2012), with further commentary by JJ Dubray, Cooperation is Essential for Innovation (6 Dec 2012).

Gavin Clarke, Sinofsky's new blogski: Windows 8 king reborn as management guru (The Register Jan 2013)

And finally, Steve Sinofsky Managing through Disagreement (Jan 2013), with commentary by Kip Kniskern, Jay Yarrow.



Updated 5 August 2013

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