Satya Nadella says changes coming to Microsoft Corp

Written by New York Times | Updated: Jul 12 2014, 13:18pm hrs
Satya NadellaMicrosoft CEO Satya Nadella signals changes but defers talk on job cuts. (AP)
Satya Nadella, Microsofts chief executive, has written a company manifesto of sorts. His 3,100-word essay, distributed by email to Microsoft employees Thursday morning, is Nadellas mission statement and a rallying cry for the staff. Although it contained few specifics, the essay appeared to lay the groundwork for significant changes, to be announced this month.

Nadella said everyone at Microsoft must find ways to simplify and work faster and more efficiently. We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes, he wrote. Culture change means we will do things differently.

Those words seemed to hint at the possibility of layoffs. In most years, around the end of Microsofts fiscal year on June 30, rumours swirl among employees about cutbacks in different groups as the company defines its plans for the next 12 months. When job reductions occur, though, they are rarely big enough to meaningfully affect Microsofts overall head count, which was close to 100,000 at the end of June 2013.

This year, however, the layoff rumour mill has been especially active. That is partly because Microsoft added 25,000 new employees at the end of April with the completion of its acquisition of Nokias mobile division.

Nadella said in his email that, throughout July, senior executives would reveal more on the engineering and organization changes we believe are needed. He said he would discuss changes more when the

company released its earnings on July 22.

In a brief phone interview, Nadella said his motivation for writing the memo was to galvanise employees around what our soul is. He declined to say whether the company was contemplating layoffs.

The crux of Nadellas essay was an extended description of Microsofts mission. Clarifying, rather than drastically redefining, the companys unique core, Nadella said Microsoft was the productivity and platform company for the mobile-first and cloud-first world.

We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more, he wrote.

In the interview, he cited Microsofts virtual assistant for its Windows Phone devices, Cortana, as an example of the kind of ambitious technologies he wanted Microsoft to produce. He said Microsoft would be able to use Cortana to reduce the drudgery of using something like customer relationship management software. When a meeting between a sales employee and a customer is over, Cortana will be able to detect automatically that the meeting has ended. The software could then automatically pull up the customers record for the sales employee so the record could be updated.

He described how Microsofts focus on productivity would encompass peoples needs in both their professional and their personal lives. That description seemed to leave one of Microsofts most prominent businesses, its Xbox unit, in an awkward spot: Outside Microsofts core focus.

In the past, many outsiders have called on Microsoft to sell its Xbox unit to simplify its business.

Even though Xbox is not part of Microsofts focus on productivity, Nadella wrote in his essay that the single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming.

Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft, he said.

The message: Xbox isnt central to Microsoft, but the company is keeping it. For now.

I am absolutely thrilled to have the Xbox franchise, Nadella said in the interview.