Seeing Apple in Microsoft’s reorganization
FORTUNE — It is said that to a hammer everything looks like a nail, and I’m willing to acknowledge, at least for now, that I tend to view tech industry news through the prism of Apple. After all, it’s the company I’ve covered more than any other, including a three-part feature in the current issue of Fortune and a book last year,
Still, I think I’m being completely rational in my shock at Steve Ballmer’s latest reorganization of Microsoft. His long memo explaining it to employees is one long homage to the Apple (AAPL) that Steve Jobs re-created between 1997 and 2011. Everything about the reorg sounds like Ballmer wants Microsoft (MSFT) to behave more like Apple. (And let’s set aside for the moment that Apple may well be having more trouble behaving like Apple than at any time in recent memory.)
One of the key learnings of my research on Apple over the past five years has been the extraordinary degree to which Apple is organized by function. No other company its size has the audacity to organize this way as opposed to the typical corporation’s divisional structure. The two most obvious examples of this are General Electric (GE) and, yes, Microsoft. GE’s aircraft and medical divisions are like companies unto themselves. Ditto Microsoft’s Xbox-purveying entertainment division.
Steve Jobs hated divisionalization. He hated fiefdoms. He wanted one Apple, one strategy, one brand, one message. Software developers would contribute software across products. Finance would keep the books across product groups. And so on.
And so listen to the shocking language Ballmer uses in his memo, which Microsoft posted Thursday for the world to see: “We are rallying behind a single strategy as one company — not a collection of divisional strategies. Although we will deliver multiple devices and services to execute and monetize the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands.” In plain language Ballmer also told his employees: “We will organize the company by function.”
At Apple, every initiative and task has one person assigned to it called the DRI, or “directly responsible individual.” In Ballmer’s memo, he said “every major initiative” will have a “champion.” He said that person will report directly to him or to one of his direct reports. He flat-out says the goal is better accountability.
Ballmer didn’t dance around the goal of his memo. He called it “One Microsoft.” It’s exactly what Jobs sought for Apple when he returned to the badly dysfunctional company he had co-founded and then left for more than a decade. Apple was rife with divisions and competing agendas, and Jobs killed them all — along with quite a few failing products. A key move was his decision to unify all advertising budgets for the company. The goal wasn’t to save money but rather to unify the message, to ensure that Apple’s brand stood for what Jobs wanted it to stand for. Ballmer discusses in his memo the newly centralized advertising and media efforts under two executives.
The under-appreciated part about how difficult this will be for Ballmer and his team to pull off is that taking a unified structural approach to a massive company requires inordinately good leadership. The Stanford business professor Charles O’Reilly was adamant with me when I was researching my book that the unusual way Jobs ran Apple would only work for him. It works when a dictatorial, feared, charismatic, respected, multi-talented workhorse like Jobs is able to more or less directly oversee every important facet of the company. It also worked for Apple because Jobs ruthlessly insisted on simplicity. He wanted to attack only a few things at a time — a tremendous virtue for building Apple back from the abyss and for more than a decade after. But the act gets tougher when the company grows gargantuan and, critically, when the all-powerful wizard is gone.
As a small cultural example, consider the pickle Apple is in over e-books. In refusing to settle its price-fixing case with the Justice Department, Apple under Tim Cook adhered to its Jobsian principles. It believed it was right and that its partners, the government, its competitors and critics were fools. It apologized to no one because, well, Apple doesn’t apologize because Apple is never wrong. All this worked marvelously for the great Steve Jobs. For Apple under Tim Cook, it’s an understandably different proposition.
In an almost pitying tone it has become fashionable in recent years to wish that Microsoft would return to some aspect of its former glory. In a world of Apple’s arrogance and Google’s (GOOG) brilliance and Samsung’s shocking dexterity (manufacturing, marketing, emulating), some of Microsoft’s old bullying would be great for competition and therefore great for consumers.
Could an Apple-like organizational approach help Microsoft focus and regain some of its swagger? Would such an occurrence bring Apple down yet another small peg? Could a well-integrated and well-led Microsoft blunt some of Google’s hoarding of bold ideas and vision?
One (Microsoft) can only hope.