Organinzational Change

The Elephant Dance Is In Full Swing At Microsoft

A past conversation with a friend on the announcement Steve Ballmer CEO of Microsoft would be stepping down next year caused us to wonder if there was some other underlying reason as he just announced a major restructuring of the company. We both speculated a bit, but, I must admit, for me I wasn’t familiar with the reorganization announcement.

Since I wasn’t familiar with the changes Ballmer was making, I asked my friend his opinion on them and he said it’s a mess. I let it go and we went on to another topic. But, my curiosity had been sufficient stimulated so I decided to do some research to fill in my knowledge gap around the announced Microsoft reorganization. After reading several articles, I shook my head, and said good luck. Here’s why.

Organizational Entrenchment:

This change was long overdue according to a number of sources. In fact, many have referred to as the Apple way of being organized around software, hardware and services. While this is working for Apple, the unasked and unanswered questions are will it work at Microsoft? Breaking down silos isn’t as easy as you may think, and according to those who seem to know there are a lot of silos inside of Microsoft.

People have vested interests in the current way things are working and will not willingly go along with the new announced structure. Expect some protracted infighting before people come around to accepting the newly defined structure. This will take time and will have a cost not just in money, but drops in customer service, and the lost of some customers.

Cultural Entrenchment:

This is the first cousin to organizational entrenchment. People have a vested interest in keeping things they way they are. They’ve figured out how to navigate the internal bureaucratic maze that develops in organizations the size of Microsoft. Internally they’ve figured out how to get things done not to mention who the real power players are inside the organization. According to one account I read as crazy as Microsoft’s internal structure is, it apparently has internal support among employees and don’t want to see it change. The reason, they know how work it to their advantage. So with this newly announced change, they have concerns about how this will upset their personal apple cart.

Talent Loss:

Ballmer has stated there will be no layoffs. That’s questionable. With this type of change, something will have to give from an employee standpoint. What Ballmer has set in motion will reverberate throughout the organization with not everyone being happy and will result in an exodus of talent. How large the exodus will be is speculative at this point, but with any organizational change of this type, there are always winners and losers.

Apparently, the market was more responsive to the announcement of Steve Ballmer retirement than his organizational change. Microsoft watchers are in two camps, those who feel it was overdue others who believe it will just lead to mass confusion and make a mess of everything. It’s like the end of the parade at Disneyworld when the elephants come marching down Main Street, followed by the crew that have to clean up the mess the elephants make.

Whoever, gets to be the new CEO at the end of Ballmer’s term I hope he has a big brush and plenty of water.

© Timothy A. Wilson 2013. All Rights Reserved

The Elephants Are Dancing At Dell

The elephants are getting ready to dance at Dell. You see when elephants dance in the corporate setting, a great deal of damage is the result.

Michael Dell is trying to take his company private and Carl Icahn is trying to take it over and replace the current board and move Dell out. This dance will affect employees and customers and if Icahn wins, Dell may go the way of Digital Equipment Corporation, Data General, Gateway and Compaq.

The first two companies I cited (Digital & Data General) had their founders pushed out and replaced. A similar fate seems to be on the horizon for Michael Dell. In the case of Digital and Data General, the boards of both of these companies ousted their founders.

When elephants dance, they pay little attention to their surroundings after all they’re the biggest thing in the room and care less about the damage their dance will create. This type of dance is about who will control the company not about the impact it will have on the employees. The other elephants who are concerned are the major stockholders and they don’t much care as they win regardless of who ends up the leader.

The fallout from this dance first will be subtle then like the ripples from a stone dropped in a still pond they will have a long lasting impact throughout the company. It will start with some key people quietly living to the more expansive company wide downsizing.

As Michael Dell fights to keep his company, Carl Icahn is fighting as hard to take it away from him. Dell employees are trying to stay focus but in the pit of their stomachs, they’re very concerned about how this dance will end. No doubt, management is telling them to focus on what they do best, but the focus on the customer will rapidly drop as employees will focused internally concerned about their future with Dell.

This is an expensive dance happening inside the boardroom at Dell. There will certainly be winners and losers. Dell’s stockholders will win regardless if Dell goes private or taken over by Icahn.

Two groups will lose. First, the employees as they will have to contend with the constant set of changes that will result in from going private or a takeover by Icahn. If the company goes private, Michael Dell will have to make changes to differentiate itself in the commodity PC market. On the other hand, if Icahn wins whole scale management changes will cascade throughout the organization. Second, customers will be on the receiving end of employee’s dissatisfaction with the internal workings of Dell. This may range from antipathy, to incompetence to Dell going the way of Digital, Data General, Gateway and Compaq the results of elephants dancing.

© Timothy A. Wilson 2013. All Rights Reserved

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