Why Microsoft’s Reorganization Is a Bad Idea
Apple is the exception that proves the rule; they are functionally organized, but that absolutely does not mean a functional organization is best. Understanding why almost all corporations are organized by divisions (and how Apple manages a functional organization) illustrates why I think Ballmer is making a grave mistake.
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In my (very-biased) opinion, I believe collaboration is fundamentally broken at Microsoft. It is all about politics, not great outcomes, and that is absolute death in a functional organization, which has nothing but collaboration to hold together cross-functional product teams. At least in a divisional model all of the relevant team members have a common product and a common boss, meaning everyone has no choice but to work together. Unless the employee review and compensation model is significantly changed, this, along with the lack of mission and clear accountability, will grind progress to a halt.
Update (2013-07-24): Ben Thompson posits an uncanny valley:
However, a company organized functionally that does not have the necessary cultural ingredients for true collaboration is actually in worse shape for having tried; the disagreements will turn into conflict, and the agreements made through groupthink will arguably be worse.
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http://emuneee.com/blog/2012/11/12/microsofts-org-chart/ has it right. Steve isn't asking people to stop seeing the other groups as their enemies (remove the guns), Steve's asking them to scooch together.
When people called for tossing out management, bad people aside, they really meant "toss out all the conflicts". Neither bad people nor conflicts are being addressed. People are just asked to be communal.
