CEO Satya Nadella last week gave what amounted to a public tongue-lashing to Microsoft's 127,000 employees, which was followed up by an analyst's report that the company plans to announce layoffs of up to 10% of that number at its quarterly earnings report July 22.
Many of the layoffs could come from the 25,000 new employees acquired when Microsoft bought Nokia's phone business in April, according to Rick Sherlund, an analyst for Nomura Securities as quoted by CNET.
That report came as the second blow to Microsoft employees after Nadella wrote a 3,100-word email to them and then posted it publicly on the Microsoft Web site.
While much of it was about product goals, the final section was dedicated to the corporate culture and what needs to change.
Here are 10 highlights:
- I'm looking to the engineering teams to build the experiences our customers love. I'm looking to the sales and marketing organizations to showcase our unique value propositions and drive customer usage first and foremost. [Implication: Engineering teams arent building experiences customers love and sales and marketing dont showcase value propositions and drive customer usage.]
- We will be more effective in predicting and understanding what our customers need and more nimble in adjusting to information we get from the market. [Implication: Microsoft hasnt done well predicting and understanding customer needs and has been slow to respond.]
- We will streamline the engineering process and reduce the amount of time and energy it takes to get things done. You can expect to have fewer processes but more focused and measurable outcomes. [Implication: The company has been lumbering, falling short of these goals and lacking in accountability.]
- Each engineering group will have Data and Applied Science resources that will focus on measurable outcomes for our products and predictive analysis of market trends, which will allow us to innovate more effectively. [Implication: There arent sufficient means to measure success or failure.]
- Software Engineering will evolve so that information can travel more quickly, with fewer breakpoints between the envisioning of a product or service and a quality delivery to customers. In making these changes we are getting closer to the customer and pushing more accountability throughout the organization. [Implication: Software engineering is bogged down and individuals dont have enough accountability.]
- Over the next six months you will see new investments in our workforce, such as enhanced training and development and more opportunities to test new ideas and incubate new projects. [Implication: Training, or the right sort of training, is lacking, as are opportunities to act on innovations.]
- We will change the process and mindset so you can more seamlessly move around the company to roles where you can have the most impact and personal growth. [Implication: Employees are stagnating.]
- We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes. [Implication: Information moves too slowly and is bogged down by bloated layers of hierarchy.]
- I am committed to making Microsoft the best place for smart, curious, ambitious people to do their best work. [Implication: Microsoft is not the best place for smart, curious, ambitious people to do their best work.]
- Finally, every team across Microsoft must find ways to simplify and move faster, more efficiently. [Implication: team activities are too complex, and move too slowly and inefficiently.]
Many of these initiatives point out organizational or process problems that are the fault of management, so the memo may galvanize workers in the trenches with hope that a burdensome system may finally get out of the way.
And many of these initiatives directly respond to criticisms of Microsoft that were aimed at Nadella's predecessor Steve Ballmer.
But publicly broadcasting this culture change in such detail gives the impression that Microsoft in general isn't doing its best work and that workers haven't been giving enough, which is probably not the best way to effect change.
This high-profile dressing down combined with the rumored layoffs will have workers at Microsoft walking on egg shells.
That may be just what Nadella wants.