## Why Microsoft's Reorganization Is a Bad Idea ### Why Microsoft's Reorganization Is a Bad Idea  #### Metadata * Author: [[stratechery.com]] * Full Title: Why Microsoft's Reorganization Is a Bad Idea * Category: #articles * URL: <https://stratechery.com/2013/why-microsofts-reorganization-is-a-bad-idea/> #### Highlights * This model scales to a very high number of products. Consider General Electric, the classic example of a divisional company. It has twenty-five different businesses, ranging from finance to jet turbines. The competitive advantage of such companies is usually in their management acumen and capital reserves, and the preferred employee is a generalist, able to quickly master any job with a refined set of skills. * The flipside of motivation is accountability: the fact each product has its own P&L makes it very clear which division leaders are succeeding or failing. * Divisional organizations have clear career advancement opportunities for generalists I've already noted that divisional organizations favor generalists; generalists also tend to favor divisional organizations as there is a much clearer career path. You are able to move up not only within a specific function, but you can also move laterally amongst divisions, usually with a nice jump in responsibility. * If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review," said a former software developer. "It leads to employees focusing on competing with each other rather than competing with other companies." # Why Microsoft’s Reorganization Is a Bad Idea  ## Metadata - Author: [[stratechery.com]] - Full Title: Why Microsoft’s Reorganization Is a Bad Idea - Category: #articles - URL: https://stratechery.com/2013/why-microsofts-reorganization-is-a-bad-idea/ ## Highlights - This model scales to a very high number of products. Consider General Electric, the classic example of a divisional company. It has twenty-five different businesses, ranging from finance to jet turbines. The competitive advantage of such companies is usually in their management acumen and capital reserves, and the preferred employee is a generalist, able to quickly master any job with a refined set of skills. - The flipside of motivation is accountability: the fact each product has its own P&L makes it very clear which division leaders are succeeding or failing. - Divisional organizations have clear career advancement opportunities for generalists I’ve already noted that divisional organizations favor generalists; generalists also tend to favor divisional organizations as there is a much clearer career path. You are able to move up not only within a specific function, but you can also move laterally amongst divisions, usually with a nice jump in responsibility. - If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” said a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”