Satya Nadella has overhauled Microsoft’s senior leadership this year with a raft of changes intended to keep the 50-year-old software giant ahead in the artificial intelligence race after it restructured its relationship with OpenAI.
The Microsoft chief has made big hires such as former Meta engineering boss Jay Parikh, and elevated senior executives including commercial head Judson Althoff and Ryan Roslansky, chief executive of LinkedIn, which Microsoft owns.
Nadella is responding to greater competition from rivals in the AI market and seeking to speed up progress on building Microsoft’s own AI models, and enhancing its coding tools and applications, according to more than half a dozen current and former Microsoft executives.
“Satya is in ‘founder mode’,” said Dee Templeton, deputy chief technology officer at Microsoft, referring to the hands-on leadership style coined by Paul Graham, an influential Silicon Valley investor.
People close to Nadella say he is also focused on the increasing competition from Amazon and Google — both once seen as AI laggards — which are making sharp progress in infrastructure and model development.
Microsoft gained an early advantage in AI through its $14bn bet on OpenAI, which gave the software group unique access to the ChatGPT maker’s technology and first claim on its data centre contracts.
But after restructuring its partnership with Sam Altman’s start-up in October, Microsoft has dropped exclusivity over its data centre needs and will lose exclusive access to its research and models in the early 2030s.
Microsoft 365’s AI assistant Copilot surpassed 150mn monthly active users, the company disclosed to investors in October. But this remains short of the about 650mn users reported by Google for its Gemini chatbot and the 800mn by OpenAI for ChatGPT.
At the same time, start-ups such as Anthropic, Anysphere and Replit are eating into Microsoft’s market share for AI coding tools.
To respond to these pressures, Nadella has shaken up the company’s leadership and his own management approach.
He has instituted a weekly meeting that brings together employees to discuss some of these competitive pressures. The sessions reflect an effort by the Microsoft chief to meet individuals outside his executive team and encounter new ideas and talent, according to people familiar with the matter.
“Satya is trying to demonstrate a sense of urgency,” said one Microsoft executive. “The goal is to get out of some of the structures that exist and make the route to him easier.”
Templeton, who leads these meetings, said the aim was to encourage collaboration between teams to get the $3.5tn group moving at a more “rapid pace” than usual — and cut through its layers of management.
Nadella has also spent more time meeting start-ups, including Applied Compute — a company developing bespoke AI “agents” to perform various tasks autonomously, founded by former OpenAI researchers — as well as hiring platform Mercor to better understand what businesses want from AI tools.
His leadership reshuffle has handed big jobs to outsiders, and ruffled some feathers inside Microsoft.
Parikh, who led engineering at Meta until 2021, has been put in charge of Microsoft’s new CoreAI unit, overseeing the company’s tools for software developers.
His appointment builds on last year’s recruitment of Mustafa Suleyman to lead Microsoft AI, the company’s internal effort to build leading AI models.
The Google DeepMind co-founder has been given an independent budget and allowed to offer his own pay scale to compete in the fierce battle for AI talent, according to two people familiar with the matter.
“Satya is determined to support new recruits against Microsoft’s own culture,” said one Microsoft executive. “There is some jealousy internally. People are making more money in his unit, but that is a risk worth taking.”
Microsoft said: “All of our senior leaders have equal ability to recruit talent and manage their teams in a way that works successfully for their business and their people alike.”
Soma Somasegar, managing director at Madrona, a venture capital firm, said Nadella’s changes to his senior leadership would help cut “red tape” as Microsoft bolsters its own AI strategy separate from its OpenAI investment.
“He wants to keep experimenting and see what’s going to deliver,” Somasegar said.
Following recent changes, Nadella has 16 direct reports, broadly in line with previous years due to the consolidation of roles including for sales and marketing.
Althoff, Microsoft’s commercial chief, now leads marketing, sales, support and operations, which includes setting priorities for its engineering teams to match customer needs.
LinkedIn chief Roslansky has an expanded remit, including the company’s Office software suite.
The changes are also partly intended to test succession plans for some senior executives, according to two people familiar with the matter.
Current and former executives point to the elevation of several young staff members including 37-year-olds Asha Sharma and Charles Lamanna, who each lead on different AI product categories, as examples of the company preparing younger talent for top jobs in the future.
Nadella has promoted Rolf Harms, a long-standing Microsoft strategist, to advise him on the economic impacts of AI and how these will affect the company’s spending and pricing strategy.
He has also elevated the company’s former HR chief Kathleen Hogan to lead a new team that will map out Microsoft’s future corporate strategy and structure.
Those close to Nadella insist that the changes are not a reflection of his desire to step down after 11 years in post. At 58, the same age his predecessor Steve Ballmer was when he left the role, he is expected to lead the company for several more years.
Charles Fitzgerald, a former Microsoft executive, said Nadella’s moves echo his approach after buying LinkedIn and GitHub, which he allowed to run largely autonomously.
“Satya is remarkably hands-on as a product guy . . . but he doesn’t write the code,” Fitzgerald said, noting that the Microsoft chief was interested in the details but did not get carried away micromanaging teams.
“He’s done a good job of making Microsoft more relevant than it was before AI. Now he’s maximising taking advantage of this opportunity,” he added.
Additional reporting by Stephen Morris in San Francisco
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