The challenge of top-down change and the Microsoft layoffs
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About this newsletter
What makes this newsletter unique is that every two weeks, I share a chapter from my book It Depends: Writing on Technology Leadership 2012-2022, which Unit Circle Press released in March of last year. These chapters are not sequential; each is a standalone piece. In addition, a podcast serializes the audiobook in order, released alternate weeks from this newsletter.
I’m speaking in Seattle this week
Family health issues have forced me to cancel my conference talk travel this spring, but I will speak in Seattle on Wednesday for the Engineering Leadership Council Meetup hosted by Airbnb. Information and registration is available here.
The Latest Podcast
The latest episode of the podcast is titled “Building a technical career path at Spotify.” In it, I discuss why and how we build a career pathing framework at Spotify. I share some key insights I learned from the process: Your career framework directly reinforces (or undermines) your company values, and timing matters: too early stifles growth, and too late creates frustration.
If you're building a tech team that needs to scale while preserving culture, this episode offers practical lessons from our journey at Spotify. I shared the chapter almost a year ago in this newsletter.
You can download the episode from Apple Podcasts, Spotify, YouTube, directly via the RSS Feed, or wherever you listen to podcasts (see pod.link for a more extensive list).
About this week’s chapter
The events described in this chapter show their age since they happened over eleven years ago. However, I included this article in the book because I thought the particular message was still timely. I believe this is even more the case in 2025. Companies all over the technology industry are trying to radically change their cultures from the top down, whether it is “Founder Mode”, flattening hierarchies, or eliminating diversity programs, companies are trying to force a lot of top-down culture changes these days. If they learned their lessons from previous waves of unsuccessful culture changes, or they are just using these culture changes as an excuse to downsize, this time there is a lot more layoffs associated with these efforts. Given how heavy-handed some of these culture change efforts are, it will be interesting to see if they are more effective than those I describe here.
This chapter was shared on the podcast in February of 2024.
This is chapter 2 of It Depends.
The challenge of top-down change and the Microsoft layoffs
Originally published on July 18, 2014
In my talks on engineering culture, I often discuss how to improve an existing culture or fix a broken one. I advocate for a bottom-up approach for large organizations to create actual culture change.
I have a few reasons for this:
Individual contributors or first-level managers are frequently my primary audience. I want to give them tools they can use to affect change in their larger organizations.
Bottom-up change takes longer, but it is more likely to be genuinely transformative. Moreover, because the whole organization invests (eventually), it has a better chance of long-term success.
In a large organization, when a cultural change (or any kind of disruptive change) is pushed from senior leadership down, it tends to fail because the middle managers have usually attained their position by being successful in the old culture. This success bias makes them less likely to embrace change and more likely to only go through the motions while actively managing up to make it seem like they are participating.
Almost every time I advocate this bottom-up approach, I get a question asking if top-down change can also be effective. Sometimes this comes from a senior executive looking to lead change in the organization.
When Steve Ballmer was trying to turn Microsoft’s culture from competitive to cooperative with his “One Microsoft” plan, I would claim that the chance of it succeeding was nearly zero for the third reason I mentioned above. Having worked at Microsoft in the 90s and early 2000s, I know the culture through which many of the then-Microsoft executives and middle management rose. Microsoft spent decades building a highly competitive culture. A restructure and top-down initiatives to encourage collaboration were unlikely to reverse decades of competition.
I pointed to the approach Marissa Meyer took at Yahoo as having a better chance of success. Yahoo was implementing new review policies that seemed harsh to many in the company. These new review policies arrived with “silent layoffs,” a significant effort to eliminate people in the company who were uninterested in the new culture. While this seemed unreasonably severe, it made a clear point: this was the new culture, and there was no tolerance for the old way of working.
In the memo that Satya Nadella sent to Microsoft on July 18, 2014, outlining the layoffs that he was undertaking, one section caught my eye:
In addition, we plan to have fewer layers of management, both top-down and sideways, to accelerate the flow of information and decision-making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams.
This strategy differed sharply from Steve Ballmer’s approach to culture change. Coupled with the largest layoff in the company’s history was a clear message that a central target was the company’s management. Moreover, the layoff served to underline the seriousness of the change. Flattening hierarchies and removing managers would eliminate or weaken those most likely to fight the cultural shift.
I think this has a much better chance for success than the One Microsoft approach, but it is still not guaranteed. Changing how 100,000 people approach their jobs is an hugely difficult task, after all.
The “house cleaning” approach may be a successful tactic in affecting cultural change in a large organization, but it is also perilous. The morale implications are significant. It would be most effective in a “do or die” situation where drastic action is necessary to save the company.
There is an argument that Yahoo was in this position when Marissa Meyer joined the company. From the folks I know at Yahoo, the aftermath of the shakeup produced a feeling of confidence and hope for the future.
Microsoft is not in a dire situation. While many in the industry and the press see the company sliding into irrelevancy, it is still amazingly profitable. This radical restructuring combined with layoffs may be greeted with significantly less enthusiasm from the employees. Satya Nadella may be taking advantage of his honeymoon period here, and that may be the thing that saves this.
I will continue to follow the progress of both leaders and companies as they try to evolve. It will be fascinating and instructive.
I hope they are successful for the Microsoft and Yahoo employees’ sake.
Update
The changes at Yahoo were not enough to save the company’s position in the industry, and Marissa Meyer is no longer the CEO.
My friends at Microsoft tell me that the company culture has changed significantly from the Gates/Ballmer era under Satya Nadella.
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