Microsoft’s AI reboot reshuffles Satya Nadella’s leadership team

CEO Satya Nadella has just dismantled the senior leadership structure that has run Microsoft for decades.

It’s the latest step in his plan to reboot Microsoft for the AI ​​era and transform the 220,000-employee giant into one that can compete with smaller, faster and more technologically sophisticated rivals.

Business Insider spoke to people who work closely with CEOs and looked at internal documents to determine who’s joining, who’s leaving, and how the company’s power structure is changing.

“We quietly retired the organization known as SLT,” said one of the people who works closely with Mr. Nadella. A commonly used acronym for senior leadership team, referring to powerful executives who run a vast business and report directly to the CEO. Instead, Nadella created a smaller, flatter team closer to the action.

This is a big deal for the company, as Jeff Bezos once described it as a “country club” for employees who are ready to continue their careers until retirement. To join the fierce AI race, Nadella joins other Big Tech companies working hard in the opposite direction.

“The pace of this platform transition is faster than anything we’ve seen in the past,” said a person close to the CEO, adding that Microsoft “cannot afford to slow down.”

Old model retired, new guard installed

Nadella studies startups because, as the CEO recently put it, Microsoft’s sheer size is a “huge disadvantage” in the age of AI.

What worked for Microsoft in the cloud era is no longer holding it back. The company’s stock suffered its worst quarter since the 2008 financial crisis, as it faces pressure from investors to demonstrate hundreds of cloud-era Microsoft capabilities. The billions invested in AI will pay off.

So Nadella has been trying to reboot AI for the past year. To do this, we had to make some major changes. First, he appointed a new CEO for Microsoft’s commercial business in October, giving him time to focus on technical work. In November, he appointed a new AI advisor to help reinvent the company’s business model for the AI ​​era.

All the while, a quiet campaign was underway within executives, as Business Insider reported in December. Mr. Nadella asked leaders to accept a heavy workload and a new, more demanding culture, or leave. Since then, several high-profile leadership changes have been announced.

One of the new teams replacing the traditional organization is corporate leadership, which will meet at least weekly and focus on company-wide corporate operations and governance, according to people close to Mr. Nadella. Nadella, Microsoft President Brad Smith, Chief Financial Officer Amy Hood, Chief Human Resources Officer Amy Coleman, and Commercial CEO Judson Althoff.

Nadella also currently operates an Engineering Leadership Group of approximately 35 engineering and product leaders. The structure is similar to the startup-style operating model he has publicly praised in recent months, in which engineers, researchers, product builders and designers work closely together rather than through a large management chain.

This is also reminiscent of changes occurring at other Big Tech companies. Amazon CEO Andy Jassy has expanded the company’s so-called S-Team senior leadership team to include lower-level employees closer to the business, including vice presidents, two levels below the CEO.

Mr. Nadella personally reviews the AI ​​metrics on a weekly basis, one of the people said.

Microsoft also has a new Copilot leadership team responsible for Microsoft’s AI assistant, consisting of Charles Lamanna, Jacob Andreou, and Ryan Roslansky. One of the people said the three meet weekly for a separate stand-up with Nadella. Ramanna, a longtime executive, oversees the Copilot platform. Andreou joined Microsoft just last year and focuses on user interfaces. Roslansky, who previously served as CEO of LinkedIn and currently leads much of Microsoft’s Office business, is in charge of the application.

A rising star on the engineering leadership team is Microsoft veteran Arun Ulag. Urag was promoted to EVP in April, expanding his role beyond running data analytics platform Fabric to a larger role in the company’s overall strategy. Mr. Ulag reports to cloud chief Scott Guthrie, but Mr. Nadella treats him like a direct report, one person said. Mr. Nadella also meets with the Azure cloud computing infrastructure leadership team every two weeks.

In another attempt to move closer to idea generation, Nadella has expanded the accelerator meetings he started last year. A person familiar with the meetings told Business Insider last year that these meetings leave executives on the back burner and allow rank-and-file employees to surface ideas and explain what they’re seeing from the field.

Along with Ramanna, Andreu and Roslansky, Pavan Davouri has also emerged as one of Nadella’s trusted operators. The 25-year Microsoft veteran, who worked on Microsoft’s original team responsible for the Surface hardware product line, has been leading the Windows and devices group since March.

Jason Schletzer, an associate professor at Georgetown University’s McDonough School of Business, told Business Insider that Microsoft needs to “improve the flow of information to get the right information to the right people at the right time” to beat more agile competitors.

“The rate of change, especially in technology, has created a need for situations where senior-level executives need to know exactly what’s going on at a very local level,” Schretzer said.

That’s a tall order. Asked if there are any large companies that have figured out how to do this particularly well, Schretzer said, “I can’t think of any among the 40 companies that I talk to on a daily basis.”

new era

As new leadership emerges, several influential brokers who have been with Microsoft for years are reducing their roles, shifting from a more focused role, or reducing their roles.

DeepMind co-founder and Microsoft CEO Mustafa Suleiman, whom Nadella hired in 2024 to head the company’s newly created AI division, now has a narrower role overseeing about 650 employees, according to an organizational chart seen by Business Insider. He remains close to Nadella and focuses on the company’s super intelligence group.

Kevin Scott, Microsoft’s chief technology officer and lead architect of the company’s AI vision, remains a close advisor to Nadella.

Yusuf Mehdi, who has worked at Microsoft for 35 years and has been the company’s chief commercial marketing officer since 2023, announced Thursday that he will be leaving the company until next year to transition into a role “helping reimagine Windows for the agent era,” according to a memo seen by Business Insider.

Rajesh Jha, long one of Microsoft’s most influential product leaders, will retire on July 1, the start of Microsoft’s next fiscal year.

Mr. Nadella wants to preserve the organization’s memory during the handover, according to people familiar with the transition. Some longtime leaders may remain in advisory or interim positions for six to 12 months after operational control is transferred, one of the people said. “Satya does not want to suddenly lose its institutional knowledge,” the person said.

Charlie Bell, widely considered one of the architects of Amazon Web Services and who joined Microsoft in 2021 to oversee a massive 10,000-person security organization, is now listed as just an “engineer” and has zero reports in a recent organizational chart seen by Business Insider. He was replaced by Haite Garrott, a former Microsoft executive who temporarily left the company for Google Cloud, who was appointed executive vice president of security earlier this year. In an internal memo announcing the changes, Nadella praised Garotto’s blend of engineering and customer-facing experience, saying she brings “an ethos that combines building products and delivering value for customers.” A person familiar with the changes said Mr. Garrott has “deep ties” to Microsoft customers and is close to Mr. Nadella.

Perhaps the most surprising personnel change is in the gaming industry.

In February, Microsoft named Asha Sharma as CEO of Microsoft Gaming, replacing longtime Xbox leader Phil Spencer. Sharma joined Microsoft’s Core AI group in 2024 after holding leadership roles at Instacart and Meta. The move surprised many employees, as Mr. Sharma had relatively limited experience in the gaming industry compared to other internal candidates.

People familiar with Nadella’s thinking said he personally mentors Sharma and sees her as a leader who can modernize Microsoft’s gaming business.

The decision also demonstrated Mr. Nadella’s desire to promote outsiders and new executives over longtime Microsoft veterans. Sarah Bond, another prominent gaming executive seen by some as a potential successor, resigned from her post after the announcement, but is now a “special advisor” to Sharma. An organizational chart viewed by Business Insider still listed Spencer as reporting to Nadella, but that transition had already occurred. One of the people involved said, “Asha is running around energetically.”

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