Nadella dismantled Microsoft’s decades-old leadership structure

Satya Nadella has effectively erased the leadership blueprint that governed Microsoft for decades, replacing it with a structure that mirrors the agility of a startup. The company “quietly retired what’s known as the SLT,” according to an insider close to the CEO. That senior leadership team, once a collection of powerful executives managing sprawling divisions and reporting directly to Nadella, no longer exists.

In its place, Nadella introduced three new operational groups. A corporate leadership group of five , Nadella, Brad Smith, Amy Hood, Amy Coleman, and Judson Althoff , now meets weekly for governance. An engineering leadership group, comprising roughly 35 product and engineering leaders, operates through tight coordination rather than traditional managerial hierarchies. A Copilot leadership team of three , Charles Lamanna, Jacob Andreou, and Ryan Roslansky , holds a separate weekly standup with Nadella.

Nadella also personally reviews AI metrics every week and meets with the Azure cloud infrastructure team every two weeks. This model reflects the startup-style operating philosophy he has openly championed. Engineers, researchers, and product builders now collaborate directly, compressing the managerial chains that defined Microsoft’s cloud-era structure.

“The pace of this platform shift is happening faster than anything we’ve seen,” one person close to the CEO said. “Microsoft can’t afford to be slow.” The company’s stock recently suffered its worst quarter since the 2008 financial crisis, as investors pressure Nadella to prove returns on hundreds of billions of dollars poured into AI.

Nadella has been closely studying startups because, as he recently acknowledged, Microsoft’s massive scale has become “a massive disadvantage” in the AI era. The restructuring follows a year-long push in which Nadella demanded leaders either embrace a more demanding culture or leave. Several high-profile departures followed.

The executive changes are sweeping. Rajesh Jha, a dominant product leader for years, retires on July 1. Yusuf Mehdi, a 35-year veteran and consumer CMO, is departing. Charlie Bell, widely regarded as an architect of AWS who joined Microsoft in 2021 to lead 10,000 security staff, now appears as an “engineer” with zero direct reports on internal org charts.

Mustafa Suleyman, the DeepMind co-founder Nadella hired in 2024 to lead a new AI division, now oversees roughly 650 employees in a narrower role. He remains close to Nadella and focuses on superintelligence. The AI division he was originally brought in to build has been absorbed into the broader engineering structure.

Perhaps the most unexpected move came in gaming. Asha Sharma replaced longtime Xbox chief Phil Spencer as CEO of Microsoft Gaming in February. Sharma joined Microsoft’s Core AI group in 2024 from Instacart and Meta, with limited gaming experience. Nadella had been privately mentoring her and believed she could modernize the business.

Rising stars include Arun Ulag, promoted to EVP in April. Though Ulag reports to cloud head Scott Guthrie, Nadella treats him as a direct report. Pavan Davuluri, a 25-year veteran who worked on the original Surface team, now leads Windows and devices. Hayete Gallot, who briefly left Microsoft for Google Cloud, returned to replace Bell as EVP of security.

Microsoft’s Trusted Technology Group, reported earlier this month, fits within this restructured landscape. Jenny Lay-Flurrie’s responsible AI work now reports into a flatter organization where engineering leads rather than follows.

The restructuring mirrors a broader trend across enterprise software. Salesforce lost 51% of its value as investors questioned whether legacy SaaS companies can compete in the AI era. Microsoft’s response is to strip away the management layers that made it slow and rebuild around small teams, weekly AI reviews, and engineers who report closer to the CEO.

Georgetown professor Jason Schloetzer noted that the velocity of technological change demands “senior-level executives to get their finger on the pulse of what’s going on at the very local levels.” When asked if any large company has mastered this approach, he replied: “I cannot think of a company in the four dozen I talk to on a routine basis.”

Nadella is attempting to transform a 220,000-person company into something that operates like a 35-person engineering team, with 220,000 employees backing it up. Whether that vision is achievable is the question Microsoft’s stock price will ultimately answer. The SLT is gone. The AI metrics are weekly. The old guard is retiring. The reboot is fully underway.