Microsoft just had its worst stock quarter since the 2008 crash. Now CEO Satya Nadella is blowing up the org chart that got it there.
Nadella quietly retired Microsoft's Senior Leadership Team. The SLT was the group that ran the 220,000-person company for decades. He built a new inner circle focused on AI, per a Business Insider report this week.
The SLT was Microsoft's old top team. The small group signed off on the biggest moves. Nadella replaced it with a smaller core team plus a 35-person engineering group that runs the actual product work.
The new setup looks like Amazon's "S-team." That's the small group CEO Andy Jassy uses to push faster picks across his company. Nadella now reviews AI numbers every week. Most CEOs at his scale don't touch that kind of work.
There's also a new Copilot team built for Microsoft's AI helper. Copilot is the product Nadella has bet the next decade of the company on.
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Rising names in the new team include Charles Lamanna, Jacob Andreou (a Snap vet), Ryan Roslansky (LinkedIn's CEO), and longtime Microsoft engineer Arun Ulag. Mustafa Suleyman, the DeepMind co-founder Microsoft hired in 2024, now runs the firm's superintelligence team.
A wave of old-guard staff is leaving at the same time. Rajesh Jha, one of Microsoft's most key product leaders for years, is set to retire when the fiscal year ends. Yusuf Mehdi, the consumer chief who has been at the firm for 35 years, just said he's stepping down.
Charlie Bell, the former AWS architect who joined Microsoft in 2021, was moved to a smaller role. Phil Spencer was replaced as head of Microsoft Gaming by Asha Sharma earlier this year. Nadella backed the move himself.
Kevin Scott, the chief technology officer, is staying put.
Nadella has called Microsoft's size "a massive disadvantage" in the AI race. That's why he's cutting out a whole top layer just to move faster. The hard part is whether the new setup actually ships better products.
Microsoft stock (ticker: MSFT) needs the bet to pay off after a rough start to 2026. Investors are watching every Copilot launch for proof the reset is working.
The wider context matters too. Google and OpenAI both moved faster on AI products last year. Microsoft was the first big tech firm to back OpenAI back in 2019. Some of that early lead has slipped.
The flatter org chart could help close the gap. Or it could just be a fresh coat of paint on the same bloated firm. The next year of Copilot updates will tell.
There is also a simpler way to read the move. Big firms tend to slow down as they grow. Cutting layers can help. The cost is that some good people leave too. Microsoft has lost a few top names this spring.
A few key engineers can shift the speed of a product team in a way an org chart can't show. That risk is real, and it shows up in the next round of product launches.
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