Microsoft’s AI Reboot Reshapes Satya Nadella’s Leadership Team

CEO Satya Nadella 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-person behemoth into a company capable of competing with its smaller, faster, technically sophisticated rivals.

Business Insider spoke to people who work closely with the CEO and referenced internal documents to determine who’s in, who’s out, and how the company’s power structure is changing.

“We quietly retired what’s known as the SLT,” said one of the people who works closely with Nadella, referring to the commonly used acronym for senior leadership team — powerful executives who run sprawling businesses and report to the CEO. Instead, Nadella has created smaller and flatter teams closer to the action.

It’s a big deal inside a company that Jeff Bezos once said was a “country club” for employees who were ready to coast through their careers until retirement. To compete in the breakneck AI race, Nadella has joined the rest of Big Tech in going hard in the opposite direction.

“The pace of this platform shift is happening faster than anything we’ve seen,” one person close to the CEO said, adding that Microsoft “can’t afford” to be slow.

Ditching the old model and bringing in a new guard

Nadella has been studying startups because, as the CEO recently put it, Microsoft’s vast size has become “a massive disadvantage” in the AI era.

What worked for Microsoft in the cloud era will no longer cut it — its stock had its worst quarter since the 2008 financial crisis as it faces investor pressure to show that the hundreds of billions of dollars it invested in AI will pay off.

So, for the past year, Nadella has been attempting an AI reboot. To do this, he needed to make some big changes. First, he freed up his time to focus on technical work by appointing in October a new CEO of Microsoft’s commercial business. In November, he tapped a new AI advisor to help reinvent the company’s business model for the AI era.

All the while, a quiet campaign was happening within the executive ranks: Nadella asked leaders to sign on for a significant amount of work and a new, more demanding culture — or leave, as Business Insider reported in December. Several high-profile leadership changes have been announced since then.

One new team replacing the traditional structure, according to the people close to Nadella, is corporate leadership, which meets at least weekly and focuses on companywide corporate operations and governance: Nadella, Microsoft President Brad Smith, Chief Financial Officer Amy Hood, Chief People Officer Amy Coleman, and Commercial CEO Judson Althoff.

Nadella now also operates an engineering leadership group of roughly 35 engineering and product leaders. The structure resembles the startup-style operating model that he has publicly praised in recent months, in which engineers, researchers, product builders, and designers work in close coordination rather than through large managerial chains.

It’s also reminiscent of a shift happening at other Big Tech companies. Amazon CEO Andy Jassy has expanded the company’s so-called “S-team” senior leadership team and included lower-level employees closer to the work, such as vice presidents who are two layers removed from the CEO.

Nadella also personally reviews AI metrics every week, one person said.

Microsoft also has a new Copilot leadership team responsible for Microsoft’s AI assistant, made up of Charles Lamanna, Jacob Andreou, and Ryan Roslansky. The three meet weekly in a separate standup with Nadella, one person said. Longtime executive Lamanna oversees the Copilot platform. Andreou, who joined Microsoft only last year, is focused on the user interface. Roslansky, previously the CEO of LinkedIn and now running large parts of Microsoft’s Office business, is in charge of applications.

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

In another attempt to get closer to idea generation, Nadella has also expanded the accelerator meetings he started last year. At those meetings where executives take a backseat, and rank-and-file workers surface ideas and explain what they’re seeing from the trenches, as people familiar with the meetings told Business Insider last year.

Along with Lamanna, Andreou, and Roslansky, Pavan Davuluri is also emerging as one of Nadella’s trusted operators. The 25-year Microsoft veteran who worked on Microsoft’s original team responsible for its line of Surface hardware products has led the group responsible for Windows and devices since March.

Jason Schloetzer, an associate professor at the McDonough School of Business at Georgetown University, told Business Insider that Microsoft’s need to beat more agile competitors requires “improving information flows to where the right people get the right info at the right time.”

“The velocity of change in technology in particular is necessitating a situation where senior-level executives need to get their finger on the pulse of what’s going on at the very local levels,” Schloetzer said.

It’s a tall order. Asked if there’s a large company that has figured out how to do this particularly well, Schloetzer said, “I cannot think of a company in the four dozen I talk to on a routine basis.”

A new era

As new leaders rise, several longtime Microsoft power brokers have transitioned out of or into reduced or focused roles.

An organizational chart viewed by Business Insider showed that DeepMind cofounder and Microsoft CEO Mustafa Suleyman, whom Nadella hired in 2024 to lead a newly created AI division, now has a narrower role and oversees roughly 650 employees. He’s still close to Nadella and is focused on the company’s superintelligence group.

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

Yusuf Mehdi, a 35-year Microsoft veteran who has been its commercial chief marketing officer since 2023, on Thursday announced he’s leaving the company after transitioning to a role where he will “help reimagine Windows for the agentic era” through the next fiscal year, according to a memo viewed by Business Insider.

Rajesh Jha, one of Microsoft’s most influential product leaders for years, is set to retire when Microsoft’s next fiscal year begins on July 1.

People familiar with the transition said Nadella wants to preserve organizational memory during the handoff. Some longtime leaders may remain in advisory or transitional capacities for six to 12 months after operational control shifts, one of the people said. “Satya does not want to abruptly lose that institutional knowledge,” the person said.

Charlie Bell, who was widely considered one of the architects of Amazon Web Services and joined Microsoft in 2021 to oversee a massive security organization of 10,000, is now listed as simply “engineer” with zero reports on a recent organizational chart viewed by Business Insider. He was replaced as executive vice president of security earlier this year by Hayete Gallot, a former Microsoft executive who had briefly left for Google Cloud. In an internal memo announcing the change, Nadella praised Gallot’s blend of engineering and customer-facing experience, saying she brought “an ethos that combines product building with value realization for customers.” One person familiar with the changes said Gallot has a “deep connection” with Microsoft customers and is in Nadella’s inner circle.

Perhaps the most surprising personnel move came in gaming.

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

People familiar with Nadella’s thinking said he had been mentoring Sharma privately and viewed her as a leader capable of modernizing Microsoft’s gaming business.

The decision also signaled Nadella’s willingness to elevate outsiders and newer executives over long-tenured Microsoft veterans. Sarah Bond, another prominent gaming executive viewed by some as a possible successor, left the role after the announcement but is now a “special advisor” to Sharma. Spencer was still listed as reporting to Nadella in the organization chart Business Insider viewed, but that transition has already happened. “Asha is off and running,” one of the people said.

Have a tip? Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a nonwork device; here’s our guide to sharing information securely.