He has made chunky hires, such as Meta's former engineering boss Jay Parikh, while boosting Microsoft's commercial chief, Judson Althoff, and LinkedIn's chief executive, Ryan Roslansky.
Nadella is reacting to fiercer competition and trying to accelerate Microsoft’s AI model work, plus improve coding tools and apps, according to more than half a dozen current and former executives.
People close to Nadella say he is watching Amazon and Google, once treated like AI laggards, as they sharpen up in infrastructure and model development.
Vole's early AI edge came from its $14bn bet on OpenAI, giving it standout access to ChatGPT tech and first claim on data centre contracts.
After restructuring the partnership with OpenAI chief executive Sam Altman’s start-up in October, Microsoft dropped exclusivity for data centre needs and expects to lose exclusive access to research and models in the early 2030s.
Microsoft 365’s AI assistant Copilot passed 150 million monthly active users, the company told investors in October, but it still trails Google’s Gemini at about 650 million and ChatGPT at 800 million.
Meanwhile, start-ups such as Anthropic, Anysphere and Replit are nibbling away at Microsoft’s hold on AI coding tools, because of course they are.
To deal with that pressure, Nadella has been tinkering with leadership and his management habits. He has set up a weekly meeting where staff discuss competitive threats, partly to meet people outside his usual exec bubble and sniff out ideas and talent.
One Microsoft executive told the Financial Times, “Satya is trying to demonstrate a sense of urgency. The goal is to get out of some of the structures that exist and make the route to him easier.”
Templeton, who runs the sessions, said the aim is to drive collaboration so the $3.5tn group moves at a more “rapid pace” than normal and slices through layers of management.
Nadella has been spending more time with start-ups, including Applied Compute, which is building bespoke AI “agents”, and he has been talking to hiring platform Mercor about what businesses want.
The reshuffle has given big jobs to outsiders, which has annoyed some insiders.
Parikh, who ran engineering at Meta until 2021, now leads Microsoft’s new CoreAI unit, in charge of developer tools.
That followed last year’s arrival of Microsoft AI head Mustafa Suleyman, the Google DeepMind co-founder, who was brought in to build Microsoft’s own top-tier AI models.
Two people familiar with the matter said Suleyman has an independent budget and can offer his own pay scale to win talent, because nothing says harmony like different pay bands.
One Volish executive said, “Satya is determined to support recruits against Microsoft’s own culture. There is some jealousy internally. People are making more money in his unit, but that is a risk worth taking.”
Madrona managing director Soma Somasegar said Nadella’s senior leadership moves would help cut “red tape” as Microsoft builds an AI strategy that is not just an OpenAI side quest.
Somasegar said, “He wants to keep experimenting and see what’s going to deliver.”
After the recent changes, Nadella has 16 direct reports, broadly in line with previous years, helped by consolidating roles, including sales and marketing.
Althoff now runs marketing, sales, support, and operations, which means setting engineering priorities so customer needs no longer get ignored.
Roslansky has a wider remit too, including Microsoft’s Office software suite, which is one of those jobs that quietly eats your weekends.
Two people familiar with the matter said the changes also test succession plans for senior execs, because nothing motivates like being measured in public.
Current and former executives point to rising younger leaders such as 37-year-olds Asha Sharma and Charles Lamanna, who lead different AI product areas.
Nadella has promoted long-time strategist Rolf Harms to advise on AI’s economic impact, and moved former HR chief Kathleen Hogan into a new team shaping Microsoft’s future corporate structure.
Those close to Nadella insist this is not about him stepping down after 11 years, even though he is 58, the same age former Microsoft chief executive Steve Ballmer was when he left.
Former Microsoft executive Charles Fitzgerald said Nadella’s moves echo how he handled LinkedIn and GitHub, letting them run with plenty of autonomy.
Fitzgerald said, “Satya is remarkably hands-on as a product guy... but he doesn’t write the code. He’s done a good job of making Microsoft more relevant than it was before AI. Now he’s maximising, taking advantage of this opportunity."