Inside Microsoft CEO Satya Nadella’s AI revolution

Microsoft CEO Satya Nadella views AI as an existential threat, a once-in-a-generation opportunity, and a chance to cement his legacy at the top of the tech industry.

The mission is both personal and professional for the Nadella, who is pushing the company to rethink how it operates at every level. That's according to internal Microsoft documents obtained by Business Insider, and interviews with leaders, managers, and other employees at the software giant.

Sweeping organizational shifts include high-profile executive changes and mandates for teams to work faster and leaner — all designed to consolidate power around AI leaders and radically reshape how the company builds and funds its products.

"Satya is pushing on intensity and urgency," one Microsoft executive told Business Insider. That's putting pressure on some Microsoft veterans to decide whether they want to stay and commit to the mountain of work it's going to take to complete Nadella's AI revolution.

"You've gotta be asking yourself how much longer you want to do this," this executive added.

Nadella is having conversations with executives to sign on for the transformation, or leave, people familiar with the matter said. Many of these people asked not to be identified discussing sensitive matters, although one top executive spoke openly with Business Insider about the CEO's overhaul and Microsoft's AI future.

Nadella's new technical focus

Nadella this year appointed a new CEO of Microsoft's commercial business to free up time to focus on the technical work necessary for his AI ambitions.

According to an internal memo, Nadella also started a weekly AI accelerator meeting and corresponding Teams channel to speed the pace of AI work and get more ideas from across the company.

Executives do not present in these new meetings. Instead, lower-level technical employees are encouraged to speak and share what they're seeing from the AI trenches. This is designed to avoid top-down AI leadership, and is intentionally a bit messy and chaotic, according to people familiar with the new approach.

Other major executive changes are looming. Three Microsoft executives told Business Insider that longtime Office and Windows boss Rajesh Jha has been mulling retirement. Insiders are also chattering about the possibility that Charlie Bell, who runs Microsoft cybersecurity, could retire.

Microsoft's spokesman Frank Shaw said the company does not expect any changes in the short term to its senior leadership team, of which Bell and Jha are both members.

Althoff's rise

Microsoft recently promoted Judson Althoff, its longtime sales chief, to an expanded role as CEO of the company's commercial business.

Althoff's promotion is intended to give Nadella and the company's engineering leaders more time to focus on AI, according to an internal memo viewed by Business Insider, which described this moment as "a tectonic AI platform shift."

Nadella has shifted to saying the company is in the "middle innings" rather than the "early innings" of AI, a cricket term, and started saying he wants to see the game through, one of the people said.

"This will also allow our engineering leaders and me to be laser focused on our highest ambition technical work — across our datacenter buildout, systems architecture, AI science, and product innovation — to lead with intensity and pace in this generational platform shift," Nadella wrote.

Practically, that's meant Althoff is spending more time as the face of Microsoft at events such as the recent Ignite conference, the first one in Nadella's tenure when the company CEO didn't deliver the keynote.

One executive told Business Insider the move seems to be paying off so far by giving Nadella "extra bandwidth to really lead the company in learning, leveraging, and building AI."

"Satya is 100% engaged with leading the company to learn and embrace AI," this person said. "The Judson move was brilliant. It actually allows Satya more time to advance the company in its AI journey. Satya spends a good amount of time in meetings you could characterize as AI learning, product, and engineering."

New marching orders

Nadella recently announced new marching orders for executives in another Teams channel, this one exclusively for Microsoft corporate vice presidents and above. The CEO said the company is at a turning point at least as significant as the shift to cloud computing and needs to completely rethink its business model.

"We all have to work and act like ICs in our own orgs, constantly learning and unlearning," Nadella wrote, referring to Individual Contributors, someone who is focused on technical work rather than managing people.

"I chuckle a bit each time someone sends me a note about talking to a friend at an AI start-up, about how differently they're working, how agile, focused, fast they are," the CEO added. "The reality is that this work is also happening right here at Microsoft under our noses! It's our jobs as leaders to seek this out, empower it, cultivate it, and learn from our own early in career talent who are reinventing the new production function!!"

Production function, explained

Asha Sharma, Microsoft CoreAI product president, who joined in 2024, said the company has shifted its operations dramatically in her short tenure. Nadella's new "production function" is about using AI to radically change how the company creates, builds, and delivers products and services.

When she joined, the AI industry would crank out a big new foundation model roughly every six months. Then, releases happened every six weeks. Today, AI is changing so quickly that it's forcing Microsoft to rethink not just its products but the entire way software is made, Sharma said in an interview arranged by the company.

For decades, software development has worked like an assembly line. You take a set of inputs — people, time, resources — and transform them into output. Scaling production required scaling those inputs.

"AI breaks that relationship," she said.

AI agents, data, and intelligence now act as a new type of scalable unit that can generate software, insights, and decisions without a corresponding increase in engineering hours or budget. That means the marginal cost of creating something new drops dramatically, Sharma explained, and teams can now spend more on "judgment, taste, and problem-solving."

Leadership evolution

With so much changing, it's natural that leadership evolves — and Microsoft insiders expect more changes at the top.

Jha, a veteran executive who oversees famous Microsoft products such as Office and Windows, has been mulling retirement, according to three executives who spoke to Business Insider.

Still, one of these executives noted that Jha has a newfound excitement about the company's AI potential, so he could stick around for Nadella's new intense era.

If Jha leaves, LinkedIn CEO Ryan Roslansky might succeed him, these executives said. Roslansky has been running LinkedIn since 2020 and Microsoft recently expanded Roslansky's role to include Outlook, Word, Excel, PowerPoint, and the Microsoft 365 Copilot application, according to an internal announcement from Nadella in June.

Roslansky started reporting to Jha for his new duties as executive vice president of Office, and to Nadella in his capacity as LinkedIn CEO, according to organizational charts viewed by Business Insider.

Charles Lamanna, president of the business and industry Copilot group responsible for building AI tools like low-code applications, also moved to report to Jha at the time, and is taking on a bigger profile within the company, 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.