Microsoft CEO Satya Nadella is studying startup product development, admitting the tech giant’s size is a major AI disadvantage. He’s restructuring to flatten hierarchies and foster faster innovation, emphasizing a ‘learn-it-all’ mindset over past successes. Nadella warns AI projects fail without fundamental workflow redesign and data integration, highlighting the urgent need for reinvention.

Microsoft CEO Satya Nadella is spending his weekends studying how startups build products, revealing that his company’s massive size has become a critical weakness in the race to develop AI. Speaking on the “MD MEETS” podcast with Axel Springer CEO Mathias Döpfner, Nadella said he devoted an entire recent weekend to understanding how new companies create products with speed Microsoft can’t match. The reason is simple but damning: Microsoft’s scale is now “a massive disadvantage,” he admitted.At startups, product development teams work at a single table—scientists, engineers, and infrastructure specialists collaborating and iterating instantly. At Microsoft, Nadella manages three separate divisional heads overseeing those same functions, creating bureaucratic layers that slow decision-making to a crawl.

Why Microsoft and other Silicon Valley giants are flattening their hierarchies

Nadella’s weekend study sessions reflect an urgent shift across the tech industry. Meta, Google, and Amazon are all aggressively trimming middle management layers, viewing thick hierarchies as fatal obstacles to swift product development and AI experimentation.Microsoft has already begun restructuring internally. Leaked documents show Nadella now has 16 direct reports—handpicked executives tasked with dismantling organizational silos and accelerating the company’s AI transformation.

Nadella says key to stay Relevant in AI era is unlearning success

Beyond organizational fixes, Nadella argues the real challenge is mental. Leaders must abandon the “know-it-all” mindset that drove past success and adopt a “learn-it-all” approach instead. The hardest part, he said, is unlearning what made you successful to learn something new.The CEO warns that most corporate AI projects collapse because companies treat AI as a traditional IT upgrade. Success requires four fundamental shifts: redesigning workflows entirely, adopting modern AI tools, training employees properly, and extracting company data from legacy systems.To guide this transformation, Nadella has tapped Rolf Harms, who helped Microsoft navigate its cloud computing revolution 15 years ago with his influential “Economics of the Cloud” white paper, to now rethink the company’s business model for the AI era.Nadella’s weekend homework underscores a stark reality: even the most successful tech companies must fundamentally reinvent themselves or risk becoming irrelevan