Microsoft CEO Satya Nadella is leading a sweeping transformation of the company, driven by an ambitious vision to position Microsoft at the forefront of the AI revolution. According to internal documents and interviews with current and former employees, Nadella views artificial intelligence not just as a technological shift, but as a defining moment for the company’s future—comparable in scale to the move to cloud computing. At the heart of this transformation is a cultural and structural overhaul. Nadella is pushing for greater intensity, speed, and agility across the organization, encouraging teams to work faster and leaner. This has created pressure on long-time Microsoft leaders, many of whom are being asked to either commit fully to the AI mission or consider leaving. “You’ve gotta be asking yourself how much longer you want to do this,” one executive said, highlighting the personal and professional stakes involved. To focus on technical execution, Nadella has restructured leadership. He appointed Judson Althoff, the longtime head of Microsoft’s commercial business, to a broader role, freeing up Nadella’s time to concentrate on AI strategy and engineering. Althoff has since taken on a more visible role, including delivering the keynote at the recent Ignite conference—the first in Nadella’s tenure where the CEO did not speak. This shift is seen as a strategic move to allow Nadella to dive deeper into AI development, including datacenter expansion, systems architecture, and product innovation. Nadella has also launched a weekly AI accelerator meeting and a dedicated Teams channel, where lower-level technical employees are encouraged to share insights and ideas directly. The format is intentionally unstructured and dynamic, designed to bypass traditional hierarchies and tap into grassroots innovation. “This is about avoiding top-down leadership and letting the work emerge from the trenches,” one insider said. The company is also redefining how it creates value. Asha Sharma, president of Microsoft’s Core AI product group, described a new “production function” where AI agents, data, and intelligence act as scalable units that dramatically reduce the cost of software development. Unlike the traditional assembly-line model, where output depends on increasing human hours and resources, AI enables teams to generate more with less. This allows engineers to focus on higher-level tasks like judgment, creativity, and problem-solving. Leadership changes are expected to follow. Rajesh Jha, who has led Office and Windows for years, is reportedly considering retirement, though he has shown renewed enthusiasm for AI. If he departs, LinkedIn CEO Ryan Roslansky is seen as a likely successor, especially after being given expanded responsibilities over Microsoft 365 and Copilot tools. Charles Lamanna, who leads the business and industry Copilot group, has also taken on a more prominent role. Nadella’s message to executives is clear: the company must act like individual contributors—constantly learning, adapting, and unlearning. “The reality is that this work is happening right here at Microsoft,” he wrote in a Teams message. “It’s our job as leaders to seek it out, empower it, and learn from our early-career talent who are reinventing the new production function.” With AI now at the center of Microsoft’s strategy, the company is not just adapting to change—it is trying to lead it.