Seven Evolving Leadership Qualities for the Twenty-First Century
Lots of companies are undergoing turnarounds right now. Clearly, it is a difficult time in a tech market in transition. HP, BlackBerry, BMC, AMD and Yahoo are all in different phases of a turnaround. The sharpest contrast is between AMD and Yahoo. AMD appears to be methodically executing against a defined strategy in order to accomplish an articulated goal. Yahoo appears to be doing a lot of stuff and it is incredibly difficult to explain either the destination or progress.
I wrote recently about how to select the key executives for a turnaround and then how to determine what needed to be fixed. Now let’s look at execution, using AMD and Yahoo as examples. Much of the difference is that Yahoo started as a far bigger mess then AMD, and part of the difference is because the executive selection process was far better executed at AMD than it was at Yahoo. We’ll touch on both of those, but I’m going to spend most of my time on execution.
AMD vs. Yahoo: Contrasting Foundations
AMD was a relatively simple company; it wasn’t badly managed, it simply wasn’t able to compete against a far stronger Intel. It had made a series of critical mistakes, and when the emergence of ARM hurt Intel, AMD, being subordinate to Intel, got hit as well. Yahoo simply lost its way; it seemed to lose track of what business it was in. As a result, while it should have become Facebook, Facebook emerged and removed that opportunity. Yahoo chased search for a while but couldn’t compete with Google, and then basically sold its search business to Microsoft. As a foundation, at least AMD knew what market it was in. Yahoo’s turnaround team needed to first define that.
In AMD’s team selection, Rory Read was chosen from the PC industry; he had participated in the successful turnaround of what was the IBM PC company, under Lenovo. He came in understanding both the market AMD was in and how to execute a turnaround. At Yahoo, Marissa Mayer had helped build Google but she had never done a turnaround. When she joined the company, not only was it unclear what market Yahoo was in, the company was no longer really a competitor for Google, suggesting that it would likely emerge in a different segment from Google (where Mayer came from). Granted, Mayer was closer than Carol Bartz, her predecessor, who came from the packaged software market, but her skills weren’t as closely aligned. To be fair, until Yahoo was better defined, it would be nearly impossible to determine what skills were actually needed.
Read largely handpicked a set of executives that he knew from IBM and built a team loyal to himself. Mayer seemed to struggle with team selection, largely because she didn’t seem to want to present a strategy first and thus had no more ability to refine her choices than the folks who selected her did.
AMD vs. Yahoo: Execution
So AMD started with a much stronger foundation and Rory Read early on articulated a strategy that would take AMD out from underneath Intel, fixing the first problem, and embrace ARM, also addressing the second. It then bought SeaMicro as part of the focused execution of that strategy and has presented a cadence in its analyst meetings of articulating milestones toward the turnaround goal and then showcasing each milestone as it is met. Its strategy is based on the belief that the battle between Intel and ARM will continue and that there is a position for a company that can act as a bridge between the two, especially on servers. While there is always risk in moving differently from a market, as an underdog without the resources to outspend the leaders, the only way you can emerge as a power is by carving your own path. Following doesn’t work if the folks you are following can out-resource you.
Mayer had two major problems: She started without clarity with regard to what business Yahoo should be in and then she didn’t correct that problem. As a female CEO, she also started with an inordinate amount of celebrity and, as Carly Fiorina found when she tried to turn around HP, celebrity can become a significant distraction and make it seem like you are making progress when you aren’t. The end result is that Yahoo’s direction isn’t as well defined, and her executive selection seems less focused (her recent acquisition of the ex-news lead Katie Couric, who is currently being pilloried by Yahoo News, appears ill advised). Because Yahoo hasn’t articulated a strategic framework, its acquisition of SkyPhase, a natural language company, looks either like it is trying to chase Google again, or is desperate to appear relevant. These moves could be strategic, but because Mayer hasn’t articulated a clean strategy, they appear foolish or desperate. And both labels may be accurate.
Wrapping Up: Have a Plan and Execute
Plan and execute: This would seem to be Business 101. First, you have to know where you are going, then you execute against this plan with staffing, acquisitions, restructuring and/or ecosystem changes. However, a common mistake, so common that it is actually taught in early competitive analysis courses, is to move to execution before the direction is determined. I think this is what makes the difference between Mayer’s execution at Yahoo and Read’s execution at AMD. Read started with a plan, while Mayer jumped in and started making changes. As a result, AMD appears to be making good progress, partially because we can see where it is going. Yahoo seems be furiously running in place. There is a famous quote by coach Yogi Berra: “If you don’t know where you are going, you probably won’t get there.” Something to remember when you are executing a turnaround.
