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Book Summary of Nicholas Carlson’s ‘Marissa Mayer and the Fight to Save Yahoo!’

January 10, 2017 By Nagesh Belludi Leave a Comment

Over the holidays, I finished reading journalist Nicholas Carlson’s Marissa Mayer and the Fight to Save Yahoo! This interesting book offers an account of Yahoo’s steady slide towards irrelevance and Marissa Mayer’s early tenure as CEO.

“Complex Monstrosity Built Without a Plan”

Carlson devotes the first third of the book to explaining Yahoo’s beleaguered history and how years of mismanagement and strategy negligence got Yahoo into the mess that Mayer inherited as CEO in 2012.

The second third is about Mayer and her brilliant career as employee number twenty at Google. In 2010, her career allegedly stalled because Mayer got sidelined after conflicts with other luminaries within Google. Relying broadly on anonymous sources, Carlson portrays Mayer’s intense nature and her personality contradictions: in public settings, Mayer is brainy, glamorous, confident, articulate, and approachable. However, in one-on-one settings, Mayer is a self-promoting, dismissive, calculating, tardy, inquisitorial individual who avoids eye contact. “There was nothing especially abhorrent or uncommon about Mayer’s behavior as an executive,” Carlson writes. “She was headstrong, confident, dismissive, self-promoting and clueless about how she sometimes hurt other people’s feelings. So were many of the most successful executives in the technology industry.”

The last third is devoted to Mayer’s initial efforts to turn Yahoo around. Within the first year at the helm as CEO, Mayer motivated Yahoo’s beleaguered workforce, launched the redesign of some of Yahoo’s major sites, and made acquisitions to make Yahoo relevant in the mobile, media, and social realms. Carlson also describes Mayer’s bad hiring decisions, habitual tardiness, tendency to micromanage, tone-deaf style of communication, and dogged devotion to establishing the universally-despised practice of tracking goals and stack-ranking employees.

Yahoo: The Fabled Legacy Internet Company on the Slide to Irrelevance

Anybody who follows the internet content industry understands that the principal question regarding the then-37-year-old Mayer’s recruitment as CEO was never whether she could save Yahoo. Rather, the question was whether Yahoo can be saved at all.

Yahoo has been a mess for a long time. For early consumers of the internet, Yahoo’s portal was the internet—from the mid-1990s until the early 2000s, Yahoo was the number-one gateway for early users of the internet who wanted to search, email, or consume news and other information. Then, Yahoo floundered as the likes of Google, Facebook, Apple, Amazon, Twitter, and Microsoft redefined the consumer internet and content consumption. Yahoo’s successive managements struggled to identify Yahoo’s raison d’etre and failed to set it apart from the up-and-coming websites. Yahoo’s management also fumbled on opportunities to harness the popularity of Yahoo Mail, Yahoo Sports, and Yahoo Finance to get advertising revenues growing again.

Mayer’s Arrival Was Too Late for Yahoo

Mayer came to Yahoo with extraordinary credentials, drive, technical savvy, celebrity, and charisma. Her tenure was centered on answering the single question, “What is Yahoo? What should become of Yahoo?”

The odds of Mayer succeeding to revive Yahoo as an independent internet content company were very bleak right from the beginning, because Mayer took on an increasingly irrelevant business with very little actual or potential operating value—either as an internet content company or as a media company. Carlson appropriately concludes,

Ultimately, Yahoo suffers from the fact that the reason it ever succeeded in the first place was because it solved a global problem that lasted for only a moment. The early Internet was hard to use, and Yahoo made it easier. Yahoo was the Internet. Then the Internet was flooded with capital and infinite solutions for infinite problems, and the need for Yahoo faded. The company hasn’t found its purpose since—the thing it can do that no one else can.

Since the publication of the book in December 2014, Mayer has dedicated her leadership to selling Yahoo’s core internet businesses and its patent portfolio. Yahoo is expected to then convert itself into a shell company for its investments in Alibaba (15.5% economic interest) and Yahoo Japan (35.5%.)

Recommendation: As a fast read, Marissa Mayer and the Fight to Save Yahoo! is great. Beyond Nicholas Carlson’s gossipy narrative and his pejorative depiction of Mayer’s management style, readers of this page-turner will be interested in Yahoo leadership’s strategic and tactical missteps. Particularly fascinating are how Yahoo missed opportunities to buy Google and Facebook when they were mere startups, the rebuffing of an acquisition bid from Microsoft, a lack of strategic focus, the leadership skirmishes with activist investors, the revolving door at the CEO’s office, and an Asian-asset drama.

The Spectacular Rise and Fall of Avon’s Andrea Jung // Book Summary of Deborrah Himsel’s ‘Beauty Queen’

July 26, 2016 By Nagesh Belludi Leave a Comment

When companies do well, their CEOs are often heralded as outstanding visionaries and brilliant innovators. In particular, when macroeconomic conditions are favorable, these CEOs are sheltered from scrutiny because the spoils of their success deflect attention from their leadership shortcomings (see my previous article on how success often conceals wickedness.) When the tide turns, however, the leadership deficiencies are exposed for all to see. The CEOs are the first to get the blame, even if they may not merit it.

Deborrah Himsel’s Beauty Queen offers an insightful tale of the spectacular rise to the top and the tumultuous fall from grace of Andrea Jung. Beauty Queen divides Jung’s tenure as the CEO of cosmetics company Avon from 1999 to 2012 into two halves: Jung led six consecutive years of double-digit growth initially and then presided over a series of operational missteps that led to her resignation. Alas, Avon has never since recovered—its numerous restructuring efforts have failed, and its strategic and financial performance has severely deteriorated.

The Rise of Andrea Jung and Avon (1999–2005)

Promoted at age 41, Andrea Jung brought glamour, charm, and personal style to her CEO’s role. She quickly reshaped Avon’s image and articulated a powerful purpose for the company. She injected energy into a decaying cosmetics brand and pushed Avon into new profitable markets in China, Russia, and other countries. When Jung became CEO, 60% of Avon’s sales were in the United States; by 2011, only 17% of sales were in the United States and 70% were in developing markets.

Jung’s revival of Avon’s fortune catapulted her fame; she became one of America’s most recognized chief executives. Fortune magazine named her one of the most powerful women in the world. Jack Welch recruited her to General Electric’s board of directors.

Beauty Queen attributes this initial success not only to Jung’s inherent strengths in marketing and branding, but also to her right-hand person Susan Kropf. Kropf was a brilliant operations person, who balanced Jung’s acute lack of skills in running the day-to-day operations of a global company.

The Fall of Andrea Jung and Avon (2005–2012)

Avon’s sales started to slow down in 2005. And, Susan Kropf’s exit in 2006 corresponded with the dawn of Avon’s misfortunes. Andrea Jung never replaced Kropf; Avon was left without a chief operating officer.

As Avon started to struggle, Jung’s inadequate operations experience became a serious liability. A streak of self-inflicted problems resulted in strategic and operational disasters that took a huge financial toll and resulted in a flight of Avon’s top talent. Jung failed to deal effectively with failures of computer systems in Brazil, inadequate inventory and supply-chain management, poor management of working capital, and a staggering bribery scandal in China.

Jung’s lack of expertise to deliver results went up against her bold projections about the business’s future. Straying from Avon’s door-to-door direct selling roots, Jung experimented with a direct-selling channel, but quickly abandoned her strategy of running Avon retail stores. Her attempts to start baby-goods and other new product lines foundered after just two years. Avon’s many acquisitions failed; a silver jewelry company (Silpada) that Jung bought for $650 million had to be sold back to the original owners for $85 million.

Avon never recovered from the blunders that Andrea Jung presided over

Avon Beauty Products After Jung’s several turnaround efforts had failed to take hold, she resigned in 2011. Her replacement, former Johnson & Johnson executive Sheri McCoy, has since struggled to turn the company around.

The bribery scandal in China impaired Avon. In 2014, Avon settled the case with the Justice Department and the SEC for $135 million. To boot, Avon not only spent $350 million on legal fees, but also lost ground in the burgeoning cosmetics market in China.

Avon’s market value fell from $21 billion (1-Mar-2004) at the height of Jung’s success to $1.1 billion (15-Jan-2016). The company’s stock price fell from $44.33 to $2.50.

Lessons from Andrea Jung’s Leadership Style at Avon

Some of the most instructive leadership lessons from Beauty Queen are,

“Studying the trajectory of the Avon CEO is a great way to learn leadership. Andrea’s career … offers invaluable lessons about finding the right balance between substance and style.”
“Her story is a cautionary tale, one that suggests the critical importance of being aware of your weaknesses and how they can sabotage you.”
Leaders should know when to go. “If Andrea had departed in 2008, she would have left with her reputation and halo fully intact … CEOs that are successful early on often err on the side of staying too long.” [See my previous article on why leaders better quit while they’re ahead.]
Companies should pair up their leaders with deputies who have complementary skills to offset the Achilles’ heels of the leaders.

Recommendation: Skim through the first six chapters of Beauty Queen for an informative quick read on Andrea Jung’s rise and fall at Avon. Thumb through the next five chapters for an uninteresting discussion of broad leadership lessons and action lists in dry PowerPoint style.

Don’t Listen to Jim Cramer on Mad Money

September 21, 2015 By Nagesh Belludi 3 Comments

If you ever tune in to CNBC’s popular Mad Money show, you’ll notice that host Jim Cramer speaks about the financial markets with unabashed certainty. Behind the goofy sound effects and the onscreen antics lies his particular brand of stock market punditry.

Cramer’s energy and confidence are most evident in the lightning round where his devotees hail “Booyah” and ask for his take on a barrage of stocks. In response, Cramer presents quick statistics and declares, “Same-store sales in China rose 12% last quarter. It’s a screaming buy; they’re doing great. BUY! BUY! BUY!” Or, he blurts out, “This company is involved with deep water rigs, the deep water market has not come back at all. If it does go up at all, SELL, SELL, SELL!”

What’s most notable about Mad Money is that Cramer is seemingly equipped to answer questions about any listed company with all the gusto he can muster. How could he possibly know the ins and outs of every company: their products, finances, cash flow, competitive positions, market prospects, and current valuation? He may know of many companies cursorily, but how could he have intimate knowledge of every ticker symbol that his fans throw at him? You’ll never hear him say, “Sorry, never heard of them,” or “Gee … truth be told, I’m not familiar with their new products or how they compare to the competitor’s products. I really couldn’t tell you.” He’s loud. He’s boisterous. And, he’s got to have an opinion on every stock—if he doesn’t, there is no show.

Jim Cramer, the best entertainer in the financial media

Jim Cramer’s credentials are impressive: Harvard, Goldman Sachs, hedge fund management, and TheStreet.com. He is the author of many investment-advice books with titles as appealing as “Get Rich Carefully”, “Sane Investing in an Insane World”, “Confessions of a Street Addict”, “Watch TV Get Rich”. He is experienced. He has extensive knowledge of the markets. He is passionate. He is smart.

Nonetheless, do not let Cramer’s credentials fool you about Mad Money‘s intent. His antics are entertaining. He wears silly costumes, yells at the camera, throws chairs around when angry, hits things with mallets, and chews heads off foam bears—all while producing goofy sound effects that include squealing pigs and a flushing toilet.

Jim Cramer’s opinions on Mad Money are often one-dimensional, half-baked, oversimplified, or wide of the mark. In the very first Mad Money episode I watched in 2005, a caller on the lightening round asked him about a company called PetroKazakhstan. Cramer’s response was that he did not trust the Russians. PetroKazakhstan was a Calgary-based Canadian oil company that was led by Canadian executives, did all its business in Kazakhstan, and had little to do with Russia. (The state-owned PetroChina acquired PetroKazakhstan in 2006.)

Don’t identify Cramer’s show with sound investment advice

As with other programs in the financial media that are teeming with talking heads, watching Mad Money can give you pointers as to what’s happening in the markets and in business trends. You can get ideas for what stocks to research or even speculate on. However, none of it constitutes sound investment advice.

Cramer’s job is not to make you money. He gets paid by CNBC to generate viewership and to entertain viewers with the pretext of dishing out dependable investment advice. He is not a trickster; he just is an entertainer on Mad Money, a fact that he acknowledged in a 2007 essay in the New York Magazine: “On the show, I say stupid things, yell ‘Booyah’ with alarming frequency, and occasionally wear a diaper or jump into a pile of lettuce to illustrate the finer points of investing. … God knows why, but there seems to be a market for this kind of idiocy.”

Watch Mad Money for the frenzy and personality-driven entertainment. Don’t take his speculative tips or investment advice seriously. Instead, do on your own research.

Rule #21 in Cramer’s 25 Rules of Investing states, “Be a TV critic: accept that what you hear on television is probably right, but no more than that.” Now, that’s good advice.

The Art of Remembering Names

December 11, 2007 By Nagesh Belludi 4 Comments

The Sweetest Sound in Any Language

Dale Carnegie’s classic, “How to Win Friends and Influence People,” is one of the most popular books on people skills. Here is an excerpt of his discussions on the importance of remembering names.

… a person is more interested in his or her own name than in all the other names on earth put together. Remember that name and call it easily, and you have paid a subtle and very effective compliment. But forget it or misspell it – and you have placed yourself at a sharp disadvantage.

… one of the simplest, most obvious and most important ways of gaining good will was by remembering names and making people feel important – yet how many of us do it?

How Napoléon III Could Remember Names

Napoleon the Third, Emperor of France and nephew of the great Napoleon, boasted that in spite of all his royal duties he could remember the name of every person he met.

His technique? Simple. If he didn’t hear the name distinctly, he said, “So sorry. I didn’t get the name clearly.” Then, if it was an unusual name, he would say, “How is it spelled?”

During the conversation, he took the trouble to repeat the name several times, and tried to associate it in his mind with the person’s features, expression and general appearance.

If the person was someone of importance, Napoleon went to even further pains. As soon as His Royal Highness was alone, he wrote the name down on a piece of paper, looked at it, concentrated on it, fixed it securely in his mind, and then tore up the paper. In this way, he gained an eye impression of the name as well as an ear impression.

The 5R Technique for Remembering Names

Here are five simple tips that can help you remember names. For an example, suppose that you attend an informal gathering of professionals from the financial industry; Renuka is one of the attendees.

Resolve to remember. Habitually, you fail to remember names because you do not make a conscious effort at it. When a person states his/her name, by reflex you reply with a “nice to meet you” while your mind is possibly busy judging the person’s appearance or processing some other information. Consequently, your short-term memory registers the person’s name briefly and discards it before long. Commit to pay attention to the person’s name and deposit it in your longer-term memory.
Review. Ask for a spelling of the person’s name. If required, ask the spelling of how the person’s name is pronounced. For instance, Renuka is pronounced Rae-nu-ka—the ‘e’ is pronounced ‘ae’ as in aerospace. Additionally, note that Renuka sounds like Rebecca.
Relate. Associate the person’s name with somebody you may previously know. Suppose that Renuka states she grew up in Hyderabad, India. Then, you recall that your former colleague, Pavan is from the same city too. You can say, “Renuka, my previous project manager, Pavan, is from Hyderabad too. He spoke often of the Museum of Clocks there. His wife had prepared ethnic food for me; it was hot and spicy.”
Repeat. During your conversations, state the person’s name as frequently as appropriate: “Renuka, what are your thoughts,” or,” that is an interesting observation, Renuka,” or, “thank you for your time, Renuka.”
Record. Following your conversation, step aside if possible and record the person’s name along with a few other details to help capture an impression of the person. For instance, record “Renuka. Sounds like Rebecca. Grew up in Hyderabad, India—same city as Pavan. Black-coloured Mercedes Benz Coupe. MBA in finance from Columbia University. Risk analyst at American Express.”

Concluding Thoughts

Dale Carnegie asserts, “A person’s name is, to that person, the sweetest and most important sound in any language.”

Positive impressions are invaluable. Remembering names is an important social skill—mastering this skill can offer a distinct advantage in your business and personal lives. The secret to remembering names is to make an extra effort to review, relate, repeat and record the names and associations of people for easier recall.

Ethel Romm on Building Consensus

April 1, 2007 By Nagesh Belludi Leave a Comment

Building Consensus for Decision-making

Ethel Grodzins Romm was the President and CEO of NITON Corporation, a maker of scientific equipment. NITON is currently part of Thermo Fisher Scientific (NYSE: TMO.) Ethel is an accomplished engineer, entrepreneur and author.

Guy Kawasaki features Ethel Romm in his book ‘Hindsights: The Wisdom and Breakthroughs of Remarkable People.’ In her interview for this book, Ethel emphasizes the need for leaders to build consensus instead of enforcing their will.

Ethel Romm on Building Consensus

“Business is a garden of forked paths, and when we can’t agree on which one to take, then I make the call. There are occasions when you have to say, ‘I’m the president, and it’s got to go this way,’ but that’s the weakest appeal of all.”

“If it’s everybody’s decision—if everyone has helped to make it, or talked you out of something—then we’re all rowing together. Bosses say, ‘Go!’; leaders say, ‘Let’s go!'”

Sometimes, it is difficult for managers “to see why or how they are inefficient. They believe that they are succeeding—after all, nobody mutinies. They fail to understand that when you are the boss, everyone salutes you and follows your orders, regardless of your personality.”

“Thus, they are misled into believing that their meanness or callousness is keeping everyone in line. They can easily get the idea that if they don’t command, control, and coerce, the place will fall apart. The feedback is all wrong.”

Call for Action

Building Consensus for Decision-making Quite often, members of a team may realize that they have very little influence on the decision-making process and withdraw from active participation. However, the team buy-in on the decision to ensure prompt follow-up on expected contributions. Building consensus as part of the decision-making process, therefore, is one of the core team skills—for team members and team leaders.

Listen to every idea offered during a team conversation. Do not ignore or sidestep any ideas or concerns. Do not criticize or show objection. Instead, seek clarifications and discuss: “That is a great idea. And, one of the challenges we will face is…. How shall we work around that? What if we modify…? How about…?” Differences of opinion are natural and expected. Work on reaching decisions by building on the agreements.

As Dwight Eisenhower said, “Pull the string, and it will follow wherever you wish. Push it, and it will go nowhere at all.

Respect for Employees: Cases from RadioShack and Northwest Airlines

October 6, 2006 By Nagesh Belludi

Lisa Haneberg wrote about RadioShack [RSE] laying off 400 workers and informing them of the decision via email. Lisa’s Management Craft blog article records her thoughts on this choice.

Human resources… People are not just resources like computer systems and Post It notes. Our employees, all of them, even the underperforming ones who ought to be let go, are our partners. They are our business family. Even when it is the right thing to do to let someone go, we need to remember that they are important partners. How we leave a relationship is just as important as how we enter into it.

‘101 Ways to Save Money’

Northwest Airlines terminal at Detroit Metropolitan Airport This reminds me of another instance of careless mistakes at Northwest Airlines. The company, currently operating under Chapter 11 bankruptcy protection, is considering additional layoffs and pay cuts for employees.

A few weeks ago, a booklet distributed to likely-to-be-laid-off ground workers is reported to have advised them on saving money: “don’t be shy about pulling something you like out of the trash” and “take a date for a walk along the beach or in the woods” along with more sensible tips like “brown bag your lunch” and “refinance your mortgage.” See the full list of ‘101 Ways to Save Money’ here.

Irrespective of the organizational and financial state of the company, including tips such as the above in employee communication is careless, insensitive and insulting to the dignity of the workers, especially when they are candidates for potential layoffs. An appropriate supervisory review of this publication prior to release could have easily avoided the bad publicity and ill will that this incident generated.

As alluded to every year in Fortune magazine’s ranking of the ‘best companies to work for’ in America, employees’ attitudes towards their organizations have a profound effect on the performance of companies. Further, better performance leads to higher morale among the employees; this results in a virtuous cycle of company performance and employee morale. The primary means of achieving high employee morale is by co-creating a corporate culture that instills a sense of ownership through empowerment, trust and fair treatment, by instilling pride for personal and organizational achievements and by providing adequate opportunities for personal and career growth.

Philanthropy: Collaborative Initiatives to Transfer Corporate Values to the Social Sector

August 30, 2006 By Nagesh Belludi Leave a Comment

Traditional philanthropy, whether personal, institutional or corporate, takes three forms: cash capital, volunteer-time in programming support, and cause-related sponsorship. I believe a fourth avenue, corporate and non-profit collaboration, can make an important difference in the society.

Following last year’s Katrina hurricane, Wal-Mart [WMT], Home Depot [HD] and FedEx [FDX] reached out to vulnerable victims by providing hundreds of truckloads of vital supplies, thanks to their immense supply chain infrastructures. These companies highlighted one promising area of effective corporate outreach and community collaboration. Can the corporate sector transfer logistical knowledge to relief agencies and aid them to set-up an infrastructure to support nimble disaster planning in the future?

One of the most significant characteristics of successful corporate leaders is their ability to clearly recognize new social, political and economic influences and to adapt their enterprises to developing circumstances rapidly and economically. These corporate leaders possess the dynamism, the ability to innovate and the mechanisms for spurring efficiency and allocating resources in entirely new channels.

Non-profits have limited access to such visionary individuals and the expertise necessary for social investments to overcome barriers in resources and operational efficiencies. Therefore, there is a pressing need for corporate leaders from all levels to collaborate with the social sector. I expect innovative corporations to launch and expand their philanthropy programs to create partnerships for sustainable initiatives and transfer corporate practices, values, oversight and accountability measures to non-profits.

*Keyword(s): Philanthropy, outreach, non-profits, Katrina, Wal-Mart, Home Depot, FedEx

Respect the Competition

May 15, 2006 By Nagesh Belludi 2 Comments

In business, as in sports or work-life, it is essential to possess a mature sense of respect for the competition. The recent arguments between US Airways [ LCC] and JetBlue Airways [ JBLU] form a case in point.

JetBlue recently announced services between New York JFK and North Carolina in direct competition with services offered by US Airways. As part of this announcement, JetBlue’s CEO David Neeleman commented, “… until now, the people of North Carolina have overpaid for sub-standard service.” This was a direct attack on US Airways, which has a strong presence in these routes.

In response, Doug Parker, the CEO of US Airways, addressed employees “upset by these remarks” as follows; read the full response here.

First, I know David pretty well and I can assure you he is a genuinely good person. That he chose to make such a remark is probably indicative of the stress that JetBlue is under and we should not take his remarks personally.

He then explained the problems JetBlue faces and compared JetBlue’s offerings with his company’s.

It doesn’t appear that our customers are overpaying; rather it appears that passengers aren’t willing to pay JetBlue enough for them to be profitable.

JetBlue is struggling mightily and the hard working employees of US Airways are a big reason why. Rather than get upset by their comments we should keep them in context … US Airways is going to be here long after JetBlue.

… we will compete aggressively, we will focus on running our own race and we will win. Thanks so much for taking care of our customers and please keep it up.

When faced with a competitor’s unfavourable remarks, it is tempting to confront and bad-mouth the competition. In such circumstances, employees look forward to directions from a company’s leadership. Often, blowing out the competition’s candle to make one’s shine brighter can backfire, create ill will among employees and lead to loss of customer respect. In his message, Doug Parker sets a clear competitive tone by first uttering words of respect for the competition and then explaining the circumstances involved.

In the intensely competitive airline industry, front-line customer service is a critical differentiator. Customer service consists of a series of interactions that customers have with employees: ticketing agents, gate agents and flight attendants. Evidently, JetBlue has a reputation for better customer service. Doug sends a clear message to boost the morale of his employees and motivating them to deliver superior customer experiences.

Clearly, Doug Parker’s respectful and pragmatic approach exudes a winning attitude. The trust and confidence in his message appeals to employees, customers and the competition.

Google Romance: Beyond All Fools’ Day

April 3, 2006 By Nagesh Belludi Leave a Comment

On All Fools’ Day, Google [GOOG] announced, as a joke, work on its Google Romance online matchmaker service. Isn’t the company serious about opportunities the ‘contextual dating‘ service presents?

What would attract users to migrate from Yahoo! Personals or Match.com or the other dating websites? The search technology used to match profiles is probably mature: profiles are searched by matching well-defined fields and by searching profile descriptions. Google could supplement this matching mechanism by incorporating tags or by allowing users to rank or provide feedback on profiles they view based on whatever criteria.

Building a large user base will be critical. Three of my colleagues consider the $25-$35 monthly fees they pay for the above services an overcharge. A free service or low fees can attract a significant user base to Google Romance. The popularity of the search engine, any unique features, and clever marketing (allowing users join by invitation only, as with Gmail) can help too.

Clearly, Google Romance presents an enhanced opportunity for Google’s AdSense program. With personal details of a user and profiles of potential partners a user is looking at, it could target more specific, more meaningful ads based on age, gender, diet preferences, likes, location, etc. Further, the service could easily be integrated with Talk, Gmail, maps, local search, etc. and keep users engaged within the Google grid of services.

It is hard to imagine Google not being serious about this potential revenue stream.

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