Change Management

Fire Fast—It’s Heartless to Hang on to Bad Employees

August 27, 2019 By Nagesh Belludi Leave a Comment

Firing is About an Underlying Commitment to Retaining Great People

The former General Electric leader Jack Welch earned the moniker “Neutron Jack” for sacking some 100,000 employees in the early years of his tenure as chief executive. Welch defended the dismissals by emphasizing that it would have been far more heartless to keep those employees and lay them off later when they had little chance of reinventing their careers. The dismissals were part of his deliberate efforts to establish a corporate culture that emphasized honest feedback and where only the “A players” got to stay.

Many Fired Employees Feel Surprised That the Axe Didn’t Fall Sooner

Managers know that ending a bad fit sooner is better than doing it later. Firing a bad employee is often better for both the employee leaving and the employees remaining.

Then again, many managers hesitate because firing is awfully difficult. No one likes to fire people. Looking an employee straight in the eye and telling he’ll no longer have a job is one of the harshest things a manager will ever have to do.

Besides, some managers are so uncomfortable with conflict that they are unwilling to deal directly and honestly with a problem employee, not to mention of confronting the risk of a wrongful termination claim.

If an Employee is Not Working out for You, Fire Fast

By holding on to a bad employee, you are really doing a disservice to the employee. Forcing a person to be something he’s are not, and giving him the same corrective feedback—week after week and quarter after quarter—is neither sustainable nor considerate. Trying to keep the employee in the wrong role prevents his personal and professional evolution.

Give the employee a chance to turn the situation around—people can change.
Try to find him an appropriate role within your company. Recall the old Zen poem,

Faults and delusions
Are not to be got rid of
Just blindly.
Look at the astringent persimmons!
They turn into the sweet dried ones.

However, if the employee is a truly bad fit, reassigning him just shifts the problem to a different part of the company.
If your efforts to remediate a bad employee haven’t worked out, cut your losses and fire him promptly. Help the employee move on to a job or a company where the fit is much better.

Idea for Impact: It is much worse to retain someone who is not suited for his job than it is to fire him. Help him find a new role quickly and land on his feet.

Microsoft’s Resurgence Story // Book Summary of CEO Satya Nadella’s ‘Hit Refresh’

July 10, 2019 By Nagesh Belludi 1 Comment

Leader as Sense-Maker and Cultural Curator

Microsoft CEO Satya Nadella is an exemplar of a leader as sense-maker. He has revitalized how Microsoft’s strategy, mission, and culture connect people, products, and services—inside and outside his company.

Nadella has a success story to tell, and his Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone (2017, with two co-authors) highlights how he is a different kind of leader transforming Microsoft into a different kind of company.

Hit Refresh‘s broad objective is to lay out a vision for the future of the company. The book is aimed at people who work at or with Microsoft. Many employees were given a special imprint of book with Nadella’s faux-handwritten annotations in the margins and highlighted snippets.

The book’s narrative arc shifts from a personal memoir to a management how-to, and then to technological futurism. The latter—and perhaps the least interesting—portion features Nadella’s forethoughts on artificial intelligence, augmented reality, and quantum computing, as well as their socio-economic implications.

Satya Nadella Shook Things Up by De-Ballmering Microsoft

Nadella took Microsoft’s reins in February 2014 after long-time CEO Steve Ballmer resigned in August 2013. Under Nadella’s watch, Microsoft quickly became more open and more nimble as an organization. Its cloud computing, Office 365, and gaming platform franchises are all running remarkably well.

Microsoft pivoted its business model around subscription products that produce recurrent revenue. It acquired Mojang (creator of the popular Minecraft videogame title,) LinkedIn, and GitHub. It ditched Nokia and embraced open source software—it’s even including a Linux kernel in a future Windows release.

Today one of my top priorities is to make sure that our billion customers, no matter which phone or platform they choose to use, have their needs met so that we continue to grow. To do that, sometimes we have to bury the hatchet with old rivals, pursue surprising new partnerships, and revive longstanding relationships. Over the years we’ve developed the maturity to become more obsessed with customer needs, thereby learning to coexist and compete.

A Renewed Sense of Purpose: The Leader’s Tone Steers the Organizational Culture

Hit Refresh‘s foremost take-away is how the tone at the top sets an organization’s guiding values. Properly contemplated, propagated, and nurtured, Nadella’s approach became the foundation upon which the culture of Microsoft has been remade.

With “the C in CEO is for curator of culture,” Nadella’s dominant mission has been to recreate Microsoft’s underlying beliefs, values, and expectations in the eyes of its employees, business partners, customers, investors, and the society. This culture is to be consistent within Microsoft and characterize all the discernable patterns of behavior across the organization.

When I was named Microsoft’s third CEO in February 2014, I told employees that renewing our company’s culture would be my highest priority. I told them I was committed to ruthlessly removing barriers to innovation so we could get back to what we all joined the company to do—to make a difference in the world.

Nadella’s playbook has consisted of challenging complacency, instituting a “growth mindset,” being open-minded enough to welcome new technology and collaborate with Microsoft’s traditional competitors (“frenemies,”) and shifting from a “know it all” to a “learn it all” mindset.

I had essentially asked employees to identify their innermost passions and to connect them in some way to our new mission and culture. In so doing, we would transform our company and change the world.

“Driven by a Sense of Empathy and a Desire to Empower Others”

Core to Nadella’s framework is his conviction that individuals are wired to have empathy. “The alchemy of purpose, innovation, and empathy” is indispensible “not only for creating harmony within organizations but also for creating products that resonate.”

Nadella describes how caring for a special-needs child and his wife Anu’s sacrifices for the family made him become conscious of the significance of empathy. Specifically, Anu helped him recast these setbacks as opportunities to expand his worldview.

Being a husband and a father has taken me on an emotional journey. It has helped me develop a deeper understanding of people of all abilities and of what love and human ingenuity can accomplish. … It’s just that life’s experience has helped me build a growing sense of empathy for an ever-widening circle of people. … My passion is to put empathy at the center of everything I pursue—from the products we launch, to the new markets we enter, to the employees, customers, and partners we work with.

The most interesting section of Hit Refresh is Nadella’s personal journey growing up in India, migrating to America, and working his way up the career ladder at Microsoft. The only child of a Sanskrit scholar and a civil servant, Nadella was hooked on cricket (it taught him how to compete vigorously, the virtue of working in teams, and the importance of leadership direction.)

Recommendation: Satya Nadella’s Hit Refresh is a satisfactory first take on his remarkable revamp of the culture of a company that had become set in its ways. Microsoft’s transformation has been nothing short of dramatic—there’s a lot more to be done and written about.

Small Steps, Big Revolutions: The Kaizen Way // Summary of Robert Maurer’s ‘One Small Step Can Change Your Life’

June 18, 2019 By Nagesh Belludi Leave a Comment

Most intentions for change seek a transformative change—something significant to be achieved once and for all, in a short period. “Big, bold steps” is the mantra of many a self-help book or motivational guru du jour.

Real change, however, takes time and is difficult. You become overwhelmed with the magnitude of the effort and persistence required to lose twenty pounds, save up for retirement, change jobs, or stabilize a sinking relationship.

As with most New Year resolutions, you’ll meet with success temporarily, only to find yourself slipping back into our old ways as soon as the initial burst of enthusiasm fades out.

Gradual Improvement, Not Radical Change

UCLA clinical psychologist Dr. Robert Maurer’s One Small Step Can Change Your Life: The Kaizen Way (2004) conceives transformative change as an endless, continuous process of gradual improvements.

By breaking daunting tasks into absurdly little steps, you feel little resistance to change.

To initiate a worthwhile exercise regimen, for example, Maurer suggests that you start exercising by marching in front of the television for one minute for a day or two. Then, little by little, ask, “How could I incorporate a few more minutes of exercise into my daily routine?” Such modest questions help you seek the next proverbial baby step and “allow the brain to focus on problem-solving and action.”

To tidy up your home, pick an area of your home, set a timer for five minutes, and tidy up. Stop when the timer goes off. [This is similar to my ’10-Minute Dash’ technique to overcome procrastination.]

One small step leads to the next, which leads to one more, and so on—finally leading you to your goal of transformative change.

“Little Steps Add Up to Brilliant Acceleration”

Maurer relates this approach to Kaizen, the famed Japanese system of obsessive tinkering and continuous, incremental improvement. This idea is actually American in origin—it was brought over by American efficiency and quality experts such as W. Edwards Deming who were helping Japan rebuild its industrial strength after World War II.

Kaizen involves making continual, small adjustments to production techniques to not only improve speed and quality, but also save resources. That is to say, it is a relentless pursuit of perfection by breaking it down into incremental improvements.

At companies that have embraced Kaizen and other Total Quality Management (TQM) approaches, employees come to work every day determined to become a little better at whatever it is they are doing than they were the day before. Katsuaki Watanabe of Toyota, the poster-boy of TQM, has acknowledged,

There is no genius in our company. We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution.

Small Kaizen questions help you determine the next baby step and allow the brain to focus on problem-solving and action

“Little and often” empowers you to “tiptoe past fear”—your brain stops putting up resistance because it is tricked into thinking that you’re embarking only on something minuscule.

All changes are scary, even positive ones. Attempts to reach goals through radical or revolutionary means often fail because they heighten fear. But the small steps of Kaizen disarm the brain’s fear response, stimulating rational thought and creative play.

You can thus triumph over fear and the subsequent inaction that fear causes.

Small steps rewire your nervous system, create new connections between neurons so that the brain enthusiastically takes over the process of change and you progress rapidly toward your goal.

Minimalist, steady, incremental change helps your brain overcome the fear that impedes success and creativity

To avoid failure at keeping your resolutions despite your best intentions, don’t push yourself to somehow become different rapidly. Instead, pledge to achieve positive, enduring life changes one powerful baby step at a time.

Other prominent insights in Maurer’s One Small Step Can Change Your Life:

“Small actions satisfy your brain’s need to do something and soothe its distress.”
“If you are trying to reach a specific goal, ask yourself every day: What is one small step I could take toward reaching my goal?”
“Small actions are at the heart of Kaizen. By taking steps so tiny that they seem trivial or even laughable, you’ll sail calmly past obstacles that have defeated you before. Slowly—but painlessly!—you’ll cultivate an appetite for continued success and lay down a permanent new route to change.”
If you hit a wall of resistance, “don’t give up! Instead, try scaling back the size of your steps. Remember that your goal is to bypass fear—and to make the steps so small that you can barely notice an effort.”
When we face crises, “the only concrete steps available are small ones. When our lives are in great distress, even while we are feeling out of control or in emotional pain we can try to locate the smaller problems within the larger disaster … to help move us slowly in the direction of a solution. But if we are blind to the small, manageable problems, we are more likely to slip into despair.”

Recommendation: Speed-read One Small Step Can Change Your Life: The Kaizen Way. It will help if you or a loved one is stuck in the rut of goal failure.

Take really small steps towards every significant change you want to make. The cumulative benefits of small improvements do have the power to produce large, transformative change. Let Kaizen be a routine that is never done.

Change Isn’t Just Possible—It’s the Way Life Works

June 13, 2019 By Nagesh Belludi Leave a Comment

Remarkable lines from “Change” from the English metaphysical poet John Donne’s Elegy III (Poems of John Donne, Volume 1, 1896):

To live in one land is captivity,
To run all countries, a wild roguery;
Waters stink soon, if in one place they bide,
And in the vast sea are more putrified:
But when they kiss one bank, and leaving this,
Never look back, but the next bank do kiss,
Then are they purest; Change is the nursery
Of music, joy, life and eternity.

Change helps you come back to yourself, over and over again, and ride the waves of richness through whatever life has to offer.

Change is a gift! Flow with it and seek out the beauty in each moment. Show up and be present, for there is something precious for you now—even within the pangs of loss and melancholy.

Learning from the World’s Best Learning Organization // Book Summary of ‘The Toyota Way’

November 27, 2017 By Nagesh Belludi Leave a Comment

Toyota is the World’s Most Benchmarked Company, and for Good Reason

Toyota’s cars are reputed for their reliability, initial quality, and long-term durability. It is the pioneer of modern, mass-production techniques and a paragon of operational excellence. Even if its reputation has taken a beating in the last few years because of the uncontrolled acceleration crisis and major product recalls, Toyota’s long-term standing as the epitome of quality production is undeniable.

Toyota measures and improves everything—even the noise that doors make when they open and close. As cars roll off assembly lines, they go through a final inspection station staffed by astute visual and tactile inspectors. If they spot even a simple paint defect, they don’t just quietly fix the problem merely by touching up the paint to satisfy the customer or their plant manager. They seek out systemic deficiencies that may have contributed to the problem, and may hint at deeper troubles with their processes.

World-Class Processes, World-Class Quality

As Jeffrey K. Liker explains in his excellent The Toyota Way, the genius of Toyota lies in the Japanese expression ‘jojo‘: it has gradually and steadily institutionalized common-sense principles for waste reduction (‘muda, mura, muri‘) and continuous improvement (‘kaizen.’) Liker, a professor of industrial engineering at the University of Michigan (my alma mater) has studied the Toyota culture for decades and has written six other books about learning from Toyota.

Liker establishes the context of The Toyota Way with a concise history of Toyota Motor (and the original Toyoda Textile Machinery business) and the tone set by Toyota founders Sakichi and Kiichiro Toyoda. Quality pioneers such as Taiichi Ohno, W. Edwards Deming, and Joseph Juran instituted groundbreaking philosophies that shifted Toyota’s organizational attention from managing resource efficiencies in isolation to managing the flow of value generated by the Toyota Production System (TPS.)

“No Problem is the Problem:” How Toyota Continuously Improves the Way it Works

Liker devotes a bulk of his book to the distinct elements of Toyota’s foundational principles: continuous flow, minimal inventory, avoidance of overproduction, balanced workload, standardized tasks, visual control, etc. He drills down to the underlying principles and behaviors of the Toyota culture: respect people, observe problems at the source, decide slowly but implement swiftly, and practice relentless appraisals of the status quo. Liker states, “Toyota’s success derives from balancing the role of people in an organizational culture that expects and values their continuous improvements, with a technical system focused on high-value-added flow.”

Companies that have tried to emulate Toyota have struggled not with understanding its management tools but with putting into practice the mindset and the organizational discipline that permeates everything Toyota does. “Understanding Toyota’s success and quality improvement systems does not automatically mean you can transform a company with a different culture and circumstances.”

Book Recommendation: Read The Toyota Way. As Liker observes, “Toyota is process oriented and consciously and deliberately invests long term in systems of people, technology and processes that work together to achieve high customer value.” The Toyota Way is comprehensive and well organized, if tedious in certain parts. It can impart many practical pointers to help improve the operational efficiency of one’s organization. Peruse it.

Postscript: I’ve taken many tours of Toyota’s Georgetown, Kentucky, factories and a few associated suppliers—once as part of a lean manufacturing study tour organized by Liker’s research group and other times privately. I strongly recommend them for observing Toyota’s matchless culture in action on the production floor. I also recommend the Toyota Commemorative Museum in Nagoya for a history of Toyoda Textile Machinery and Toyota Motor and their management principles.

20 Reasons People Don’t Change

June 13, 2017 By Nagesh Belludi Leave a Comment

If you have trouble getting people to change, perhaps one—or more—of the following reasons are to blame:

They don’t want to change … they find reassurance in the status quo
Their environment is holding them back
They’ve tried to change in the past, failed, and have given up
Your coaching / feedback is garbled … the benefits of change are unclear
They don’t react well to criticism
They’re suspicious of your motives (i.e. fear of manipulation)
They see little incentive to change
They don’t know how to change
They have no role models
There’s no support (or resources) for change
Change threatens their self-image
They can’t tell what’s really important
They don’t feel courageous enough … i.e. they fear failure
They don’t feel enough pain yet
They’re overconfident or arrogant
They fear their weaknesses will be exposed
They’re too lazy and undisciplined
Change requires giving up something they presently value
They resist change that’s imposed from outside … i.e. they’re not intrinsically motivated for change
Change undermines their self-confidence

Idea for Impact: Temper your expectations of others. Old habits die hard. Even Einstein’s doctor couldn’t get the great physicist to quit smoking despite his deteriorating health.

Be realistic about changing others’ hearts and minds. If you can learn to accept them for who they are and let go of your conceptions of their perfection, your relationships become more richer.

Book Summary of Donald Keough’s ‘Ten Commandments for Business Failure’

March 10, 2017 By Nagesh Belludi Leave a Comment

During a remarkable business career of 60+ years, Coca-Cola executive Donald Keough (1926–2015) developed an inspiring lecture on leadership failures. At the prompting of Warren Buffett, a former neighbor and friend, Keough published his lecture as Ten Commandments for Business Failure.

Keough worked for the Coca-Cola Company for 43 years and rose through the ranks to become its President and COO. Following retirement in 1993, he served on the boards of Coca-Cola, Buffett’s Berkshire Hathaway, and many other organizations.

At Coca-Cola, Keough steered the company’s global product expansion and directed its iconic brand image and enviable distribution network. He became the business world’s most celebrated non-CEO leader.

Keough gained reputation as the public face of Coca-Cola’s 1985 New Coke misadventure—he delivered an on-TV mea culpa (see YouTube video) and announced the volte-face reinstatement of “Coca-Cola Classic.”

Donald Keough’s Straightforward Analysis and Leadership Lessons

Keough’s Ten Commandments for Business Failure is a predictable, yet insightful—even if circuitous—exploration of ten (and a bonus) leadership mistakes.

Quit Taking Risks: “Failures, for all the valuable lessons that they teach us in hindsight about management blunders, are simply risks that just didn’t work out. Such miscalculations, costly though they might be at the time, are part of the price of staying in business. As Peter Drucker pointed out nearly fifty years ago, it is management’s major task to prudently risk a company’s present assets in order to ensure its future existence.”
Be Inflexible: “Flexibility is a continual, deeply thoughtful process of examining situations and, when warranted, quickly adapting to changing circumstances. It is, in essence, the key to Darwin’s whole notion of the survival of the fittest. … Most recalcitrant business leaders would certainly never actually characterize themselves as inflexible. More than likely they would pay lip service to a philosophy of change, expressing the usual platitudes about how they embrace change and welcome it.”
Isolate Yourself (i.e., Be Out of Touch): “One of the traits of many of the legendary builders of business was that they had an uncanny ability to know and relate to their employees at every level … if you isolate yourself, you will not only not know what you don’t know about your business, but you will remain supremely and serenely confident that what you do know is right. Isolation, carried to its most extreme form, tends to breed a sense of almost divine right.”
Assume Infallibility: “The infallible we-know-best attitude of management has caused many companies to ignore reality and miss opportunities … If you want to increase your chances of failure, deny the possibility that you are not always 100 percent perfect in your judgment. Ignore the fact that sometimes others do know a thing or two. … So, if you want to fail, pose as an infallible leader.”
Play the Game Close to the Foul Line: “Business finally boils down to matters of trust consumers trust that the product will do what it promises it is supposed to-investors trust that management is competent-employees trust management to live up to its obligations. In recent years we seem to have quite a few smart, energetic people who have evidenced a rather fuzzy view of the right thing.”
Don’t Take Time to Think: “Time to think is not a luxury. It is a necessity. As Goethe noted: “Action is easy; thought is hard.” Yet action frequently-in fact, more often than not-takes on a life of its own. We pay homage to reason, but we are held hostage to emotion. We are, after all, feeling creatures, and in the excitement of a particular endeavor once the ball is rolling, it’s difficult to stop.”
Put All Your Faith in Experts and Outside Consultants: “The narrow perspective of what appears to be genius is often the inverse of wisdom.”
Love Your Bureaucracy: “As [Warren] Buffett said, “It’s unbelievable how much bureaucracy can build up in businesses, particularly those in which you can pass almost all of your costs to the consumer.” … On the hazards of bureaucracy: at their worst, they cannot only impede success, they can also precipitate disaster. … The more cooks there are in the kitchen, the greater the chance that bureaucratic decision making will either be deadlocked or the decision will become an exercise in group wishing. … Ultimately, a bureaucracy can become so dysfunctional that there is literally no one who can rain on the parade. The team can never make anything approaching an objective decision.”
Send Mixed Messages: “Sending mixed or confused messages to your employees or your customers will jeopardize your competitive position, and result in failure.”
Be Afraid of the Future: “The most serious problem with great pessimism is that it is absolutely paralyzing. People are so afraid of dire consequences that they throw their hands up in despair and do nothing. Fear of the future guarantees that the future will be a failure. … To aspire to any kind of leadership in business you simply have to be a rational optimist. One optimist in a sea of pessimists can make all the difference.”
Lose Your Passion for Work-for Life: “A major component of happiness in the business world is finding something you love doing, whatever it might be, and then finding a way to do it. To have success you have to have a high level of unadulterated desire to get up and go to work. … The easiest way to develop an inner passion in a business setting is to focus all your mind and heart on four aspects of your world: your customers, your brands, your people, and, finally, your dreams.”

Words of Wisdom from a Distinguished Corporate Executive

Among the myriad offerings of “rules for success” volumes, books such as The Ten Commandments are distinctive for their memorable business stories and examples. Keough’s candid analyses include narratives as captivating as the historical origin of Coke, the commercial history of the xerographic machine, the Coke-Pepsi rivalry, Coca-Cola Company’s ownership of Columbia Pictures, and the New Coke debacle. When asked in an interview if New Coke was worth the risk, Keough famously replied,

I wouldn’t want to do it again. But it was an enormous learning experience, and oddly enough, it turned out to be positive for the Coca-Cola Company. Our sales increased when we brought the original formula back. The reaction from our customers was overwhelming. Once we realized that we had made a mistake, I went on television and simply said that we don’t own this brand, you do. You’ve made it clear that you want the original formula back, and you’re getting it back.

In the chapter on flexible and adaptive leadership, Keough blames Henry Ford’s stubbornness for the flagging market share of the Model T vehicle. During the mid-1920s, the industrial triumph of his mass production system and the commercial success of the Model T blinded Henry Ford to a budding customer penchant for cosmetic customization and convenience features. Electric starters, for example, were starting to be perceived as essentials and not as luxuries. Keough argues,

Henry Ford reportedly said, regarding the Model T, “They can have it in any color they want, as long as it’s black.” For a long time that was just fine. But then people began to get tired of the black tin lizzies. Yet even as America was roaring into the 1920s with bigger, faster, fancier, brightly painted automobiles, Henry Ford kept insisting that the Model T, essentially unchanged since 1908, was still what America wanted and needed and he was not going to change his mind. Inevitably, upstarts like Chevrolet and Dodge began to erode Ford’s market and seriously challenge the company’s dominant leadership. At last, more rational minds prevailed and Ford admitted the need to produce a better vehicle. After shutting down his main plant for six months, he successfully launched the Model A in 1928. But Henry Ford’s inflexibility had brought the company to the brink of disaster and cost it a competitive edge that it has never regained.

Recommendation: As a fast read, Donald Keough’s The Ten Commandments for Business Failure is worthwhile for its many nuggets of business history. Even though many of his cautionary lessons are not entirely unexpected, some are insightful. The “play the game close to the foul line” warning about values and ethics is especially thought-provoking. Keough writes, “The fact is, if you play on the edge the organization will step over the line from time to time. It is inevitable. Warren Buffett says: ‘Play to the center of the court’.”

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.

A Majority of Formal Training Doesn’t Stick

March 25, 2016 By Nagesh Belludi Leave a Comment

Most formal corporate training programs fail because (1) they’re not extensive enough to indoctrinate a new behavior and (2) they tend to dwell more on “doing” and less on ingraining a prescribed thought process.

Corporate training programs work best if there is an immediate need for employees to use certain techniques and tools. If more than a few days pass between training and the application, employees may not recall what they’ve learned. Therefore, training programs are most effective when they are about need-to-know-now topics and relate to employees’ current problems.

When employees try repeatedly to apply a new skill and fail, they can get dispirited and revert to their old patterns of behavior.

As I mentioned in my previous article, formal training can be very effective with a good deal of follow-through reinforcement under the watchful eyes of a diligent coach, such as a Process Sherpa.

Idea for Impact: Employees will not use a skill consistently until it’s ingrained in their work habits.

Starbucks’s Comeback // Book Summary of Howard Schultz’s ‘Onward’

May 19, 2015 By Nagesh Belludi Leave a Comment

Starbucks founder, Chairman, and CEO Howard Schultz’s “Onward: How Starbucks Fought for Its Life without Losing Its Soul” is an interesting case study of organizational change as orchestrated by a passionate entrepreneur. The book covers the first two years of the turnaround of Starbucks after Schultz returned as CEO.

In 2007, in the face of falling consumer spending and the upcoming Great Recession, the consumer discretionary sector was hit hard. Like other companies in that realm, Starbucks’ sales and profitability had dropped. The company’s stock price plummeted after Wall Street pared the rich valuations (high price-to-earning) of the company’s once-hot growth stock. Through these trials, Schultz worked at the company’s Seattle headquarters as chairman. Even after retiring as CEO in 2001, he had never left the company entirely and had even interjected often during Starbucks’ presentations to investors.

Starbucks’ financial under-performance was likely as much due to the economic slowdown as it was self-inflicted. In an apparent instance of misplaced cause-and-effect, Schultz blamed the company’s leadership for focusing too much on rapid expansion, opening too many stores, and diluting the in-store Starbucks experience. Behind the CEO’s back, Schultz started working with strategy consultants and other board members to develop a “transformational agenda” centered on the core values of the company he had founded in 1982.

In January 2008, Schultz invited the CEO home on a Sunday evening, fired him, and assumed the CEO position for a second stint. Over the next two years, Schultz rejuvenated the company’s mojo by making operational improvements and focusing on employee engagement, Starbucks’ specialty coffee products and its distinctive in-store customer experience.

Schultz’s vision, focus, and execution of this transformation makes up the bulk of “Onward”. One dominant theme in the book is founder’s syndrome—the intense reluctance of entrepreneurs like Schultz to cede control of their businesses.

Towards the end of 2009 (when “Onward” was authored,) the economy started to improve. A measured recovery in consumer confidence invigorated the fortunes of most consumer discretionary companies that had suffered during the downturn. At Starbucks, customers returned to stores and spent more. Sales and profitability improved. The company’s valuation on Wall Street soared again. Conceivably, Starbucks may have enjoyed a comeback even if Schultz had remained just the chairman, retained and supported the CEO, and worked with the company’s leadership team to initiate course corrections.

That Starbucks continues to be an American success story and has done extraordinarily well to date under Schultz’s leadership is one more instance of a beloved fairy tale in the world of business—that of a company in distress rescued by the return of its visionary founder.

“Onward” is Schultz’s somewhat grandiose narrative of his return as CEO. The 350-page book is brimming with peripheral details, self-congratulatory superlatives, recurring claims, and Pollyanna-isms that are illustrative of a charismatic entrepreneur and a brilliant corporate cheerleader.

Recommendation: Skim. (For Starbucks aficionados: Read.)

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Change Management

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