by Jean-Louis Gassée
After tens of thousands of layoffs, what can tech company CEOs do?
To clarify the title above, let’s return to the start of a serious and fun May 2010 Monday Note tiled Ballmer just opened the Second Envelope:
“You know the business lore joke. The departing CEO meets his successor and hands him three envelopes to be opened in the prescribed order when trouble strikes. First crisis, the message in envelope #1 says: Blame your predecessor. Easy enough. Another storm, the the CEO opens the second envelope: Reorganize. Good idea. And when calamity strikes yet again, he reaches for the third: Get three envelopes…”
Reorganizing was just what Ballmer had done, kicking out key execs Robbie Bach and J. Allard. Which made me think the Third Envelope wasn’t far off. I was wrong: Ballmer’s reign at Microsoft was to last till February 2014 when he was finally allowed to buy a Los Angeles sports team.
Back to the early part of 2023 and tech companies’ fall from grace (and free money), one wonders: Which CEOs are, or should be writing, Three Envelopes?
Given my record just mentioned, I won’t make pointed predictions.
With one exception: Elon Musk. The air around him is so turbulent that we could forget he’s already written Three Envelopes. Indeed, at Twitter, the vox populi, an online poll told him he ought to resign his CEO position at the company. Graciously or not, he said he accepted. And nothing happened, he’s still at the helm, letting more people go, refusing to pay some vendors and looking for one or more business models that would make the company solvent and allow him to recover enough of the $44B purchase price.
In parallel, Musk just held a 3+ hours Investor Day event that proved long on lofty promises such as some day building 20 millions cars and short on specifics such as new car models. And, to add to the turbulent atmosphere around him, Musk just announced he was interviewing people to build a Generative AI (GenAI) organization to compete with the likes of OpenAI. Why? Because existing GenAI project are too “woke”… We can sigh all we want, but two thoughts keep floating to the surface: Don’t take what Musk says at face value. And don’t bet against him.
But what about other prominent and troubled tech companies, massive layoffs following frenzied hiring, promising project suddenly jettisoned? What would push a top exec to pound their chest before handing the required envelopes to a new leader?
Looking for possible answers, I went around the Web, googled “complaints about [company X] culture. Setting aside unavoidable rants, and staying as close as possible to recent events, one finds a lamentable, time worn, banal set of human frailties.
We’ll start with BS self-induction. Let me explain. Charismatic leaders are magnetic; from their strong persona emanates a powerful field that influences others and persuades them to believe and follow. But… as with electromagnetism, the emitted field also acts on the emitter. Very assertive leaders are prone to themselves fall for the stories they enthusiastically tell others. A highly visible example is a company founder changing the name of company he founded to spread a new message: Our future is in a new version of fully-immersive computed recreation of reality. As a result, 11,000 people were laid off, perhaps with more to come. On darker evenings, I hope that CEO was cynically telling tales rather than completely believing them.
I’m sure readers will look around and find other examples of intoxicating grand tales, such as but not limited to the promises of AI applied to the auto industry.
Another old poison is easy money. Why not launch this project, research that technology? We can afford it and look at the potential if it works. Add the visionary sheep effect, competitors are doing it, and you see leaders endorsing “enormously promising” adventures such as voice recognition or AR/VR goggles and glasses. Regarding voice recognition, a connaisseur, Satya Nadella, just said “voice assistants like Siri, Alexa, and Cortana are ‘dumb as a rock’”. Did Microsoft’s CEO just discover that, or how long has he known it? And, while he is cleaning up product portfolios, what will he do about the company’s Surface devices that waste money unsuccessfully competing with the likes of Dell, Asus and others?
There are many other examples of easy money toxicity, but we need to turn to something even more poisonous: large organizations’ loss of meaning. And the resulting hardening of corporate blood vessels. We can illustrate loss of meaning as follows: in a healthy organization, everyone from the friendly receptionist to the CEO can concisely say what the company’s mission is. Even drunk at three am under the rain, the person can utter words such as “we organize the world’s information” or “we make personal computers”. Once a group of people loses that ability, that cohesive force, psychic energy is rerouted towards individual power acquisition and preservation. Now, compound this with easy money and grandiose projects and you get dangerously inward-looking organizations. There, the rules are clear: advancing one’s rank and compensation demands getting more staff on one’s project. A sad and unfortunately not completely obsolete story of organization toxicity is aptly told in a Vanity Fair article titled Microsoft’s Lost Decade. To be fair to Microsoft’s current leadership, company culture has considerably evolved and the Vanity Fair piece should just be seen as more generally describing ailments that threaten large rich organizations.
As a part of the loss of meaning syndrome, we can turn to one of my favorites: the Product Manager proliferation. On paper, the role looks logical, almost unavoidable. In theory, the Product Manager coordinates, harmonizes. There are market requirements, engineering feasibility, supply-chain availability and financial considerations to meld together in the evolving management of a product project. Very logical, orderly, looks could on a Board Presentation slide. What could go wrong? Human nature. Who’s really responsible, who gets or loses meaning? My own — and not necessarily shared belief — is the engineering lead ought to stay in charge and be judged on their project’s overall fitness to the company’s business. Injecting a Product Manager’s ego and lesser technical knowledge in the mix only muddies the waters. An admittedly naive perspective — but one stemming from a life in the Valley.
Returning to the question in the title, no clear answer, or answers avail. This for a wide set of reasons: the ills I’ve described above (and others I refrain from mentioning) are almost eternal, as we’ve seen for older organizations such as IBM or, more recently my dear old HP. The coming months will provide more answers.
— jlg@gassee.com