Twitter recently announced the departure of four top executives, at a time when share prices are plummeting and growth has been disappointing.
CNN Money reported the reason for the changing of the C-suite guard as “personal burnout” unrelated to the company’s struggles of late.
However, some reports attribute the “hashtag hashing” as a necessary step to shake up stagnant performance.
Can such wholesale change at the top make this much of a difference and turn around a company’s fortunes?
You Can Fire the Coach, but Players Will Perform the Same
When a sports team isn’t performing well, the knee-jerk reaction is to fire the coach. Yet, numerous studies show that replacing a head coach has little effect on team performance.
Indeed, Freakanomics reports one study where not only does a new coach do little to improve the poor team performance, it actually makes the team perform worse.
While business relishes in sports metaphors, the analogy here may be a bit imprecise. True, coaches, like C-suite executives, set strategy, but they don’t actually play in the game the way senior managers do.
If players aren’t hitting the ball, then there isn’t much a coach can do besides recommend recruiting new players.
C-suite executives, on the other hand, have more direct control not only over recruiting talent but, also, unlike coaches, they can actually try to change the rules of the game they are playing. In fact, that’s one of the primary reasons they are there.
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Leadership Changes That Made a Difference
The classic example of the potential benefits of leadership change is the return of Steve Jobs to set right a then-moribund Apple.
Similarly, Lee Iacocca led Chrysler out of bankruptcy in the 1980s, and Ed Whitacre Jr. successfully turned around GM following the automaker’s government bailout in 2007.
… and Some That Didn’t
On the other hand, the jury is still out on Marissa Mayer's leadership success at Yahoo!. Or Jack Dorsey’s return as CEO of Twitter.
Consider also the case of Reddit, which replaced Yishan Wong with Ellen Pao who, in turn, resigned shortly thereafter following a series of unpopular management decisions.
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A Stanford University study indicates that 3,365 CEO turnovers from 1993 to 2009 were fired as the result of overall poor industry performance. In other words, they were fired for factors that were largely beyond their control.
That said, are you considering doing a C-suite shuffle for you company? Will it actually make a change in your company’s fortunes? Or could it, like a coaching change, preserve the status quo, or make your situation worse?
Here are some things to ponder.
When Differences of Opinion Cannot Be Resolved
Your company direction is set by top management. But when there are serious clashes of opinion about which direction to take, the result is usually a standstill.
Who is right or wrong is a decision ultimately left to the company founder and board. But once a decision is made, everyone has to be on board to support it.
The issue isn’t whether the right decision has been made (that remains to be seen), but the fact that a decision has been made. Those who still want to dissent should be asked to leave to “pursue other options.”
Is It Just a Power Struggle?
Many boardroom moves, alas, are motivated more by politics and personal aggrandizement rather than legitimate disagreement about what is best for the company, employees and customers.
Unfortunately, it’s often hard to distinguish if the disagreement is legitimate or is about just clashing egos.
Your Executives Are Burnt Out
Those who recognize they’ve had enough will make the decision for change easy for you. They’ll offer to resign. Then are those who think they should or can soldier on regardless of whether their heart is still in it.
CEO.com lists some of the telltale signs to look out for that indicate C-suite executives may just be going through the paces, including:
- Over reliance on the same people, and a shrinking inner circle of advisors who bring the same old perspectives.
- Inaction, delayed decisions, sporadic participation in unfolding events.
- The same old same old, inability to retool, change messaging, or otherwise proactively respond to changing circumstances that require fresh approaches.
They Are Ineffective
We mentioned earlier the return of Steve Jobs to resurrect the company he had founded. The part that often gets left out is why Steve Jobs was dismissed in the first place.
Due to a series of failed product launches and an insistence on being right when, well, he wasn’t, Jobs himself admitted the firing was the best thing that happened to him.
It gave him the opportunity to learn how to run several other businesses effectively before returning to the helm at Apple to make the company what it has eventually become.
The Pieces Are There, but No One Is Putting Them Together
A C-suite shakeup isn’t going to matter if your products and services aren’t addressing customer needs at a competitive price point; your employees aren’t creatively addressing market forces and business requirements; or due to a variety of other issues that have to be solved at the rank-and-file and product-development levels.
But if these problems exist, then it’s up to senior management to fix the problems. If they haven’t, that’s a problem.
Worse, if everything seems to be working in place as it should, but results aren’t being achieved, there’s something wrong with strategy execution. In which case, it’s time to implement some new strategists.
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