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Yahoo to Yang: Bleeding Purple is Not Enough

So Jerry Yang has stepped down (again) as CEO at Yahoo. Unfortunately for Yahoo, he should never have taken the post in the first place (he replaced Terry Semel in 2007).

As all you Predictable Success^® followers will know, a returning founder/owner is almost always a sure sign of an organization in Treadmill trying to recover its lost glories by returning to Fun - a process that never works.

Yang told employees in his departure memo: "All of you know that I have always, and will always bleed purple," (Yahoo's corporate color). Big deal. If an organization is ever to grow beyond their founder/owners, the first painful step is for those same founder/owners to realize that their job is to downplay their personal 'bleediness' and to complete the process of passing on the vision-baton to senior and middle management.

[Someone needs to tell Howard Schultz (trying, and predictably failing, to do a similar thing at Starbucks) that it's not enough to bleed Green, or muddy brown, or whatever Starbucks corporate color is these days.]

Yang was a big 'V'*, so in an attempt to right the ship, expect to see Yahoo's board over-compensating by going for a big P when seeking a replacement CEO. Which of course will take Yahoo...right back to Treadmill.

* Footnote for avid PS-ers: Technically, Yang is a Maverick (in private workshops I might use the title 'J*rk'): not a member of the McCain-Palin gang, but rather an extreme version of the Visionary - one with little or no ability to communicate with 'O', 'P' or 'S's [i.e. his PS DNA is V _ _ _ ].

This lack of an understanding of how others think and what makes them tick is at the heart of the failure to do the Microsoft deal, which placed Yang in the position of having to communicate with one of the biggest 'O's in business: Steve Ballmer. Ballmer is as extreme in his 'O'-ness as Yang is in his 'Y'-ness. Result: No understanding. No empathy. No deal.

The Motor Industry: Bureaucracy (In) Action

The US motor car manufacturing industry (that is, GM, Ford and Chrysler - I'm exempting minor players such as Tesla) is a classic example of an industry caught in the The Big Rut stage of the Predictable Success® lifecycle.

The predominant characteristic of an organization (or an entire industry) in The Big Rut is its inability to perform any useful or transformative self-diagnosis.

In fact, this is the key differentiator between Treadmill and The Big Rut - in Treadmill, even while the organization is becoming sclerotic, management recognizes the problem and battles against it: in The Big Rut, there is both an overt acceptance that the organization is arthritic and a perverse 'Alice in Wonderland' belief that all the (to everyone else) obvious disadvantages of size are in fact competitive advantages.

Nothing could describe the US car industry more accurately.

Here's a mutli-billion dollar industry, employing tens of thousands of people (and supporting hundreds of thousands in its supply chain), the senior management of which appear never to have undertaken any serious scenario planning about two of its most basic trading assumptions:

1. The likely effect of the price of oil sky-rocketing; and / or
2. The likely effect of an intense consumer spending freeze.

What Predictable Success teaches us is that the management of an organization in The Big Rut cannot self-diagnose (and therefore fix) its underlying problems - they're the very reason the organization slid from Treadmill into The Big Rut in the first place. If they knew how to fix it, they would.

Time and again we've seen that the only way an organization in The Big Rut (or in this case an entire industry) can avoid sliding into Death Rattle is by way of a massive external intervention.

There are loud arguments being made that the US Government should provide just such a massive external intervention by way of (yet another) financial bailout for the industry.

Should it? Would doing so reverse the decline to Death Rattle and send the industry back to Predictable Success?

Sadly, there is no reason to believe it will, and one compelling reason to believe it won't. Injecting funding alone is not the intervention an organization in The Big Rut requires. Cash is not the problem here - it is just a symptom (albeit it a large and painful one).

Injecting large amounts of cash will only delay the slide into Death Rattle - it will not prevent it.

The underlying problem for an organization in The Big Rut (especially one as close to Death Rattle as the motor industry is) is a catastrophic failure of leadership.

What needs overhauled is the industry's leadership, not its cash flow. And I'm not talking about one, ten, or even 100 people 'at the top' here: while they're included, and are clearly where the primary changes need to occur, the leadership problem in the industry - as in any The Big Rut - is systemic and reaches down throughout the entire organization.

So, how do you radically (and quickly) transform the leadership of an entire industry? Thoughts for another day.

Starbucks: You can't put the genie back in the bottle

Howard Schultz, the quasi-founder of Starbucks (currently in Treadmill), returned to the CEO position at the start of this year, and has since been trying to put the genie back in the bottle (in Predictable Success terms, trying to get back to Fun), even going so far as to rehire the former executives who ran the business at that earlier, 'Fun' time.

The problem with this strategy is simple - you can't 'hyperlink' to stages in the lifecycle like that: there simply isn't a direct path from Treadmill to Fun.

Watch as the strategy comes undone and Mr Schultz increasingly flails around to find a 'quick hit' that will return the company to its old culture. When that doesn't work (and it won't), Predictable Success principles tell us that the board will eventually - albeit reluctantly, painfully and belatedly - ask Mr Schultz to step aside. Unfortunately, by this time Starbucks will be back in Whitewater, trying to reconcile its schizophrenic identity as an organization with Treadmill structures and Fun goals.

The real answer to Starbuck's dilemma? A return to Predictable Success (not a jump back to 'Fun') by a consistent but controlled re-injection of the Visionary role throughout the organization: in other words, teaching the organization how to incorporate Visionary thinking at all levels - not the return of a personalized 'Visionary' - not even if it is the quasi-founder.

Mr Schultz has fallen victim of the hubris of the Visionary - believing that their return, their vision, their zeal and passion can reclaim former glory days, when in fact it's the last thing the organization needs. Instead of 'living the vision' and 'embodying the vision' (as recent press articles have put it), Mr Schultz needs to teach it.