Issue #55
#55 - Zoom, Southwest, Barnes & Noble: Big Leadership Lessons From Big Brands
February 24, 2023

#55 - Zoom, Southwest, Barnes & Noble:

Big Leadership Lessons fFom Big Brands

What's up, everybody?

This week TalentStories goes full-on "LeaderStories": we zoom in on different acts of leadership at three high-profile, household-name companies. One is a win, one is a fail, and one the jury is still out on. But each is chock-full of insight we can learn from:

  • The win: in a rerun of the "over-hire-during-the-pandemic, slash-your-team-in-the-downturn playbook" that's so en vogue with tech leaders, another software CEO lays off 15% of his team, apologizes for it -- but then takes a unique step, turning this Story into a leadership win. 👩🏻‍💻
  • The fail: in late December, just before Christmas, Southwest, um, completely collapsed, canceling 16,000 flights and leaving millions of passengers stranded right at the holiday. "Dated software" got the blame, but a slightly deeper dive tells a much more damning leadership Story. 🛩️
  • The TBD: Barnes & Noble had been left for dead; bludgeoned, it seemed, by Amazon and the digital age. But from our last Story we learn it has a new lease on life -- and a new CEO making some big, bold bets. 📚

Thanks again for reading and exploring with us -- and have a great week!

Aki + Usman

P.S. The podcast link to our discussion of newsletter #54 -- “Be Like Water, My Friends: Companies Bend Over Backwards to Get Flexible" -- is right here.


#Leadership #Accountability #De-positioning

"Zoom CEO Eric Yuan told employees in an email that he would cut his own salary by 98% and not take a bonus amid a layoff announcement at the company that will affect around 1,300 workers worldwide.

"As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today," Yuan told employees. I want to show accountability not just in words but in my own actions" he added.

There. Finally.

The last time we visited layoffs, in issue #"51, "Leadership Failure Everywhere All At Once", we excoriated tech CEO's for their failure to lead: for planning their businesses so poorly, for laying off, and for "accepting responsibility for mistakes" -- without any form of repercussion or accountability.

In one stroke though -- by slashing his salary down to $10K USD -- Eric Yuan put miles of distance between himself and his CEO peers. Don't get us wrong, Yuan is still worth $3.6 billion, so it's not like he's feeling the squeeze. But at least he's made the effort to account for his mistakes. One can infer he's aware of how "responsibility without accountability" looks to his team, and to the outside world (including future hires, btw). And it wasn't just his salary that took a hit: Yuan also whacked the pay of Zoom's senior staff by 20%, and eliminated their bonuses for the coming year.

It all stands out as a rare act of leadership in an otherwise play-it-safe, business-as-usual Silicon Valley.


#Leadership #Accountability #Incentives #TheSqueeze

Definitely read this whole article by Zeynep Tukfeci, an editorial writer at the NY Times. On some level, the piece is an explanation of "technical debt"; of how, in this case, Southwest refused to improve its antiquated software, despite its staff begging that it be upgraded; despite a near-collapse of the system in 2021. She explains that, "Without more government regulation and oversight and greater accountability, we may see more fiascos like this one."

But Tukfeci also explains why Southwest didn't just update its bad software:

"If you are a corporate executive whose compensation is tied to stock prices and earnings statements released every three months, there are strong incentives to address any immediate problem by essentially adding a bit of duct tape and wire to what you already have, rather than spending a large amount of money to address the root problem."

In other words, it's easier to kick the can down-the-road, let the duct tape burst on someone else's watch, and leave your flight attendants, your pilots, and your millions of passengers (!) in the lurch when it happens.

Misaligned incentives, poor oversight, a lack of accountability; stock buybacks that enriched airline execs; record level exec comp during a pandemic in which employee comp fell by 35%; all while taking billions of government grants and low-interest loans. It's the kind of leadership Story that makes you want to take a shower after you read it. (And makes you want to work for Zoom, btw, not Southwest).


#Leadership #Trust #DemoteTheAuthority #Decentralization

Barnes & Noble. Toys R' Us. Chuck E. Cheese.

Three once-iconic companies that were all meant to be going out of business. You read the news, feel soul-crushed 😱, and convince yourself that it's just the way of the world. But then, somehow, each of them survived their brush with corporate death. Private equity or new investment swooped in, restructured and "saved the day", as it were.

Barnes & Noble is now a private company, so we don't have access to its financials. But this 👆🏻 interview with its new CEO, James Daunt, was as insightful as it was refreshing. Some highlights:

"Daunt’s focus has been devolving power to local store managers. A great bookstore, he thinks, is a reflection of the community in which it exists. A Barnes & Noble next to a thriving church needs to be different from one down the street from a high school."

"We sort of take three steps forward and then one step back,” Daunt told me. “The forward is my constantly encouraging and pushing for the stores themselves to have the complete freedom to do absolutely whatever they want — how they display their books, price their books, sort their sections, anything. Those freedoms are difficult if you lived in a very straitjacketed world where everything was dictated to you.”

"And he is dismissive of the kind of customer research that would cast that art as a science. I asked him, for instance, whether Barnes & Noble tracked the demographics of its customers. “My predecessors spent enormous amounts of energy and effort to answer questions of that sort, and I spend literally zero,” he said. “I have no interest at all in even beginning to think of that as a question. It’s totally irrelevant. Our stores are for everybody.”

It's refreshing to see a CEO buck so many management trends that are accepted as gospel: decentralizing and giving radical autonomy to his chain of stores; empowering them to reflect the community in which they belong; shunning customer research and segmented demographic data in favor of building a more inclusive experience. Who's to say the new approach will work? The point is, he's cutting squarely across the corporate grain, and doing it with conviction. Some would even say he's leading.

Thanks for reading, and have a great week. 🙏🏻

Work moves pretty fast. If you don't stop and look around once in a while, you could miss it.
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