Does Marissa Mayer Have What It Takes to Fix Yahoo?
Fred Hassan, a six time turnaround CEO, has his doubts but feels as a product leader, Marissa Mayer is the right person. The difficulty lies in the fact that as a newly minted public company CEO, she has never seen a turnaround at Google—and needs advice and support to undertake what arguably is the most difficult task any CEO faces.
March 20 2013 by ChiefExecutive.net
First she ended telecommuting at Yahoo; more recently she has tightened up hiring standards a great deal according to Reuters, personally overseeing all new hirings which slows down the process. She reportedly wants to ignore recruits that didn’t graduate from top schools, saying in a recent tweet, “why can’t we just be good at hiring?” Mayer says further that she wants Yahoo to be people’s first choice not the “worst” choice to work in Silicon Valley.
Speaking on CNBC, turnaround veteran Fred Hassan, former CEO of Schering-Plough and chairman of Bausch + Lomb and senior partner at Warburg Pincus told Maria Bartiromo that he has mixed views on all this. CNBC asked Hassan if Mayer has the right stuff to turn around the company. “As a product person she is the right individual,” observes Hassan, “but as a leader she is two degrees of difficulty removed from the challenge. She has a lot of courage to take the job Yahoo. First, she has never been a public company CEO, and second, she has never had to face a turnaround. To be effective at a turnaround, one has to build the foundation from the inside to make this work. You cannot do this without culture change. It’s a much tougher job to conduct a turnaround.”
When pressed for details Hassan drew extensively from what he calls his “playbook,” which he describes as the CEO’s “ABC Advantage.” Hassan believes that attitude drives behavior; behavior drives culture; and culture then fosters executional excellence and sustainable high performance. According to Hassan, attitude, behavior and culture (ABC) are productivity advantages, in addition to business acumen and drive. In this way a CEO creates a culture that develops effective strategies and powerful execution.
His playbook forms the core of his recently published book Reinvent, which sets forth how he managed numerous turnarounds. Before chairing Bausch + Lomb’s board in March 2010, he was recruited after the Pfizer/Pharmacia merger in 2003 to be chairman and CEO of Schering-Plough. The pharma giant could hardly have been in worse shape, according to management advisor Ram Charan. Its revenues were plunging; it had no promising products ready to pick up the slack; and various authorities of the U.S. government had launched investigations with no end in sight. Fortune magazine predicted that “Fred Hassan may be heading toward his first high-profile failure,” and that it would be “miraculous “ if the company survived.
After fixing what was broken at Schering-Plough the company embarked on 17 straight quarters of double digit revenue growth. What was a cash burn of almost a billion dollars a year turned into a positive cash flow of $2 billion. (Prior to S-P Hassan turned around Sweden’s Pharmacia and Michigan’s Upjohn in 1997-1998, so the playbook is based on a good deal of direct experience.)
“She’s taking a hard look at talent. I agree that she is right to do this because one needs the right people in place to execute. It’s an important leg of the stool—but not the only one,” says Hassan. “Every new person represents a couple of million dollars in new investment. But she has to take people with her and I don’t necessarily see that happening as clearly as it should.
“What’s critical at this stage is communicating her view of the future. It’s about her personal authenticity. It’s about building trust and purpose so that people can believe in her and see a common purpose. Once they have that they are inclined to want to come to work every day to see it through. Once people see a common mission people will converge around doing the right things. Right now she does things that the media notices and that people question and see as arbitrary. She’s doing the right things, things she learned at Google around products that are definitely good for Yahoo, but as to fixing the culture it is not so clear. She needs help and advice from her board.”