Chapter 1, “Industries That Do Not Hire or Promote,” paints a negative picture of women’s participation in tech industry leadership. Chapter 2, “The Paradox,” points out the number of women who have become CEOs (in fact, celebrity CEOs) of large information technology companies, a rosier development. This chapter returns to the dark side. There are a number of reasons to believe that in the future the level of women’s participation in the industry may be no better—and, indeed, may be less—than at present. Events of the last decade, such as they are, may represent a high-water mark in female participation in tech. Those reasons include the following:
The lower ranks of managers (middle management and lower levels of senior management) are where candidates for board positions and the senior-most executive positions will begin to emerge five years from now and ten years from now. In information technology, the “pool” of likely female successors, as compared to female employees among the rank and file, is inordinately small. Down below, in the innards of companies, pickings from the pool are slim, will become slimmer as the years go by, and do not bode well for the future. The “pool problem” is common to—indeed, pandemic in—industry in general, but it is particularly acute in information technology.
The “adult supervisor” at Google was Eric Schmidt, who in 2001 joined Google, “then a young company brimming with intellect but lacking traditional approaches to product development and management.”2 Meg Whitman at eBay, Carol Bartz at Autodesk, and John Sculley at Apple were the adults in the room at their companies.
A school of thought postulates that women managers are adept at filling this role. The skill set thought to be particularly endemic among women managers could provide an enduring space for women in the upper ranks of information technology management, as companies develop, grow larger, and move toward being acquired or conducting a public offering of shares.
A recent take on gender and corporate governance, from British scholars, is the glass cliff theory.3 Professors Michelle Ryan and Alexander Haslam posit that corporations are likely to turn to a female for an officer or CEO position when events magnify the risk of failure. Professors Ryan and Haslam found that businesses appoint women to corporate leadership positions in problematic circumstances. Their appointments hence are more precarious than males’ appointments. If a woman CEO succeeds, directors and senior executives say, “We expected nothing less.” If the woman falls from grace, many, including directors, will say, “I told you so,” leaving unstated that failure and the ensuing fall must have been due to her gender.4
When we use U.S. Fortune 500 female CEOs as the sample, the glass cliff theory seems to bear up under examination. Patricia Woertz became CEO after Archer Daniels Midland had reached a nadir, with the former CEO’s son beginning a term in prison for price fixing on ADM’s behalf.5 In 2004 Susan Ivey, now retired, became CEO at Reynolds American, when the $246 billion settlement with forty-six states and other adverse judicial outcomes had laid the tobacco industry low.6 Brenda Barnes got the reins at Sara Lee after over-diversification and lackluster returns had driven the company down.7 Mary Sammons became the CEO of Rite Aid in the midst of deeply troubled times, with former CEO Martin Grass and other Rite Aid executives beginning prison terms and with the share price reduced to a few dollars and cents.8 The Rite Aid share price was flirting with $1.00 per share, which would have necessitating de-listing by the New York Stock Exchange.
In more recent times, Sheri McCoy left Johnson & Johnson to become CEO of Avon Products, at a time when Avon’s share price was in free fall, the company was ensnarled in a government investigation into illegal bribes Avon had paid in violation of the Foreign Corrupt Practices Act, and the door-to-door selling method for which the company had been famous had become outmoded and largely ineffective.9
In fact, a near-majority (ten of twenty-two) of the women who had become Fortune 500 company CEOs by 2010 had come to power only when corporations faced uncertain circumstances, or worse. Those women CEOs who came to power in precarious corporate settings include Jill Barad at Mattel; Andrea Jung at Avon Products; Anne Mulcahy at Xerox; Patricia Russo at Lucent; Susan Ivey at Reynolds American; Patricia Woertz at ADM; Brenda Barnes at Sara Lee; Mary Sammons at Rite Aid; Christina Gold at Western Union; and Carol Bartz at Yahoo!.10
A good example of a glass cliff hire occurred early in 2014 when General Motors appointed to the CEO position Mary Barra, a GM “lifer” who had begun her career as a manager at a GM automobile assembly plant. Her days at GM had begun even earlier than her employment. She received her bachelor’s degree at General Motors Institute (now Kettering University). Her father, a die maker, had been a lifelong GM employee.11
Within days of her appointment, Ms. Barra had to face an expanding imbroglio involving a fatal ignition defect in Chevrolet Cobalts and other GM automobiles. The defect had been the subject of a long-standing cover-up that went on as scores of operators of GM cars were severely injured. Deaths of an estimated 124 persons were attributed to the long-standing, and uncorrected, defect.12 Ms. Barra claimed, quite genuinely, to be taken completely by surprise, as her first weeks and months as CEO were preempted by the all-consuming need to respond to the growing scandal.13 One can infer that those in the know at GM knew of the impending storm and that insiders put at least a thumb on the scale in the process leading to Mary Barra’s appointment as CEO.14 The glass cliff phenomenon has explanatory power in the United States as well as in Great Britain, where it originated.
Does the glass cliff hypothesis have power to shed light upon the appointment of women as CEOs in information technology? A good case can be made that eight of the twelve women who became CEOs of tech companies did so under circumstances described by the glass cliff theory.
Marissa Mayer at Yahoo!: Women’s groups and other lauded Ms. Mayer’s appointment as CEO at Yahoo!, where she received a five-year “hello package” of $100 million in salary, guaranteed bonuses, and retention awards.15 Her task, emblematic of the glass cliff theory, was to resurrect “a once great bloated and struggling Internet company.”16 While “2011 revenue per average employee was $1.4 million at Facebook and $1 million at Google, . . . at Yahoo it was $316,000.” Only just inside the front door, Ms. Mayer would face the daunting task of reducing in size Yahoo!’s 15,300-person workforce.17
Before Yahoo!, Ms. Mayer had a successful career at Google, being employee number 20, and Google’s first female product engineer.18 Much more publicized was that Ms. Mayer was the first pregnant woman a board of directors appointed to a CEO position at a major U.S. public company. She gave birth to a son a few months after her appointment. Later she became the mother of twin daughters.19
Very soon Ms. Mayer became the target of criticism from both inside and outside the company. Inside, a well-equipped nursery/day care center soon materialized adjacent to the CEO suite, leading to criticism of Ms. Mayer as among the wealthy and powerful elite whose success was backed up by having “hot and cold running nannies.”20 Other women at Yahoo!, as well as women managers at other companies, did not have the benefit of on-site day care, or at least convenient on-site day care, the way Ms. Mayer had, which her critics were quick to point out.
Outside Yahoo!, matters were less than auspicious for Ms. Mayer from the get-go, as the glass cliff theory would predict. First, she was the sixth CEO in three years, after Jerry Wang (the founder), Tim Koogle, Terry Semel, Carol Bartz, and Scott Thompson (seventh, if interim CEO Ross Levinsohn is counted).21 Second, the parade of CEOs had proceeded from Yahoo!’s rejection of a $45 billion offer from Microsoft for more than twice Yahoo!’s then market value. The shadow of remorse at the rejection of Microsoft’s offer still hung heavily over the company and Ms. Mayer when she came into office. Third, Ms. Mayer caused Yahoo! to embark on a series of acquisitions, fifty of them, for $1.4 billion by one count, capped off by acquisition of the networking company Tumblr for $1.1 billion.22 Contributions to Yahoo!’s bottom line from those acquisitions amounted to nil.
Fourth, Mayer inherited a jewel within Yahoo!, which eventually morphed into a millstone around her neck. Yahoo! owned a 24 percent stake in Alibaba, the Chinese equivalent of Amazon. This seemingly stellar attribute proved to be one with which Ms. Mayer and Yahoo! were deficient in managing. Fifth, although Yahoo! has value to users as a content provider (Yahoo! Finance, for example) and as an Internet service provider (Yahoo! Mail and yahoo.com), neither Ms. Mayer nor her predecessors were able to capitalize on those strengths by garnering advertising revenue or otherwise.
The denouement came in the summer of 2016 when Verizon agreed to pay $4.8 billion for Yahoo!, a company that at its height had a market capitalization of $125 billion and for which Microsoft had offered $45 billion in 2008.23 The causes of Yahoo!’s decline were many, including a string of failed leaders, with fluctuating strategies that confused employees and consumers. Former employees saw “the root of Yahoo!’s slow decline as simpler.” The company and its CEOs, including Ms. Mayer, missed all three of the watershed changes in information technology, “the phenomena of search, social media, and mobile.”24
Ms. Mayer, of course, claimed that the sale represented a victory, but experts saw it as a defeat both for the company and especially for Ms. Mayer, who once “had immediate star power, appearing on the cover of Fortune and in Vogue magazine.” “Experts say it is tough to rebound from a rookie reign many observers see as pocked by mistakes complicated by an already-difficult turnaround.” For Ms. Mayer, “it will be like the pilot who flew the Hindenburg to then be asked to fly the Goodyear blimp during the Super Bowl.” Ms. Mayer has departed from Yahoo! With an estimated $55 million severance.25
Meg Whitman at Hewlett-Packard: Ms. Whitman had a prior incarnation as a CEO, a successful one, in ten years at eBay, the “c to c” (consumer to consumer) shopping/auction Internet site. After an unsuccessful 2012 try at election as governor of California, losing to Jerry Brown, Ms. Whitman returned to information technology, as CEO of a company much larger than eBay, Hewlett-Packard.
As at Yahoo!, HP’s top echelons (board and senior executives) appeared to be another gang that couldn’t shoot straight. HP and its directors had gone through five CEOs (four permanent, one “acting”) in seven years. In 2005 the HP board had dismissed Carly Fiorina as CEO. Fiorina had consistently over-promised and under-delivered, failing to make her numbers (quarterly and annual revenue and profit projections) time and time again. She laid off tens of thousand of workers, from whence came the nickname “Chainsaw Carly.” Many H-P employees detested Ms. Fiorina, and she drove out from the board of directors or any active role in the company the descendants of the company’s legendary founders, Bill Hewlett and David Packard.
The straw that broke the camel’s back was Ms. Fiorina’s ego-fueled refusal to appoint a COO, or chief operating officer, despite board requests and then board demands that she do so. Every even modestly successful admiral, ship captain, general, president, chancellor, or CEO has had a loyal number two, whether denominated chief of staff, executive officer, vice president, provost, or chief operating officer, but Ms. Fiorina refused to have one, despite what her Stanford degree in medieval history should have told her. So the HP board dismissed her.
New CEO Mark Hurd turned things around at HP, and relatively quickly. He came to HP as a cypher, from the company known as National Cash Register (which now manufactured point-of-sale computer terminals rather than cash registers). At HP, Hurd oversaw increases in revenues and profits. The stock price went all the way back up and then some. In 2008 Hurd engineered HP’s acquisition of Electronic Data Systems for $13 billion. The combination of a tech hardware company (HP) and an outsource services entity (EDP) produced “the largest IT company in the world,” with its market capitalization over $100 billion eclipsing even that of IBM.26 That pinnacle later proved to have been the high point.
Reminiscent of Jimmy Carter when he was president in the 1970s, Mr. Hurd committed adultery—in his heart. Mr. Hurd confessed carnal desires toward an attractive public relations consultant HP had hired. The HP board then did the unthinkable: it fired Mark Hurd, a successful CEO who had not actually done anything wrong. Oracle CEO Larry Ellison called the Hurd dismissal unfathomable, hiring the recently dismissed Hurd for his own company.
Soon thereafter the revisionists took over. A sample:
Mr. Hurd steadily increased H-P’s profits—but he did so partly by cutting spending on programs that could have set the company up for future growth [research and development, for instance]. . . . Among the areas where Mr. Hurd cut most aggressively was the services business, eliminating thousands of employees brought over from a $13 billion purchase of outsourcing giant Electronic Data Systems.27
Perhaps Mark Hurd’s actions as CEO did begin the HP slide, helping form the glass cliff Meg Whitman confronted when she became HP CEO two years later. In those two years (2010–2012) preceding Ms. Whitman’s arrival, HP’s market capitalization fell from over $100 billion to $30 billion. In November 2012, HP’s share price hit a ten-year low, dwindling downward to the low achieved in the bursting of the tech bubble, 1999–2002.
Why the dramatic slide at HP? To replace Mark Hurd, HP bought Leo Apotheker aboard. Mr. Apotheker had been an executive with SAP, Germany’s and the EU’s leading developer of business software. After coming to HP, Mr. Apotheker began scratching around for an entry “into the high-margin software market, which constituted less than 3 percent of HP’s sales at the time.”28 Mr. Apotheker found Autonomy, a UK software developer known for programs to manage large unwieldy databases. Despite being in a business similar to Autonomy’s, Oracle earlier had passed on acquisition talks with Autonomy, regarding Autonomy’s $6 billion market capitalization as unjustified.
Not so HP and Leo Apotheker: they plunged onward, paying $11 billion for Autonomy, only to find that the acquired company had cooked the books, among other things prematurely recognizing revenues that had not been earned. HP took an immediate $8.8 billion write-off. Lawsuits followed. The HP board dismissed Leo Apotheker from his position as CEO.29
Meg Whitman was coming off a general election loss in her quest to become California’s governor. The HP board reached out to her and she accepted the CEO position.30 Let’s summarize the glass cliff that Ms. Whitman faced and over which she could drive the company. Between 2007 and 2012, HP had made two gargantuan acquisitions (one for $13 billion and one for $11 billion) that largely had failed; HP’s profit had gone from a positive $5.1 billion in 2007 to a $5.8 billion loss in 2012; long-term debt had ballooned from $4.9 billion in 2007 to $24.1 billion in 2012; and the price-earnings ratio had dwindled from the 25X earnings of a growth company to the 5.5X earnings of a tired old industrial.31
As CEO, Ms. Whitman rolled up her sleeves. She announced that she would not split up the company, as analysts had wanted. Taking a page from predecessor CEO Carleton Fiorina or enfant terrible CEO Chainsaw Al Dunlap (“Rambo in Pinstripes”), Whitman announced that HP would lay off 8 percent of its workforce, or 30,000 of 349,000 employees, which would come on top of the 75,000 workers whom HP, bloated by acquisitions, had laid off since 2005.32
We leave Ms. Whitman as another female CEO peering over a glass cliff. In a retrospective entitled “H-P Faces a Long Hard Grind,” UBS stock analyst Steven Milunovich “argued that . . . H-P should revisit the spinoff [idea], punting printing along with PCs. This would free Ms. Whitman to focus on H-P’s other businesses—data center gear, software and services.”33 But that is another temporal phase, and the subject of another chapter, beyond the glass cliff Whitman faced when she came first to office.
The PC revolution overtook the days of big iron. Belatedly, IBM entered the world of PCs, in which it had to sell rather than lease the hardware, and networks linking those PCs, servers, and routers. The IBM PC business is gone now, sold to Lenovo, a Chinese company, replaced by a near-complete corporate focus on services and consulting. Former CEO Lou Gerstner’s book Who Says Elephants Can’t Dance? captures well this IBM ingredient, the ability to remake itself.36 Some companies, such as IBM, have this ability, and some don’t (HP perhaps, Yahoo! for certain).
The thesis is that, at the time of Rometty’s elevation, IBM’s future prospects represented yet another glass cliff, providing a stage for the appointment of a female CEO. A bloated workforce (434,000 employees) had become preoccupied with internal status and company politics, losing concern for and responsiveness to its customers. “Where we haven’t transformed rapidly enough, we struggled. We have to step it up with that . . . and that is on all levels,” summarized Ms. Rometty.37 IBM’s transformation also involves increased emphasis on what Ms. Rometty terms “strategic imperatives.” “Foremost among these are IBM’s own cloud-computing applications and Watson, its artificial intelligence platform.” So far, however, Rometty may be proving that elephants cannot dance, at least not always. She has presided over five years of quarter-by-quarter revenue declines at Big Blue.38
As of late, candidate and then president-elect Donald Trump criticized Ms. Rometty and IBM for closing plants in the United States, shipping the jobs to India. “If a company wants to leave Minnesota, fire their workers and move to another country and ship their products back into the United States . . . we will make them pay a 35% tax.”39 Google, Facebook, and other technology companies also have either moved jobs to or created numbers of support positions in India (see chapter 15).
Ms. Bartz also was outspoken. She called the tech industry on the carpet for its lack of introspection about the lack of diversity in the industry’s leadership ranks. She believed that men so outnumber women in the industry because a “mine’s bigger than yours” mentality prevails, “a game women are loathe to play, or do not play at all.”42 But, apropos of the glass cliff theory, at Yahoo! Bartz inherited a set of glass cliff problems very similar to those Marissa Mayer faced two years later. In the year preceding her appointment, Yahoo! “had navigated a failed acquisition offer from Microsoft and an attempt by investor Carl Icahn to replace its board.”43 “Women are recruited disproportionately into tough jobs, where the title [such as CEO] may be big but the chances for success are quite small.”
Ten years ago, Oracle acquired PeopleSoft, the leading developer of software for human resources applications. Here, too, Oracle and Ms. Catz faced a sharp drop in their market share. “More companies are opting to pay for such software as a subscription accessed from remote computer[s] rather than buy the software to install on their own computer servers.” Oracle has only an infinitesimal share (2.8 percent) of the market for cloud software. So an argument may be made that even the newest of the new among female CEOs, Safra Catz, takes the reins of a company facing daunting prospects, poised at the edge of a glass cliff.
Nonetheless, despite clouds (or the cloud) on the horizon, Ms. Catz may be humming a tune. In 2014 she was the highest-paid CEO in the S&P (Standard & Poor’s) 500, earning $43.6 million.45
Most commonly, CEOs leave their position due to retirement. Or CEOs depart because a merger has resulted not only in the disappearance of the position but the company as well. Boards of directors remove only a small subset of the CEOs who have left the corner office. This does not hold true, however, for woman CEOs. “Over the last decade, 38 percent of female chief executive officers who left their positions were sent packing.”48 That many of those women faced a glass cliff when they came into office undoubtedly adversely affected their performances later on, leading to an inordinate number of involuntary departures from the CEO position.
In some instances, the past is regarded as prologue. Information technology may not be an exemplar of that dictum. In information technology, the rocky and uneven performances under women CEOs make a good case for the assertion that history will not repeat itself. A probability exists that in the future the number of female CEOs may remain lackluster or decline.