Alongside the glass cliff theory, another predictor of the future fate of women as IT CEOs is the mixed performance of women who have headed up Silicon Valley corporations. That track record includes extremely poor performances, as touched upon in the previous chapter. This chapter amplifies that theme. Along the way, the historical accounts of women CEOs demonstrate how rapidly trends and fads, no matter how ephemeral, influence the industry.
In her six-year tenure at Hewlett-Packard (1999–2005), Ms. Fiorina saw the HP share price fall to half, and then continue downward. In her 2016 campaign for the Republican presidential nomination, Ms. Fiorina represented that in her era tech company stocks fell 80 percent. That may well have been close to the truth for HP under Ms. Fiorina, but overall, as the “tech bubble” burst, the NASDAQ tech index fell 27 percent, not 80 percent.1
To Jeffrey Sonnenfeld, associate dean of the Yale University School of Management, Ms. Fiorina “destroyed a corporate icon.” Among CEOs, Mr. Sonnenfeld rated her “the worst because of her ruthless attack on the essence of a great company.”2 The sobriquet “Built to Last” referred both to the company’s products and its vaulted “HP Way” of internal governance and product development.3 Fiorina had respect for neither, lampooning the HP Way. “Carly can market the tar out of herself. That’s what she’s known for,” one Wall Street analyst summary description of Fiorina’s reign concluded.4
Outside Yahoo!, in the press, the latest photographs of the usually attractive Ms. Mayer have taken on that startled, “deer-in-the-headlights” look. Inside Yahoo!, Ms. Mayer misstepped time and time again. For instance, she decreed that employment required employees to be on-site at least four days per week. At Yahoo! as well as at other companies, employees had increasingly chosen the option of telecommuting from home or other remote locales, communicating by email and via the Internet. Indeed, the “work anywhere, any time” culture had become entrenched, a Silicon Valley standard.5 The prevailing ethic’s downsides were that employees no longer knew each other, let alone brainstormed and strategized, at least in the way face-to-face coworkers are supposed to have done. Impersonal, faceless interaction spilled over into the workplace: employees emailed coworkers whose offices were two doors down the hallway.6
Mayer instituted other practices unpopular with Yahoo! employees: “She . . . pare[d] down the workforce through a rigorous quarterly review system, modeled after Google [and GE and Jack Welsh’s ruthless “rank and yank” system]. [T]op performers receive generous bonuses and the underperformers are dismissed.”7
Understandably, Ms. Mayer had come from Google, a company that encourages face-to-face employee interaction. Rather than by fiat, Google encourages face-to-face interaction with on-site facilities: restaurants, workout facilities, relaxation areas, rock climbing walls, and more. Google employees dining solo in the company’s restaurants are encouraged to take up a flag for their table. Seeing a flag, an engineer might join a product development or sales person’s table at lunch. Employees thus have a window on what is going on in other parts of the company. Mayer attempted to emulate that at Yahoo!, with the stick rather than with the carrot, making it immensely unpopular.
In her first full calendar year in office, Ms. Mayer committed other missteps, or what many onlookers regarded as missteps:
The latter produced calls for Ms. Mayer’s dismissal. Hedge fund Starwood Value “called for Yahoo! To halt its acquisition strategy, which it said has cost the company $1.3 billion and clearly not delivered value to shareholders.” An apparently defiant Ms. Mayer pledged to continue on the course she had set.10
Ms. Mayer solidified her membership in the gang that couldn’t shoot straight with the Alibaba fiasco. The year 2015 began with hope that Yahoo! would earn tens of billions through the sale of Alibaba shares (Yahoo! proposed to sell a 15 percent stake [383 million shares, worth approximately $31 billion]—its total stake amounted to 22.8 percent of Alibaba). The fly in the ointment was the refusal by the Internal Revenue Service to issue an advance opinion that the spinoff would be tax-free at the corporate level. An entire year of highly publicized on-again, off-again proposals ended with Ms. Mayer calling off the proposed sale.11 Yahoo! shareholders once again were brides left at the altar.
Following her failed acquisitions strategy, Ms. Mayer shifted to her second and third strategies. She axed additional employees, early in 2016 reducing the Yahoo! workforce 15 percent, from 14,000 to 10,700, with further cuts to come.12 She also announced the third strategy: Yahoo! Would spin off its core business, either into a newly formed company or via a sale to others. Ms. Mayer then began unraveling the ventures at expansion she had caused Yahoo! to enter two and three years previously.13
The chorus was all condemnatory. Yahoo! was a “Portal to Nowhere.”14 When one of Ms. Mayer’s responses was that the changes she had implemented still “would take a few quarters to translate into higher growth,” financial columnists were gobsmacked: “What about the past three years of Ms. Mayer’s tenure? [She] has failed to transition Yahoo from a lumbering legacy platform into a streamlined Internet business.”15 Toward the year’s end, a news piece observed that “many investors have lost patience, saying the embattled chief executive has no clear sense of direction and has misled investors and advertisers about the company’s progress.”16
Alarmed at the number of executives departing, the Yahoo! directors began a formal process of exploring “strategic alternatives.” They took the extraordinary step of excluding the CEO (Ms. Mayer) from the process.17 In the wings, would-be purchasers (Verizon, AT&T, Comcast, Alibaba, Softbank, Twenty-First Century Fox, Walt Disney, Google, Microsoft, News Corp., IAC/Interactive Corp.) queued up.18
Meanwhile, institutional investors (Starboard Value, Spring Owl Asset Management, Canyon Capital Investors) proposed radical reforms at Yahoo!. Starboard said “it would not back down from its fight with Yahoo! Inc. until Chief Executive Marissa Mayer is out.”19 The Wall Street Journal featured Ms. Mayer on its short list (an extremely short list, numbering three) of “executives to watch in 2016.”20
The board of directors engineered the sale of Yahoo! to Verizon for $4.8 billion.21 Forbes labeled the sale “the saddest $5 billion deal in tech history.” Yahoo!’s market value had exceeded $125 billion in 2000.22 Then, following discovery at Yahoo! of a massive security breach of 500,000 subscribers’ personal data, Verizon negotiated the price still lower and the Yahoo! board of directors cut Ms. Mayer’s pay.23
Ms. Rometty has been more a stealth CEO, not much in the news, low in profile compared to Marissa Mayer at Yahoo!. Nonetheless, Ms. Rometty, who took office in January 2012, joins Ms. Mayer and Matthias Muller at Volkswagen as one of the three “executives to watch in 2016”: “After 14 straight quarters of declining revenue, International Business Machines Corp. is trying to reinvent itself. . . . CEO Virginia ‘Gini’ Rometty’s challenge is to shift IBM’s business from products tailored to large, individual customers to offerings that appeal to entire industries.”24
Other views are that Ms. Rometty and IBM must square up to another revolution in information technology, the advent of the cloud. “A growing number of analysts fear IBM may be on the wrong side of a major technological shift [to] cloud computing.”25 In the future, software and hardware will be in the cloud, available for prospective users to pull down from above, renting what they need, for the time a user needs the particular application. By contrast, under its business model, IBM “makes much of its money selling software, hardware and computer services installed by its army of technological consultants.”26 In 2013 IBM’s net income shrank 21 percent and its earnings declined 15 percent. Institutional investors, including activist hedge funds, blamed Ms. Rometty for the disappointments. The headlines read, “Rometty Feels the Heat.”27
Fast-forwarding two years, IBM was still trying to turn the corner. The company had shifted significant resources to its Bluemix cloud computing service and to data analytics software. On the other hand, financial results were “not sterling”: revenue fell again, to 8.5 percent, “making for 15 straight quarters of declining sales.” Through a spokesperson, Ms. Rometty pleaded for additional time: “We’re transforming a big company. We’ve always said that this was going to take time.”28
Revenues, profits, and stock price again fell in early 2016. Ms. Rometty appealed for still more time: “We are becoming a cognitive solutions and cloud computing company,” but as analysts observed, one with “its older businesses shrinking faster than the new business [is] growing.”29
Chapter 14 describes the STEM (science, technology, engineering, and mathematics) education wave that, over less than a decade, has enveloped secondary and post-secondary education, arguing that the STEM movement should be leavened with other ingredients. Carol Bartz’s short tenure as CEO of Yahoo! may be evidence for the latter point.
Business leaders and educators see the STEM movement as particularly necessary to move women and girls forward in technology. The history of Carol Bartz as well as that of Marissa Mayer might give STEM advocates pause, for Ms. Bartz and Ms. Mayer represent two of the more spectacular CEO flameouts of our time. The two women have the distinction of having the deepest, highest-quality STEM backgrounds in the female CEO crop, Ms. Bartz from the University of Wisconsin (PhD in computer science) and Ms. Mayer from Stanford University (BS and MS in computer science).
The Yahoo! board dismissed Ms. Bartz in September 2011, two years and four months after her appointment in April 2009. In retrospect, Ms. Bartz’s prospects for success were narrow indeed.30 Earlier, Yahoo! had shifted away from an advertising-dependent, search engine and email format to attempt to become a digital media company that produced original content (Yahoo! Finance, Yahoo! Sports). This opened wide the field for Google, which perfected its DoubleClick Ad Exchange and became overwhelmingly the search engine of choice. Yahoo! could not then go back. Google had preempted the field.
Then social media came to the fore, rendering large chunks of the Yahoo! magazine format quickly obsolete. In many cases, news traveled faster via Twitter or Facebook than it ever could via specialized online magazines. At Yahoo!, Ms. Bartz’s biggest failures were that, although she thrived on technology and engineering, she lacked expertise in strategic thinking, marketing, and sales. For example, when asked whether Facebook posed a competitive threat to Yahoo!, Ms. Bartz dismissed the possibility on the grounds that Facebook did not have the revenue to compete globally.31
Yahoo! shares declined 15.4 percent in 2010. The disastrous first and second quarters of 2011 sealed Bartz’s fate. She had missed the boat on social networking and its effects. She had failed to find a new niche for Yahoo!. Effectively, it remained a company without a mission, as well as one not nimble enough to reinvent itself in a quickly changing environment.
The previous chapter left Meg Whitman as the new CEO of Hewlett-Packard, struggling to unwind the Autonomy acquisition and to reduce debt and employee head count (from 375,000) at the bloated company. She resisted calls to split the behemoth in two (“Together we are stronger”).32 In October 2013, as new CEO, she announced that “we are better together.”33 Two years later, one financial columnist wrote that “Ms. Whitman’s only tangible achievement has been to reduce net debt about $9 billion [from $27 billion]. [HP] seems as strategically moribund and unmanageable as ever.”34
Clients, students, and laypersons often ask questions about corporate governance and finance, thinking that there is an answer. They are frequently incredulous when they discover that there is no one answer and that, as often as not, fads are extremely influential. Further, Wall Street investment bankers frequently initiate the fads in quests for large fees. The prospect of a fee rather than the merits dictates their answers.
In the 1990s the fad was the issuance of “tracking stocks.” Instead of spinning off (“hiving off”) a subsidiary or a division, a parent company would retain the unit but issue a stock whose revenues and profits tracked the separated but still internal unit. U.S. Steel and General Motors, among others, issued tracking stocks. Fads have included step bonds, TIPs, strip securities, preferred stocks, convertible preferred stocks, convertible debentures, contingent convertible securities (CoCos), and endlessly onward. The fads come and, as often as not, go, receding into the background.
The latest trend, or fad, on Wall Street has been to split a publicly held company into two publicly traded companies, thereby “unlocking shareholder value.” Pharmaceutical companies have done it (Abbott Labs with Abbvie and Baxter Labs with Baxalta). Oil companies have bifurcated themselves in to exploration and extraction (the upstream part) and refining and retail (the downstream part). Sunoco and Marathon (now spun off as companies separate from U.S. Steel) are examples. Alcoa and Xerox put plans on their drawing boards for separations, unlocking the higher-tech, value-added part from the older, more staid operations of the companies. Trying to stave off extinction, newspaper companies (Tribune Publishing and Gannett, for example) saw splitting in two as salvation. In the tech field, Ms. Whitman’s former company, eBay, split itself into eBay and PayPal. Xerox has also pursued plans to split in two.35
Surprisingly, after three years in office and no progress in turning HP around, Meg Whitman reversed herself, announcing that late in 2015 HP would hive itself in two: “The new HP, Inc. will carry on HP’s personal computer and printing operations. . . . The other part, Hewlett Packard Enterprise [HPE] will sell HP’s products and services for large companies, including computer servers, data storage, software, and consulting.”36 Ms. Whitman and HPE did themselves one better, later announcing that half of the HPE half would itself be split, the spun-off technology services operation then to merge with Computer Sciences Corp.37
The resulting question has been whether Ms. Whitman’s reversal of course has been a diversion from HP’s dismal performance during her tenure as CEO (H-P shares are down 62 percent since she took over). Or is it a copycat move by Ms. Whitman, imitating what has gone on around her, the current fad or trend, the “restructuring” that investment bankers always seem to be recommending?38 Opinions are divided. A negative outlook is that “Three years after putting the kibosh on the idea of spinning off its personal computer business, HP is now ready to do just that. . . . The company’s turnaround efforts have hit a brick wall.”39 By contrast, Ms. Whitman’s spin is wholly positive: “We needed to be smaller, more nimble, more focused.”40 Needless to say, Ms. Whitman will take for herself the CEO position at the more cutting-edge Hewlett-Packard Enterprises.
And, as a final fillip, in the manner increasingly of CEOs everywhere (Chainsaw Carly Fiorina, Rambo in Pinstripes Al Dunlap), Ms. Whitman announced further cuts in the H-P workforce, which had once numbered 375,000 employees. Ms. Whitman and HP announced a further 10 percent reduction from the 300,000-employee level, putting 30,000 additional people out of work.41 Then Ms. Whitman put herself out of work, in December 2017 announcing that she would step down from all roles at HP and HPE, effective January 2018.42
Taking a page from Ms. Whitman’s “sampler,” and facing adverse stock market reactions to the financial results during her tenure, CEO Ursula Burns announced that Xerox will split itself in two.43 The court of opinion also reconvened in order to consider anew whether Anne Mulcahy, Ms. Burns’s predecessor as CEO of Xerox, had indeed saved the iconic copier and document-handling entity. Later, Ms. Burns announced that she would relinquish the CEO title and position after Xerox split itself.44
All of these tales of mixed—indeed, poor—performance by female CEOs in the information technology field may, in certain sets of hands, argue for fewer rather than more women in senior management of tech companies in years to come.