Marc Andreessen's big company turn around plan - Yahoo are you listening?

Marc Andreessen of Netscape fame has started blogging and has written a series of very insightful posts.  Today he writes "A Guide to Big Company Turn-arounds" which reads like a blueprint for how to turn around Yahoo (YHOO). Marc cites Hewlett Packard (HPQ) as a good example of how to do it, but the "guide" could be applied to any big company in trouble.

Marc outlines 9 steps to a successful turnaround. Please read his whole post, but here are 9 steps, with my short explanations. Marc goes into more depth in his post;

1. Go dark and execute - meaning don't talk to the press, just focus on getting the next 8 steps done.
2. Throw your predecessor under the bus - meaning blame your predecessor for everything and warn that it will take a year to fix everything.
3. Identify the 3-5 things that are working surprisingly well and double down on those. - Big companies have lots of products and projects. You can usually find some hidden jewels if you look really hard.
4. Identify the 3-5 things that are consuming lots of time and money, yet going nowhere, and kill those. This is critically important, otherwise it will be business as usual. Note, there may be more than 3 to 5 things that need to be killed.
5. Lay off a third of the work force. Tough but necessary. I was at DEC back in 1990 when layoffs happened every quarter for several years. There is nothing more debilitating and demoralizing than constant layoffs. Cut once and cut deep.
6. Reduce layers of management, then promote the "up and comers". Lets face it, the company got in this predicament because existing management was clueless. Get rid of them and promote some bright people who want to make good things happen.
7. Figure out the single most important thing your company must win, and put your single best person in charge of winning it. This step is strategic. The most important thing may not be one of the 3-5 things that are going well. You double down on those things to create some success and time to execute on the ONE thing that is absolutely essential to winning.
8. Look for 3-5 areas where your company is not playing or winning, but is clearly growing fast. Acquire the best company in that space. This will be expensive, but don't settle for the 3rd or 4th best company. Pay up and acquire the best. This will be your rocket fuel for growth.
9. In six months relaunch the company with a single, crisp, coherent, strategy and message. Then go dark again and execute on it. Sounds simple enough but most CEOs get consumed by the depressing details and forget to do the simple things.

Turning around a big company with 5,000 or more employees is a very difficult task. A new CEO from within the company will have a difficult time doing what is necessary. They were part of the problem and will have a hard time reversing some of the earlier decisions.

A new CEO from outside the company will not be constrained by prior decisions, old friendships, or pet projects. Making the deep cuts and canceling projects will be much easier. Sacred cows and long held beliefs will be open to re-examination.

Marc explains that big company turnarounds are very different from small company get well plans. One of the nice things about big companies is that they have a momentum that can sustain them. This is both good and bad. The trick is to find the "good" momentum and kill the "bad" momentum. The problem is that they don't walk around with signs identifying themselves as good or bad.

Small companies don't have the cash flow and momentum to carry them for a year while a new CEO figures out what to do. Small companies require immediate and decisive action. Cash is king in all decisions. Small company turnarounds usually focus on cash and customers first. Small companies may not have 3 to 5 things to promote and 3 to 5 things to kill. They may have only one thing...and you better make that one thing work in a hurry. I actually think it is harder to rescue a small company than a big company. But, the financial rewards for turning around a big company are insanely rich. Steve Jobs can tell you about that.

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Comments

[Joe Duck]

Excellent advices, especially for Yahoo.

[Ashish Garg]

I was reading this book, 'Good to Great' and in that book, it is mentioned many times that big turnaround companies in last 25 to 30 years did not hire the external CEOs. Instead, the new CEO was from within. Also, I think that hiring a new CEO is in contradiction with #6.