Last Updated May 18, 2010 12:27 PM EDT
The same goes for products, organizations, companies, and businesses. And determining whether to hold things together with duct tape or make a major strategic change is not only critical, it's way more complex than it sounds.
A couple of weeks ago my fancy new Breville blender, with more features and intelligence than you'll ever need or want, went on the fritz. You know how it goes, the more stuff they pack into these gadgets the more likely they are to break. That's a lesson of its own.
Anyway, after hours of Web searches and dialog with customer support, the manufacturer agreed to replace the defective blade assembly. In the meantime, I dug our old Waring blender out of the closet. When I turned it on, I remembered why I'd replaced it. It ran rough and noisy. So I tried a little WD-40 and, two weeks later, it's still running like new.
Had I tried the WD-40 instead of buying the new unit, I would have saved myself time, frustration, and money. But I didn't. I got it wrong.
Contrast that with my old Toro weed whacker which was held together by about 50 feet of duct tape. For the last couple of years of its life, it was nothing but trouble. I finally bought a brand new Stihl, the king of small-engine power tools. Sure, it cost more than duct tape, but in terms of time and frustration, it was worth every penny.
In hindsight, I wish I'd bought the Stihl sooner. Again, I got it wrong.
With those examples in mind, let's look at a troubled company, Yahoo.
In 2007, Yahoo's board bowed to growing shareholder frustration with deteriorating share price and exorbitant CEO pay and pushed out CEO Terry Semel. Yahoo's prospects had dimmed since Google entered te market, but instead of taking its time and conducting an exhaustive search, the company immediately promoted cofounder Jerry Yang.
The move surprised me, at the time. I thought the board acted rashly in appointing Yang - a relatively inexperienced executive - to perform what would clearly be a challenging turnaround. I didn't think he had the experience to pull it off.
Instead of searching for a brand new Stihl, the board decided to use duct tape.
The rest is history. Yang embarked on one disruptive reorganization after another without any real changes in strategy. More and more duct tape. The result was a monumental brain drain of executive and technical talent, a botched Microsoft acquisition and a sweat deal for shareholders, and further deterioration of the share price.
When the board finally admitted its mistake and ousted Yang in favor of Carol Bartz, it may have been too late to fix the troubled company. Nevertheless, Bartz executed one top-down reorganization to cut through the bureaucracy and streamline decision-making and crystallized the company's strategic direction. Today, profits are up, but revenue growth remains elusive. Time will tell.
Similar examples abound, but for all of them, the management lesson is this:
When a product, organization, business, or company is in trouble, it calls for a methodical process, primarily to determine the risk-reward benefits of holding things together with duct tape or going with a brand new Stihl. But that process can be difficult, complex, and tricky. All-too-often, as with Yahoo, executives, leaders, and board directors take a short cut. And when they do, just as in the blender and weed whacker examples above, no matter how smart they are, they're just as likely to get it wrong as they are to get it right.