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Over a month ago I predicted layoffs by major banks and Bank of America in particular as a result of their mortgage dealings in the past decade. “Bank of America is under severe pressure and will probably be next.” (to start layoffs) - August 1, 2011. BofA announced last week that 3,500 would be dispatched. Today, the headline is that CEO Brian Moynihan has fired former executive stars Sallie Krawcheck and Joe Price. I’m not qualified to advise or criticize Mr. Moynihan, but when heads start rolling at the top of an organization it is typically a scapegoating move meant to buy time. It is not unusual for the CEO to be the next amputee.
On another front, yesterday Yahoo fired Carol Bartz barely 2 years into her stint as CEO. Ms. Bartz also knew how to lay off people, but not how to redirect a floundering ship. In coming days we will see a series of CEO departures and C-level shake ups (see HP below). However, any deeply sick organization is not going to get well by firing people who just a few months earlier it praised. BofA and Yahoo are suffering from past sins of different types. Both need a thorough physical. Until sick companies accept that a new life style rather than amputation is the path to health they will continue to lurch along.
Before your company flounders help your executive team see that a new look into the marketplace is the first step back to health. Old views and old ideas are what got companies into trouble. It is insanely clear that the decade of the teens is vastly different in almost every way from the turn of the century. Can you even remember what the market was like in 2000? We had just recovered from the Y2K mania and the collapse of Dotcom. Today, technology, customers, competitors, the global economy and financial leverage are not at all what they were. Your team needs to step back, wipe away any lingering memories of the past and get a grip on the imperatives of the new market.
P. S.
Keep your eye on Hewlett Packard. The stock price is off more than 20% in the past 3 weeks. New CEO Leo Apotheker Hewlett-Packard Co. announced he reshuffled the public-relations department, a week after a lower forecast and plans for a shakeup sent the company’s stock plummeting. Shooting the spokesman (who was an Apotheker buddy from SAP) won’t change the fundamentals of what is appearing to be indecisiveness.
Let’s see what next week brings….can hardly wait.
Jac
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Dr. Jac Blog 
