“Coca-Cola Co. said on Friday it would continue to make acquisitions, but they were not necessary for the world's largest soft drink maker to meet its long-term growth objectives.
“Coca-Cola reiterated its long-term targets to increase its annual sales volume by 3 percent to 4 percent, revenue by 5 percent to 6 percent, operating income by 6 percent to 8 percent and earnings-per-share by a high single-digit percentage rate.
“Those targets do not include acquisitions, said Coke Chief Financial Officer Gary Fayard during a presentation at a conference in Florida hosted by the Consumer Analyst Group of New York.
“‘We will continue to do bolt-on acquisitions but they are not included in the growth model,’ Fayard said, adding that the company's picture of success was to reach its targets by growing its existing business.
“‘We can never replace organic growth with acquisitions,’ said Chief Operating Officer Muhtar Kent, who will soon become chief executive officer. ‘Organic growth is the oxygen of our business.’
“Kent also said that acquisitions would have to be done in a disciplined manner.
“‘You can't just keep adding things to your system,’ Kent said. He also said the company was looking at fewer, but more important brands, than in the past.
“‘We're not focused on big bets that are going to be big and important,’ Kent said.
“Coca-Cola has benefited from its recent acquisitions of FUZE teas and Glaceau vitaminwater, which have boosted sales at a time its traditional carbonated soft drinks, including Coca-Cola, Diet Coke and Sprite, were experiencing sluggish U.S. sales, as many consumers began choosing drinks like bottled water and tea, which are viewed as healthier.”
(“Coca-Cola says M&A not needed for growth targets.” Martinne Geller. www.reuters.com. February 22, 2008)
ADOPTING AND SWALLOWING what others have developed, abandoning our own quest for internal development, is a high-risk strategy for corporations and individuals.
Surely, we do adopt somewhat from others, but who are we and what do we have that can be built into distinctive value?
Organic Coke: The Real Deal
Costly, Risky, Threatening - And Vital
“Citigroup Inc. is selling or closing some retail branches and consumer-finance operations in Europe, Asia and Latin America as part of a push to devote its energy and capital to businesses with higher profit potential...
“The steps provide the latest glimpse of how Vikram Pandit, who became Citigroup's chief executive in December, is looking to overhaul the giant banking company…
“Some investors are agitating for radical action, including a breakup of Citigroup…
“Among Mr. Pandit's top priorities is to make Citigroup more efficient in its allocation of capital... To accomplish that, Mr. Pandit last month said that Citigroup will shed ‘non-core assets that are misaligned or do not adequately support our growth strategy.’
“The hope is that by reducing the bank's presence in countries with particularly slow growth or weak economies, Citigroup can shift more capital to places with blossoming middle classes and less competition. Such locales include Thailand, Russia and the Middle East.
“The same thinking this year prompted executives in Citigroup's U.S. retail-banking group to scale back their growth plans and to abandon some of the U.S. markets that the bank recently entered…
“In an interview, George Awad, a Citigroup executive in London overseeing some of the pullback moves, said the bank is showing increased determination to deal with businesses and markets where results have been lackluster.
“‘You have to take some action’ said Mr. Awad."
(“Citi's Focus: Out With Old, In With Profit Drivers; Move to Jettison Flagging Businesses Shows Pandit's Aim.” David Enrich and Carrick Mollenkamp. Wall Street Journal: February 20, 2008. pg. C.3)
WE KNOW that change is a vital part of survival; living is a flow of changes, and change is inherent in learning, growth and progress. Then why resist? Why wait?
When do we let go of hope vested in long-held strategies? When do we reconcile ourselves to abandoning existing modes of operations? When do the costs, risks and apparent threats of changing fade for the hope within the new?
The Wild Blue Yonder
“It is, as Intel's press release put it, ‘one of the most remote inhabited places on earth.’ Parintins, Brazil, is on the outskirts of nowhere... So in 2006, when Intel wirelessly connected the Amazon city to the rest of the online world, chairman Craig Barrett promised that the venture would ‘bring the expertise of specialists, sophisticated medical imaging, and the world's libraries to a community reachable only by airplane or boat.’
“The city's ‘digital makeover’ was widely reported, publicizing Intel's billion-dollar, five-year World Ahead Program. The message: Intel is doing good, improving the health and education of the poor around the globe.
“But Intel's corporate benevolence is also a shrewd investment... The company is nurturing its next crop of customers in Parintins and nearly 200 other places in the developing world. The World Ahead Program is very much about building Intel's future markets... As with so much corporate responsibility, it is a fine example of enlightened self-interest.
“‘We're not a charitable organization,’ says Barrett... Inside Intel, Barrett is seen as a supporter of World Ahead. He is refreshingly candid about just what the program is after. Intel is not, after all, putting its money into the globe's least-developed nations – it's active in Mexico but not in Malawi, in Nigeria but not in Niger. Explains Barrett: ‘We're trying to foster the continued growth of our products.’
“Today, more than half of Intel's revenues come from the less-developed countries in Asia and the Americas, up from less than a fifth a decade ago... Half of the global middle class lives in the developing world today. Within 25 years, that figure will be 90%, according to the World Bank's latest forecast. That will more than double, to 1 billion, the number of potential buyers for products that today are considered luxuries, including not only cars and refrigerators but also computers.
“‘We're taking this tier by tier by tier,’ Barrett says. In other words, Intel is pursuing not the so-called bottom of the pyramid, or BOP… but the next billion, consumers who rank economically just below those it serves today...
“Intel's immediate goal is to win over governments whose purchasing and policy decisions could drive the company's business forward. World Ahead operates primarily in industrializing and resource-rich economies – in Brazil, India, China, and South Africa, as well as in smaller but fast-growing markets such as Vietnam and Pakistan.”
(“Intel’s Amazon Ambitions.” Richard Shaffer. Fast Company: February 2008., Iss. 122; pg. 86)
LOTS OF BUZZ perhaps, and how much impact on the community and the corporation?
The future of your corporation lies in remote exploration or incremental expansion and advancement?
(ooops! change that "or" to "and"!)
Our Choices & Actions
“In classical neuroscience, the adult brain was considered an immutable machine, as wonderfully precise as a clock in a locked case. Every part had a specific purpose, none could be replaced or repaired, and the machine was destined to tick in unchanging rhythm until its gears corroded with age.
“Now sophisticated experimental techniques suggest the brain is more like a Disney-esque animated sea creature. Constantly oozing in various directions, it is apparently able to respond to injury with striking functional reorganization, and can at times actually think itself into a new anatomic configuration, in a kind of word-made-flesh outcome far more characteristic of Lourdes than the National Institutes of Health…
“From this still relatively primitive experimental data, theories can be constructed for the entirety of human experience: creativity and love, addiction and obsession, anger and grief — all, presumably, are the products of distinct electrical associations that may be manipulated by the brain itself, and by the brains of others, for better or worse.
“For neuroplasticity may prove a curse as well. The brain can think itself into ruts, with electrical habits as difficult to eradicate as if it were, in fact, the immutable machine of yore. Sometimes ‘roadblocks’ can be created to help steer its activity back in the desired direction (like bandaging the stroke patient’s good arm). Sometimes rewiring the circuits requires hard cerebral work instead...
“And, of course, the implications for external re-engineering of the human brain are ominous, for if the brain is malleable it is also endlessly vulnerable, not only to its own mistakes but also to the ambitions and excesses of others, whether they are misguided parents, well-meaning cultural trendsetters or despotic national leaders.”
(“The Brain: Malleable, Capable, Vulnerable.” Abigail Zuger. www.nytimes.com. May 29, 2007)
JUST AS DNA is not destiny, just as our world is made in our minds, hearts and hands, so too what we see, think and feel is within the grasp of our creation.
What's The Big Deal?
“Yahoo-Microsoft? Small potatoes. It's time to talk about how the potential formation of the second-largest public company on the planet could affect your life.
“If you want to understand how the great flows of people and material will shape our future, it's essential to understand BHP Billiton's $132 billion unsolicited offer for Rio Tinto. The Anglo-Australian mining companies are the world's first- and third-largest by market capitalization, which combined would have a firm hand in iron ore, coal and copper, pulled across 154 separate mines from Madagascar to Michigan…
“Companies like BHP, and countries like China, are putting up hard cash -- at huge valuations -- to secure their positions in tomorrow's flow of natural resources. In the 19th century, countries were prone to dispatch navies to secure a flow of goods. Today, they send investment bankers.
“If the offer is successful, the new $350 billion company would be larger than General Electric and behind only Exxon Mobil, pulling out nearly double the profit of Microsoft and 45 times the profit of Yahoo. It would create a company so geographically dispersed, and so politically influential that it would become almost a country unto itself.
“BHP's offer for Rio bares the fact that ‘there is not enough to go around,’ says BMO Capital Markets mining analyst Tony Robson… Feeding Chinese skyscrapers, Indian bridges and copper-wired hybrid Priuses, BHP and Rio saw quarterly revenue grow at 15% and 13%, respectively, from the year earlier. By comparison, a nominal growth stock like Yahoo saw its revenue rise over 7%...
“Research from Ernst & Young also takes mining-sector analysts to task, saying… the market ‘is undervaluing mining assets by not fully appreciating how long demand will outstrip supply’ …
“If that's the case, a BHP-Rio deal would be but an opening act in a world-wide competition for resources for which there are few precedents. And that will matter a lot more to you and your family than whether Microsoft or Yahoo appears on your screen in the morning.”
(“The Game: Proposed Mining Megadeal Could Make the Earth Move.” Dennis K. Berman. Wall Street Journal: February 12, 2008. pg. C.1)
SEEING WHAT OTHERS CANNOT is insight.
Understanding why things are the way they are, and comprehending how they work is discernment. Focused discernment may lead us toward insight.
What Is The Meaning?
“When David Fahl worked for an energy reseller, which bought and sold energy from generating companies, he noticed that getting things done right wasn't always as high a priority as making deadlines, meeting deliveries or being on budget.
“‘You can get all those things done without doing any good work,’ he says. It wore on him and didn't give him a sense of accomplishment. ‘Not even the marketing people could come up with a plausible explanation for why the company existed,’ he says.
“In the information age, so much is worked on in a day at the office but so little gets done. In the past, people could see the fruits of their labor immediately: a chair made or a ball bearing produced. But it can be hard to find gratification from work that is largely invisible, or from delivering goods that are often metaphorical. You can't even leave your mark on a document in increasingly paperless offices. It can be even harder trying to measure it all. That may explain why to-do listers write down tasks they've already completed just to be able to cross them off.
“‘Not only is work harder to measure but it's also harder to define success,’ says Homa Bahrami ... ‘The work is intangible or invisible, and a lot of work gets done in teams so it's difficult to pinpoint individual productivity.’
“She says information-age employees measure their accomplishment in net worth, company reputation, networks of relationships, and the products and services they're associated with -- elements that are more perceived and subjective than that field of corn, which either is or isn't plowed.
“Companies should create meaningful short-term goals. Instead, ‘managers create all sorts of surrogate measures that they can measure, like PowerPoint slide counts and progress charts,’ says consultant Tim Horan. ‘The person doing the landscaping has a better sense of accomplishment.’ …
“These days, we're one step further removed from the finished product. Employees have to wait for the gratification that comes with seeing a goal finally realized. ‘The average delay is much, much longer for the average worker today,’ says Robert Frank... And behavioral science notes we have difficulty with a reward delayed.”
(“A Modern Conundrum: When Work's Invisible, So Are Its Satisfactions.” Jared Sandberg. Wall Street Journal: February 19, 2008. pg. B.1)
ALL WORK is human, and all strategies rest upon humanity. So, regardless of the ingenuity of a plan, culture, ethos, and meaning are the hinges upon which it all turns.
Remember Wal-Mart!
“If anyone still doubts that low-income folks make good customers, they should talk to executives from Nokia. The Finnish company owes its 40% share of the global handset market in large part to residents of places like Calcutta, Lagos, and Shanghai, many of whom live on just a few dollars a day. Now, with the No. 3 player, Motorola, on the ropes, Nokia has an opportunity to extend that lead. But other rivals are eyeing the Finns' success and stepping up efforts to woo those same people...
“There's no shortage of contenders. Despite Nokia's intimidating position--it has 46% of the market in Asia and 66% in Africa, Mawston estimates--challengers sense an opening as poorer users trade up to better models with features such as digital cameras or music players. Sony Ericsson, for instance, on Jan. 24 launched two new phones in India, including one with speakers that doubles as an AM/FM radio. ‘If we're going to grow our share, we need to address [the low-end] market,’ says Howard Lewis, Sony Ericsson's chief of entry-level handsets.
“Nokia… goes into battle with formidable advantages. The company earned an industry-leading operating profit margin of 25% on handset sales in the fourth quarter of 2007. It is one of the most efficient manufacturers on the planet and has factories in or near all of the biggest markets. And Nokia invested more than $8 billion in research and development last year. That helped it offer models for every market segment, from top-of-the-line devices with GPS and high-resolution cameras to mass-market phones with menus in some 80 languages...
“Nokia also faces a challenge from Asian upstarts offering ultracheap phones. In India, Reliance Communications sells a model for $19, with no subsidies. And a $30 handset by China's ZTE is doing well in poorer Central European countries. Nokia, whose cheapest phones retail for as little as $32, doesn't plan to beat those rivals on price. Even poor customers are willing to pay a little more for a phone that can stand up to rugged conditions, the company insists. Still, managers admit they are keeping a close eye on the competition.”
(“Mad Dash For The Low End; Nokia leads in cell phones for the masses. But rivals are hoping to steal market share.” Jack Ewing, with Moon Ihlwan in Seoul and Nandini Lakshman in Mumbai. Business Week. February 18, 2008. pg. 30)
GO WHERE THEY AIN'T; understand value creation from the customer's vantage point; deliver just what is valued, and innovate toward the customer.
Don't squander yourself on innovation for technology's sake, nor on exceeding customer expectations. Dare to be unique!
Yin and Yang
“One of the hottest issues on the U.S. presidential campaign trail is how dependent candidates are on their spouses…
“Business leaders experience the same kind of scrutiny, and few say publicly that they confer with their spouses. Yet, it has become increasingly common for them to regularly seek work advice from their wives or husbands…
“Most of those interviewed say spouses saved them from mistakes -- hiring the wrong person, passing up a job opportunity, or not standing up to a boss…
“Many of these executives have partners with careers equally demanding to their own, similar educational backgrounds and a deep understanding of certain industries. They value having a spouse who can give frank feedback and keep matters quiet.
“‘At home, I get a reality check on things in blunt, unvarnished terms,’ says Robert S. ‘Steve’ Miller, executive chairman of Delphi, who has led turnarounds of many big companies.
“He has conferred with both his wives -- his first wife, Maggie, who died two years ago after 40 years of marriage, and his new wife, Jill… ‘I haven't always accepted what they say, but I do seek their opinion because of the chemistry we share, their understanding of me and my trust that our conversations are confidential,’ he says.
“No employee wants to hear that a boss's decision about a work matter was the result of pillow talk at home, even if that employee is similarly confiding in his or her spouse. That may be less of a problem for many male bosses, however, who seem to think that broadcasting a wife's suggestion about work makes them appear sensitive and open to new ideas. Female executives often are more guarded, fearing they'll be seen as weak and ineffective if they say they've conferred with their husbands.”
(“Top Executives Value Advice From a Spouse; Some Won't Ask for It.” Carol Hymowitz. Wall Street Journal: February 11, 2008. pg. B.1)
CHEMISTRY and trust may resonate into understanding, even when all the details are not clear.
Who is your sounding board?
Turn Around
“Chrysler LLC is laying out a turnaround plan based on a radical idea: Offering a smaller number of models will lead to bigger profits.
“Over the next three years or so, the closely held auto maker plans to drop as many as half of the roughly 30 models it now produces, a move likely to cut sales at least for a while...
“‘We're going to be the best little car company in America,’ Chrysler Vice Chairman Jim Press said in an interview here.
“The plan defies conventional wisdom in the auto industry and in Detroit. For almost a century, auto makers have been fixated on building greater economies of scale. The notion that bigger is better has driven each of Detroit's Big Three auto makers and most of their rivals for decades. It inspired several mergers and provided the foundation for just about every turnaround effort the industry has seen.
“But the new management team at Chrysler and its advisers at private-equity firm Cerberus Capital Management LP, its majority owner, are convinced ‘the old rules in this industry no longer apply,’ Mr. Press said.
“The U.S. has become a mature, slow-growth market, and competition is so fierce that no auto maker can count on rapid increases in sales, which were a key component of the previous turnaround effort at Chrysler and are still a goal of many auto makers.
“‘There's no huge [increase in sales] volume around the corner,’ Mr. Press said. ‘We need to give up that dream and face reality.’ …
“GM is taking a more conventional path with its restructuring effort. While slashing costs, the company has been developing more attractive vehicles in hopes they will lift sales. An increase in retail sales is supposed to push its U.S. market share a bit higher and offset declines in low-margin sales to rental fleets.
“The company believes it can be more profitable if it spends money producing fewer, but better, vehicles, Mr. Press said.”
(“Chrysler's Turnaround Plan: Less Is More.” Neal E. Boudette and Terry Kosdrosky. The Wall Street Journal. February 11, 2008. pg. A3)
CONVENTIONAL WISDOM has gotten the American auto industry how far... ?
There is great hope to the degree that they / we actually can give up old dreams, and become focused in the face of new realities.
Perception & Interpretation
“Microsoft isn't happy with Yahoo's decision to spurn its $44.6 billion takeover bid, but the software maker is going to let Yahoo! live with the consequences a while before applying added pressure.
“Microsoft said as much, however politely, on Feb. 11 when it called the offer, extended on Jan. 31, ‘full and fair.’ The remarks came in response to Yahoo's earlier statement that Microsoft's bid ‘substantially undervalues’ the company. The interchange is part of a delicate dance that, while cordial now, could soon turn hostile. ‘The process is following a reasonably well-known mating ritual,’ says Joseph Grundfest, a Stanford Law School professor and former commissioner of the Securities & Exchange Commission.
“To understand the process, it's important to parse each company's statement for what has been said and, just as important, what hasn't. For example, Yahoo's statements suggest there is a price that fairly values the company and ostensibly would be acceptable. Microsoft just hasn't hit that number yet.
“Importantly, Yahoo says it's the company's board that believes Microsoft's bid undervalues it. The company didn't say bankers or legal advisers feel that way. It leaves open the question whether the bankers at Goldman Sachs, Lehman Brothers, and Moelis & Co., which are advising Yahoo, concur. The same goes for Yahoo's attorneys at Skadden, Arps, Slate, Meagher & Flom.
“What's more, nowhere in Yahoo's release does the company describe Microsoft's offer as ‘inadequate.’ That's a key word, loaded with legal meaning that in mergers-and-acquisitions-speak could torpedo the deal. Instead, the company said only that ‘the proposal is not in the best interests of Yahoo and our stockholders.’
“There's even a line in the Yahoo statement that could suggest the company is ready to sell if Microsoft ups the ante. Yahoo says the board remains ‘committed to pursuing initiatives that maximize value for all stockholders.’ That could be an invitation to increase the offer, something many analysts expect Microsoft to eventually do.”
(“The Microsoft-Yahoo! Mating Dance; Understanding the ins and outs of the brewing takeover battle requires parsing what each company said -- and what each didn't.” Jay Greene. BusinessWeek.com. February 13, 2008)
AMBIGUITY may be the seedbed of communication and forward movement.
Barren straight-talk may end it all right there.
It depends -- how do you see it from your perspective?
Hindsight Foresight Insight
“Blue french fries. A colorless soda that tastes funny. A frozen soup-and-sandwich convenience food that turned out to be inconveniently labor intensive.
“These products not only failed in the marketplace, but did so predictably, at least in the eyes of Calvin L. Hodock, a marketing guru whose ‘Why Smart Companies Do Dumb Things’ is all about the many ways that innovation can go wrong. Mr. Hodock knows a thing or two about the subject, and his book offers considerable wisdom, some of it conventional and some of it not…
“Mr. Hodock is especially good on the subject of defective market research and the self-deceptions practiced by new-product teams determined to march ahead with a dubious idea despite red flags raised by focus groups and others…
“Worst of all, marketers are just human. ‘People fall in love with what they create,’ Mr. Hodock says. ‘All too often that love is blind . . . normally rational people become evangelical salesmen for their dreams rather than practical, objective business executives’ …
“[One] cliche Mr. Hodock employs -- that companies should ‘stick to their knitting’ -- gets to one of the book's limitations: The author is speaking with the advantage of hindsight. Every impending disaster seems obvious, every success predictable, as when Mr. Hodock praises Stokely Van Camp (‘an obscure processor and marketer of fruits and vegetables’) for launching Gatorade. One wonders, though, what his attitude toward Apple would have been a few years ago when the company tossed its knitting aside and plunged into making iPods and marketing music online…
“The truth is, it's hard to know what's really a foolish venture until the thing fails or succeeds.
“Neither does Mr. Hodock deal with a larger question: Do U.S. companies experience too many innovation failures or too few? Too few such failures, after all, might mean that companies weren't taking enough risks.”
(“Business Bookshelf: Seemed Like a Good Idea Inc.” Daniel Akst. Wall Street Journal: February 6, 2008. pg. D.8)
WHAT IS THE UNMET NEED? How will we distinctively fulfill that need? How is our alternative more attractive to consumers than other options available to them? Will they pay for it? How can we fulfill the need for less than the price they are willing to pay?
Where Have All The Flowers Gone?
“Is Sprint Nextel making an unwitting bid for business school case-study status? Investors could hardly be blamed for thinking so after reading the Sprint SEC filing Thursday that the cellphone company may write off $30.7 billion of goodwill related to the 2005 deal that combined Sprint with Nextel.
“That wouldn't sap Sprint Nextel of more cash, but it is a reminder of just how much value has been lost since the deal was struck.
“At the time of the deal -- billed as a merger of equals -- Nextel's market capitalization was roughly $33 billion, as was Sprint's. Today, the combined company's market cap is $29.69 billion. Operationally, it isn't much better. Last year, Sprint Nextel lost 1.2 million postpaid subscribers, and it has one of the highest churn rates in the industry. The solo Nextel had one of the lowest customer-defection rates...
“Sprint spokesman James Fisher wouldn't comment on speculation about the company's business plans. ‘We are sound financially, we have strong cash flows from operations and we have good liquidity on the balance sheet’."
(“Deal Journal / Breaking Insight From WSJ.com - Is Sprint Nextel Worth Saving?” The Wall Street Journal. February 4, 2008. pg C3)
"EVERYONE KNOWS" that the clear majority (67 - 75%) of mergers and acquisitions destroy shareholder value. Operational and cultural dyssynergies plague even the best of intentions, the best executives, and the best firms.
Even in mergers of peers, even in mergers of equals, costs and frictions and disincentives frustrate the accomplishment of strategic imperatives. Things as fundamental as customer relations and credit policy get lost in the shuffle of M&A.
Both And
“As other high-tech companies cut back on their research labs, Microsoft continues to increase its ranks of free-rein thinkers.
“The company, which has research labs in Redmond, Wash.; Beijing; Cambridge, England; Bangalore, India; and Silicon Valley, will announce plans on Monday to open a sixth lab, in Cambridge, Mass., in the Boston metropolitan area.
“These are labs where people focus on science, not product development. To lead the new lab, the company has appointed one of its veteran researchers, Jennifer Tour Chayes. Dr. Chayes, 51, who has a doctorate in mathematical physics, said, ‘We believe that in the long run, putting money into basic research will pay off, but you have to wait longer for it.’
“Microsoft, beset by competitive pressures from companies like Google, sees first-rate research labs as more important than ever. The company, which made a $44.6 billion bid for Yahoo last week as one way to compete with Google, wants a set of labs in place that can develop business opportunities that will pay off well into the future.
“‘Essentially every other industrial lab I know is shrinking, with the exception of Google,’ Dr. Chayes said. Since she joined the company in 1997, she said, Microsoft Research has grown eightfold to 800 researchers who hold doctorates.
“Those research scientists are far outnumbered by the thousands of Microsoft engineers working in advanced development and direct product development.
“‘The outcome of basic research is insights, and what development people do is take those insights and create products with them,’ Dr. Chayes said. ‘The two things are very different.’
“Microsoft is adamant about retaining a pure research department reminiscent of the old Bell Laboratories, whose scientists were awarded six Nobel Prizes over the years.
“‘Microsoft is probably the sole remaining corporate research lab that still values basic research,’ said Maria Klawe, a mathematician who is president of Harvey Mudd College.”
(“Microsoft Adds Research Lab in East as Others Cut Back.” Katie Hafner. The New York Times. February 4, 2008. pg 3)
CREATION is an outcome of the dynamic tensions of apparent opposites: thinking and doing, basics and advances, short-term and long-term, shrinking and growing, free-rein and structure, formulas and insights -- on and on and on...
Competing Values
"Managing eBay is one of the toughest jobs in the tech industry. The CEO at the online auction site has the daunting responsibility of trying to keep happy three vocal, and often opposing, factions: eBay's investors, shoppers, and sellers. While Whitman did a stellar job of balancing the conflicting interests for years, she struggled more recently to keep any of the groups satisfied. Buyers and sellers are trying out rival Web sites, and investors' ire has grown as the company's shares have lost half their value over the past three years...
"Donahoe made it clear his first priority as CEO will be revitalizing eBay's core business, even at the expense of investors. He plans to slice some of the fees that eBay charges sellers on the site to draw in more users and to persuade them to offer a greater array of products...
"Donahoe may have no choice but to rankle investors as he focuses on the long-term health of the company. EBay reported solid results for the fourth quarter, with net income rising 53%, to $531 million, while revenues increased 27%, to $2.2 billion. But much of that growth came from its newer and smaller businesses, particularly the PayPal online payment operation and the Internet calling service Skype.
"The core auction and retail businesses, which account for the majority of revenue, are showing signs of weakness. The number of active users has been flat for three quarters, at 83 million. The number of new products listed on the site has inched up only 4% from a year ago...
"Whitman's focus on expansion and profits pushed eBay's stock to its earlier heights. During her 10 years at the helm, she transformed the San Jose-based company from a simple auction site into a global e-commerce giant by pushing into foreign markets and high-growth businesses related to shopping.
"But expansion and diversification have their limits. As Whitman looked for new opportunities, rival Web sites, particularly Amazon, made inroads into the core e-commerce business. 'Competition has eroded much of the advantage that eBay once had,' says Derek Brown, a research analyst at Cantor Fitzgerald."
(“EBay's New Tough Love CEO; John Donahoe will concentrate on winning back users, even at investors' expense.” By Catherine Holahan. Business Week. 4 February 2008. pg. 58)
FOCUS can lead to balance. Balance can helps us endure. Yet, do we have the endurance to re-focus on our core? Or, are we so very anxious to move on?
