A big company gets in trouble. The board throws the CEO under a bus and brings back the founder. The stock market figures that the person who built the company is the ideal one to fix it.
Dell (DELL), Starbucks (SBUX), and Yahoo! (YHOO) have all gone with the popular formula for turning companies around. They must figure that if Steve Jobs did such a fine job when he came back to Apple (AAPL) that anyone with a founder pedigree can do likewise.
Unfortunately, Mr. Dell, Mr. Schultz, and Mr. Yang are not batting 1,000. They are probably not even batting .200. Perhaps that is because they caused the problems which bedevil their companies and then stood by as things got worse.
Over a year ago, Schultz sent Starbucks management a memo about what was wrong with the coffee shop chain. It had lost its neighborhood felling. That needed to be fixed. His handpicked CEO didn’t listen. Another year went by, The SBUX shares fell by 50%. Now Schultz is faced with playing from behind as McDonald’s (MCD) and Dunkin Donuts eat his lunch.
Yang was part of the board and management team when Yahoo! decided to go the portal route and not the search engine route five years ago. Terry Semel, a former movie company executive, was an odd choice for CEO of an internet company. Yang was one of those who approved the new chief. Semel followed the crowd, the same one that MSN and AOL were following. Google (GOOG) went down a different path and crushed them all. Now Yang is back. He has done nothing to change Semel’s core decisions. Because of Microsoft’s takeover bid, he is about to be very rich and out of a job,
Dell may be the most striking example of a man who backed his hand selected CEO. Mr.Dell made the direct sales model in the PC world a huge success. Buy machines on the internet and through call centers. Forget stores. PC buyers don’t go to Wal-Mart (WMT). His boy, Kevin Rollins, stayed with the program, even when it stopped working. Dell kept saying what a great man Rollins was, until he bounced the man and took that CEO’s chair himself.
Based on its earnings, it is clear that Dell has not brought any real innovation to his company. He move to retail sales has come very late in the game. Most electronics stores have been doing business with his competitors for years. That has given HP (HPQ), Lenovo, Acer, and Apple (AAPL) a conduit for sales which Dell simply does not have.
Not everyone can be Steve Jobs.
Douglas A. McIntyre