“the business be hanged”

In her own words, the Chief Executive Officer of Yahoo said, “…I was fired”.  

The select cadre of American Chief executives have acquired their positions by promising the Board of Directors increased profits. They bring to the game a promise of profits though better efficiencies and reducing costs. Another caveat is expanding into growth industries (faster and higher profits).

Parades of executives have marched through American businesses making motions along these lines. But how often can each selective executive do the same thing? Too often today efficiencies mean immediate results that are disastrous for the longer term. It too often means massive layoffs and forcing the best employees out or marginalizing them. It too often means focusing on non traditional business enterprises and starving the core business. It too often means selling of the more profitable parts to secure bonuses for the year, even if there is needed synergy.

Circuit City was a successful electronics and appliance retail establishment a couple of decades ago. It was BestBuys biggest competitor in the area. Circuit City bought a non-traditional business named “Carmax”. Carmax sold reconditioned vehicles. It was successful because of the large scale of its enterprise and there was no haggling over the price of vehicles. Carmax is still viable today and Circuit City is gone. 

The Washington Post newspaper bought a non-traditional business in a growth market promising higher profits. The business is Kaplan, known for education. Kaplan competes in “the for profit” education market. Its major venue today is online degree education. The core newspaper business has been reduced in funding and scope. The resources were transferred to Kaplan. But this year the online degree companies have taken some severe financial hits. The Washington Post’s “cash cow” is not able to fulfill expectations. To keep the corporate profits as high as possible the newspaper will likely be further eviscerated and increased in price. 

The latest from American CEOs that are terminated is to solicit the support of a major financier and disparage the Board of Directors that instituted the firing. Hurd, former CEO of HP, enlisted Larry Ellison of Oracle to disparage the HP Board of Directors. Carol Bartz, fired CEO of Yahoo, has enlisted a dissident member of the Yahoo Board of Directors to disparage the other members. 

These executives never really lose even when fired. They have their platinum parachute and merely cool their heels for a while. Home Depot fired CEO Robert Nardelli in 2007. He almost immediately became the Chrysler CEO. He was fired as Chrysler CEO in 2009. Look for him to resurface again. These people are like the Energizer Bunny.

The corner office in Corporate America today is purely about immediate profits to placate Investors, “the business be hanged”.