Bad times for technology companies. Amazon, Meta (Facebook’s parent company) and Twitter have taken off in droves. After Meta’s difficult week, which saw its market capitalization drop significantly, it was Twitter that found itself in the spotlight after its acquisition by Elon Musk. Both bring to the fore the unresolved question of corporate leadership. Is Musk the ugly leader portrayed in the press, an authoritarian businessman with too big an ego, who’s ruining twitter? Not so sure. Because behind the apparent madness, there is a method, even if it is debatable.
Chaos seems to be reigning on Twitter. Following its acquisition by Elon Musk, an entrepreneur who already runs Tesla and SpaceX, two industry leaders, the company is at the center of a highly publicized storm. When he arrived, the new boss laid off 3,700 employees, then announced changes to his commercial policy, only to return days later, to the point where no one knew where the company was headed, or what the strategy was. this. The situation is more like a wolf just in jail than a company turned around by a seasoned leader. In social networks, the hypothesis of an imminent loss of the company is now accepted.
However, if there was one thing everyone agreed on before Musk arrived, it was that Twitter was in trouble. The company is poorly managed, it has no real strategy, its staff is bloated and unproductive, and like Facebook, it has failed to manage the fake news controversies. In other words, he was going to the wall. Because of his importance in the public debate, it’s not just his problem, it’s ours too. While no company is irreplaceable, this one is harder to replace than others, so the Twitter soldier needs to be saved. Musk stuck with it. But Musk is not just anyone. He is the boss of Tesla, pioneer of the electric car, and of SpaceX, pioneer of the space industry. He also created Starlink, which provides much-needed satellite Internet access to the Ukrainian military. An incredible track record, in short. But he is also an authoritarian, demanding, even insufferable boss, with whom it is very difficult to work. He’s one of those bosses we love to hate, especially in France.
A method behind the apparent madness
So is this the reign of madness on Twitter? Far from here. In fact, as Oliver Campbell (@oliverbcampbell) explained so well… in a Twitter thread, Musk applied a shock therapy called ‘whaling and culling’. The analysis is as follows: there are many engineers, but it is difficult to separate the wheat from the chaff. It will take a few weeks, and time is running out. Moreover, it must be done by the very people who are potentially evil. So it’s not playable. The strategy therefore consists in putting the company immediately under pressure by giving it a very short goal that is almost unattainable, a kind of sprint, which will make natural selection very quickly. Nothing original, that’s what the military does in the early days of commando training. Musk sees who survives this sprint, who pushes hard and overcomes obstacles, and who doesn’t. This is the ‘whaling’ stage. Then just keep the first ones and burn the rest. This is the ‘culling’ phase. It is not very fun, it is morally questionable, the selection criteria are, at best, approximate, but again, the reasoning is that it is better to go fast than to do well, because there is a need for urgency action. From this point of view, the fact that Twitter is rehiring people who have just been fired, and apparently completely crazy, is easy to explain. Once the ‘good ones’ are identified, they are asked to return their team; they will naturally look for good men who have been fired, because good men know how to recognize good men. We can discuss the morality of such an approach, of course, but not present it as crazy or irrational. Nor will we shed crocodile tears for those who have been fired. They walk away with a big check, and can easily find another high-paying job within 24 hours.
Musk, a type 4 leader
In his wonderful book Good to excellenttranslated into French by From performance to efficiency, Jim Collins distinguishes between two types of leaders, which he calls type 4 and type 5. Type 4 leaders are typically charismatic and authoritarian. Over time, he was surrounded only by obedient people without a great personality, who did not dare to question his decisions. Type 5 leaders are more modest. He didn’t think he had all the answers. He has no problem being around people who are smarter than him. According to Collins, the type 4 leader generally tends to overcome his company in the short term, through his vision and his ability to make difficult decisions without getting lost in pointless debates. But he can also take his business to the wall through his pride (excessively inspired by pride and overconfidence), for example by entering into a large bet, or the self-removal of good managers, put off by their management style. In addition, after his departure, the succession is usually ensured by a member of his first board, meaning ordinary people, which leads to a faster or faster decline of the company. On the contrary, the type 5 leader has a better management quality. He is more consensual and makes better use of the talents within his team, with the first board having better quality. However, this consensus can slow down decision-making and prevent the company from making big bets, especially during times of disruption. Musk is typically a Type 4 leader. Lew Platt, a former HP executive, is a well-respected Type 5 leader, but HP has not fared well.
To better understand Musk’s action, it is useful to draw a parallel with Steve Jobs, another type 4 leader. When Jobs returned to Apple in 1996, which he had created in 1976 but from which he had been fired in work ten years later, the company has become completely ossified, unable to produce competitive products. He was at his wits end, months from bankruptcy. Jobs are cleaning. His first decisions were to fire a lot of people and appoint “good people, to key positions in the company” according to his formula. In a famous intervention, he observed that his decisions “annoyed everyone” (sic) and those who did not like them threw their bags at the press. He added, usually those who have been fired are the ones who pour like this, if they have been idle for several years. Those who remain say nothing and work. No wonder the buzz is negative, and there’s a bias we’re seeing right now for Twitter, and we should be careful.
Indeed, Musk is an extreme case of an entrepreneur, but he is still an entrepreneur in the sense that he takes a risk. If it works, he will become a hero, become very rich, and Twitter will establish itself as a leader in social networks for a long time. If it didn’t work, he would lose everything. We can blame him for many things, but not lack of courage, or of intellectual honesty (he is mainly paid in shares, like Jobs in 1996). Also, the criterion for success is clear. His work is clearly measurable. He acts within the framework of the market, that is, where there is an objective mechanism of punishment for his performance. This is a stark contrast to leaders in the political world, and authoritarian regimes, where failure is not tolerated. As authoritarian as Musk is, his action remains framed by the law he must respect; he can’t force an employee to stay in his company, or someone to join it, and he can’t stay at its head if performance is poor for too long. Bankruptcy is on the line.
The analysis is nuanced
As we can see, the discussion on Elon Musk and Twitter should be more nuanced than simply recognizing the first as a raging madman, and assuming that the second will disappear. Any business turnaround is painful, and some are more painful than others. Musk’s strategy is very risky, and certainly very questionable, but doing nothing is still more dangerous, because rejection is inevitable. Thinking Musk is crazy is a mistake by automakers and the space world, at their expense. Let’s make sure we don’t make a mistake when we study his action on Twitter.
➕Considering a big bet, read my article about Meta/Facebook: Is Meta the new Kodak? Eight lessons from history on the need and the perils of big change bets. On Jim Collins’ notion of a 4/5 leader, see my article: Steve Jobs and Lew Platt, two leadership styles. Regarding the loathing of Elon Musk by some French intellectuals, see my article: Elon Musk, back to earth? See also: Elon Musk, the technological revolution or the possibility of optimism.
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