Bad times for tech companies. Amazon, Meta (parent company of Facebook) and Twitter are laying off en masse. After Meta’s difficult week, which saw its market capitalization drop considerably, it was Twitter that found itself in the spotlight after its takeover 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 entrepreneur to the oversized ego, who is destroying Twitter? Not so sure. Because behind the apparent madness, there is a method, even if it is debatable.
Chaos seems to reign at Twitter. Following its takeover 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. As soon as he arrived, the new boss laid off 3,700 employees, then announced changes in his commercial policy, only to go back a few days later, to the point that no one really knows in which direction the company is going, nor what is its strategy. The situation is more like that of a wolf that has just entered the fold than that of a company being turned around by a seasoned leader. On social networks, the hypothesis of an imminent disappearance of the company is now taken for granted.
However, if there’s one thing everyone agreed on before Musk arrived, it’s that Twitter was in danger. The company was badly managed, it had no real strategy, its staff was bloated and unproductive, and like Facebook, it had failed to manage the fake news controversies. In short, she was going into the wall. Given his importance in the public debate, it was not just his problem, it was ours as well. While no company is irreplaceable, this one is harder to replace than others, so the Twitter soldier had to be saved. It was Musk who stuck to 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 army. An incredible track record, in short. But he is also an authoritarian, demanding, even undrinkable boss, for whom it is very difficult to work. He is one of those bosses that we love to hate, especially in France.
A method behind the apparent madness
So is this the reign of madness at Twitter? Far from it. In fact, as Oliver Campbell (@oliverbcampbell) explained very well… in a Twitter thread, Musk applies a shock therapy called ‘whaling and culling’. The analysis is as follows: there are far too many engineers, but it is difficult to separate the wheat from the chaff. It would take weeks, and time is running out. Besides, it should be done by the very people who are possibly evil. So it’s not playable. The strategy therefore consists in putting the company immediately under pressure by giving it a very short-term objective that is almost unachievable, a sort of sprint, which will make a natural selection very quickly. Nothing original, that’s what the military do in the early days of commando training. Musk sees who is surviving this sprint, who is pushing hard and overcoming obstacles, and who is not. This is the ‘whaling’ phase. Then just keep the first ones and fire the others. This is the ‘culling’ phase. It’s not very fun, it’s 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 urgency. From this perspective, the fact that Twitter re-hires people who had just been fired, and which seemed totally insane, is easily explained. Once the ‘good guys’ have been identified, they are asked to put their team back together; they will naturally seek out the good guys who got fired, because the good guys know how to identify the good guys. We can discuss the moral of such an approach, of course, but not present it as crazy or irrational. Nor will we shed crocodile tears for those who got fired. They leave with a large check, and will easily find another well-paid job within 24 hours.
Musk, a type 4 leader
In his remarkable book Good to greattranslated into French by From performance to excellence, Jim Collins distinguished between two types of leaders, which he called type 4 and type 5. The type 4 leader is typically charismatic and authoritarian. He tends over time to be surrounded only by obedient people without great personality, who do not dare to question his decisions. The type 5 leader is more modest. He doesn’t think he has all the answers. He has no problem surrounding himself with people smarter than him. According to Collins, the type 4 leader generally tends to outperform his company in the short term, by his vision and his ability to make difficult decisions without getting lost in useless debates. But he can also bring his business into the wall by his hubris (excessiveness inspired by pride and overconfidence), for example by embarking on a big bet, or depriving oneself of talented managers, put off by their management style. In addition, after his departure, the succession is usually ensured by a member of his first circle, that is to say by mediocre people, which leads to a more or less rapid decline of the company. In contrast, the type 5 leader has better quality governance. He is more consensual and makes better use of the talents within his team, whose first circle is of better quality. However, this consensus can slow down decision-making and prevent the company from making big bets, especially in times of disruption. Musk is typically a Type 4 leader. Lew Platt, a former HP executive, was a well-respected Type 5 leader, but HP didn’t end up in great shape.
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 ten years later, the company has become completely ossified, unable to produce competitive products. She is at her wit’s end, a few months from insolvency. Jobs cleans up. His first decisions are to fire a lot of people and to appoint “good people, in key positions in the company” according to his formula. In a famous intervention, he observes that his decisions “piss everyone off” (sic) and that those who don’t like them will empty their bags in the press. He adds that it is usually those who have been fired who pour out like this, when they had not done anything for years. Those who remain say nothing and work. It is not surprising that the buzz is negative, and there is a bias that we find today for Twitter, and which we must be wary of.
In fact, 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, will be very rich, and Twitter will establish itself as a leader in social networks for a long time. If it doesn’t work, he will lose everything. We can reproach him for many things, but not the lack of courage, nor 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 to say where there is an objective sanction mechanism for his performance. This is a notable difference with leaders in the political world, and authoritarian regimes, in which failure is not sanctioned. As authoritarian as Musk is, his action remains framed by the law which he must respect; he cannot force an employee to remain in his company, nor someone to join it, and he cannot remain at the head of it if the performance is poor for too long. Bankruptcy is on the line.
Nuancing the analysis
As we can see, the discussion on Elon Musk and Twitter should be more nuanced than simply characterizing the first as a raving madman, and assuming that the second will disappear. Any business turnaround is painful, and some are more so than others. Musk’s strategy is very risky, and certainly very questionable, but doing nothing would have been riskier still, because the decline was inevitable. Thinking Musk crazy is a mistake automakers and the space world have already made, to their cost. Let’s make sure we don’t make the same mistake when we study his action at Twitter.
➕On the notion of a big bet, read my article about Meta/Facebook: Is Meta the new Kodak? Eight history lessons on the necessity and the risks of big innovation bets. On Jim Collins’ notion of a 4/5 leader, see my article: Steve Jobs and Lew Platt, two styles of leadership. On the detestation of Elon Musk by certain French intellectuals, see my article: Elon Musk, back on earth? See also: Elon Musk, the technological revolution or the possibility of optimism.
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