Turnarounds have been a fascination of mine for a number of years. It amazes me how many of those who attempt a corporate turnaround often act as if they’d either never been done before or never been successful.
Both Apple and IBM stand as examples that demonstrate not only that turnarounds are possible but that sometimes the fixed company can vastly exceed what it had been at its prior peak, as was the case with Apple.
With most turnarounds there is the historic fact that the company once was successful, suggesting the model the company was built around was sound — the firm just needed to go back to rediscover in some new way what it once was. However, Twitter was never financially successful in the first place removing that one critical piece. Having been designed like most of the Internet firms in the 1990s, with revenue and profit as an afterthought, there is a very large possibility that the Twitter model doesn’t work.
This suggests the approach to turning it around should be more in line with a redesign. The analogy would be a racecar that once won races vs. a racecar that never won. In the first case, there is at least a chance the car that once won could fixed, but a car that has never won may need to be redesigned to win.
To me, this sounds a lot like what Steve Jobs faced when he came back to Apple. He initially wondered if he could fix Apple the PC company and then realized Apple needed a redesign. This topic came up on a panel I was part of on CBC radio earlier this week, and I wondered how Steve Jobs might have handled Twitter.
Currently Twitter is at the start of what looks like a death spiral. In my opinion, the firm’s leadership doesn’t seem to understand what is needed to turn the firm around. To make investors happy and to protect their own income, executives in this situation typically do successive layoffs or depart the firm for greener pastures. These problems layer on top of the issues of inadequate revenue and profit to justify an emotion-driven valuation. This last made it virtually impossible to sell Twitter because the market valuation is well above where it should be based on financial performance. It does have cash reserves in the billions and isn't in immediate danger of going under, but it is bleeding. If that trend can’t be stopped, eventually it will bleed out employees, users or both.
Looking at this, lets channel Steve Jobs and see if Twitter just needs a fix, better focus on what it does or a redesign, while realizing that, like Apple, it may actually need both.
Steve Jobs’ Possible Plan
Jobs first cut Apple to the bone, which appears to have already been done at Twitter. Then he looked for another iconic product, in his case, the iPod, to push the company into the future. From this perspective, what Twitter needs, other than consistent leadership, is something that generates revenue from users at a scale to turn Twitter from profit-seeker to profit-maker.
There are a number of things users might actually pay for: higher-quality feeds (you could better segment the feeds by subject, interest and quality for a fee), better protection (being proactive with regard to bullies or predators) or helping people become more trustworthy or influential. The vast majority of folks have few followers and aren't that great at tweets. They would likely be willing to pay a fee to raise their game. Professionals would likely appreciate a service that helped prevent them from doing career-damaging things or things that hurt relationships. And companies would likely appreciate protections over their employees that did the same (say an imbedded approval process and stronger alerting service). Finally, you could likely also monetize brand and image protection so that, real time, if a tweet storm was starting, the service could both alert and provide advice on responses that have historically been successful. The overall effort would be to make Twitter into both a more trusted and better monetized service.
But, as with Apple, I doubt these revenue streams would be enough. Twitter would need something that filled a need that existed but was being poorly met, which was what the iPod did. Or it would need a product that people could be made to want, more along the lines of the first PC or what was attempted with the Apple Watch (sadly after Steve passed).
This would require some work. Ideally it should be connected back into what Twitter does, which is short-form communication one-to-many. So how about a service tied to a head-mounted device similar to Google Glass but better implemented so you could send short form voice messages with what you are seeing. It would be capturing a rolling 30-second video, and when you gave the command it would package what you just saw up and send it either to everyone, a friend or a group depending on your vocal command. Looxcie was the closest to the hardware, and backed up with a Twitter-like service, it might be able to break out.
Twitter has a lot of cash, but it seems to have become a one-trick pony. And that never ends well.
On that CBC radio show, there were a lot of discussions about having Twitter either get bought by NPR or become another NPR or having users pay upwards of $2K each to take the service private. I think that instead of trying to create the next NPR or post office, Twitter's leadership should instead try to create the next Apple or Facebook. Let’s hope they choose wisely.
Photo courtesy of Shutterstock.