Wednesday, September 3, 2014

The RadioShack Fiasco and its CEO Hiring Team

(image credit)
I was not really a technology geek, but I enjoyed going to RadioShack to buy stereo accessories, cables, and audiotapes.  I had a mini-recorder, for example, to use for lectures in my university days, and a nearby RadioShack had mini-cassettes.  Also, in Lance Armstrong's most recent run ups at the Tour de France, he led a team sponsored by RadioShack.  Being quite a cycling fan, I had this added affinity with the storied American shop.
RadioShack once held a central place in the imagination of young minds and the world of technology, selling one of the first mass-market computers (the TRS-80) nearly 40 years ago.

But the digital revolution left it behind long ago, along with staples like tape recorders, landline answering machines and digital cameras.

After nine decades in the business, the company’s pulse in the electronic marketplace has grown as faint as a fading battery.

Its stock price is so low — it closed at 63 cents on Tuesday — that it may face delisting within the next few months by the New York Stock Exchange. When it tried this spring to stop the hemorrhaging with plans to close 1,100 of its stores, its lenders balked. Some analysts predict the company could run out of cash as early as next year.
Reference: RadioShack in Need of Rewiring.

The once storied American shop ran into major trouble over the past decade, and New York Times writer Elizabeth Harris attributed it to the shift to e-retailing, evolution of wireless technology, and fewer electronic tinkerers among us.  But let's see if we can shed additional light on what went terribly wrong.

Not just wireless, but the radical, fast-moving developments in media and technology over the past 15 years must have been a foreboding landscape for RadioShack.  I've been reflecting on the need for CEOs to step back and take stock of what is happening around them.  If they aren't do this on any regular basis, then it's akin to being the captain of the Titanic and sleeping at the wheel.

But that is just one thing:  They also have to the leadership, business and management abilities to do something effective with whatever they may observe or discern.  It isn't enough, in other words, to see the big picture or see below the surface, but they must also know what to do and be able to do it.

Finally, they must have the willingness, commitment and energy to carry out whatever strategy and plan they hatched up.  In brief, then, they have to see it, they have to know it, and they have to do it. 

So what was happening at the wheel for RadioShack?
  1. David Edmondson was CEO in 2005-2006, and left in a scandal over lies in his resume.
  2. Claire Babrowski came and went in 2006, as just a six-month CEO.
  3. Julian Day lasted five years, but apparently lacking in sales, leadership and management skills, he left in 2011 as one of the "Crappiest CEOs."  
  4. James Gooch then came in, but was himself merely a 16-month CEO, and in his wake left a devastation of a 73% drop in stock price in his wake.
  5. Joseph Magnacca is the current CEO, and has been in place since early 2013.  His aggressive scramble to right the ship hasn't exactly inspired confidence among analysts, however.
That said, I saw this goofy scenario in my mind: Each of RadioShack's CEO stuck on the captain's wheel, as it spins like a roulette wheel. 

So before a CEO can see it, know it, and do it, he or she must be the right CEO to begin with.  The hiring team at RadioShack was apparently incompetent and must take responsibility for this fiasco.

Edmondson, for one, came onboard as VP of Marketing in 1994.  Why it took so long for his faux resume to surface is baffling.  How Day lasted five years for being crappy, according to his own employees, is cause for head scratching.  What the hiring team saw in Gooch, I can only imagine.

For the sake of everyone at RadioShack, I hope that very team got it right with Magnacca.

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