A Tale of Two Layoffs
Layoffs at tech companies are practically a rite of passage. Tech companies do them often – every few years at the most. Why? Because when opportunities appear, tech companies have to move fast. So, they hire and deploy all resources at their disposal to try and capture value before their competition does. When it works, we read about it in the Wall Street Journal or Wired. When it doesn’t work, companies find themselves over-extended. Business plans showing revenue and profit growth don’t materialize, and companies are left with high expenses and no revenue to show for it. What do they do? Well, they try to re-deploy as much as they can, but inevitably, they are overstaffed and so they do layoffs.
This essay isn’t about the cost or benefit of running a business this way. This essay is a tale of two layoffs that I have personally been impacted by and how different they can look.
Let’s start with the similarities. Both companies executed the layoffs reasonably well, not a lot of chaos or confusion, and both companies provided ample severance. Enough money so that I could focus on finding my next role without immediately being thrown into financial chaos…but not so much money that I could simply kick back for years.
And now the differences.
At Company A, I attended an all-hands meeting just before finding out my role was being eliminated. At this meeting, the CMO of the company talked about a new strategy the company was going to pursue. This was taking the company in a completely new direction…zigging while all their competitors were zagging. This was essentially a “bet the company” moment where they were laser-focused on doing things in a bold, new, and customer-centric way. And, as the CMO explained, “executing this strategy is going to cost a lot of money.” It required completely rethinking existing business models and would certainly impact company margins for quite some time until the new strategy (hopefully) resonated with the market and took hold. So, the CMO explained, any roles that aren’t absolutely required for us to execute this new strategy, are being eliminated.
It was at that moment that I learned something that I repeat over and over in my career.
Strategy isn’t what a company says it is. Strategy is what a company spends its money on.
Here was a company that was aligning its investment with its strategy. I left the company satisfied with an understanding of why my role was eliminated and I watched them from the sidelines as their new strategy caught fire and elevated the business to another level entirely. They changed an industry and have since been rewarded handsomely by the market for it.
Now let’s talk about Company B. This company did a similar thing in that, just before I found out my role was being eliminated, I attended an all-hands meeting led by our CPO. In this meeting, the CPO reflected on the previous year – standard retrospective stuff…what went well…what we could have improved on. Then he talked about our focus and strategy for the year ahead. And right there, on one of the slides was the project that I was working on. It’s always comforting to see your efforts reflected in the message of a large company’s top management. And yet, two hours later, I was told my job was being eliminated. Not just mine, but several others on my team as part of a company directive to our group’s senior leader that our budget needed to be cut by 50%. No, that’s not a typo. A key strategic initiative for the coming year – cut your budget in half. Not surprisingly, things didn’t turn out the way they had envisioned in PowerPoint.
So, if you want to know what a company’s strategy truly is? Don’t read PowerPoint slides, don’t read any marketing material. Look at how budgets and headcount are allocated. Follow the money…it’s as simple as that.
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