Category: Leadership and Change

Infosys Co-Founder Murthy Returns to Right the Floundering Firm

Infosys_LogoIn a first-of-its-kind move in corporate India, N.R. Narayana Murthy, the iconic co-founder of Infosys, has returned to the software company as executive chairman almost seven years after stepping down from it in August 2006. In August 2011, Murthy turned 65, and, in line with company policy, he retired as non-executive chairman and mentor. To bring back Murthy into an executive role, Infosys has revised its retirement age for the position from 60 to 75.

On June 1, addressing the media from the company headquarters in Bangalore, K.V. Kamath, who stepped down from his position of chairman to make way for Murthy, said: “The board has taken this step keeping in mind the challenges that the technology industry and the company face.” Murthy added: “This call was sudden, unexpected and most unusual.”

But it’s been clear for some time now that Infosys, which for many years was highly admired and an industry bellwether is quickly losing its sheen. In financial year 2012-2013, Infosys grew at 6.6% — one of its worst performances since the company’s inception in 1981. The firm’s growth forecast of 6% to 10% for the current year is lower than the industry projection of 12% to 14%. And the company’s margins, once the best in the industry, have also slipped. In contrast, peers like Tata Consultancy Services and Cognizant have performed well, despite tough market conditions.

Infosys officials maintain that the firm is under pressure because of various factors, including greater exposure to discretionary spending and a large dependence on financial services. In addition, a couple of years ago, the company embarked on “Infosys 3.0″, billed as a “transformational journey” from being a technology solutions company to becoming a strategic partner to clients. It also adopted an IP-led and platforms-and-products-based approach. The results of this have yet to kick in.

Murthy’s return has thrown the spotlight on the founder-CEO model that he himself has strongly espoused. The company was founded by seven co-founders led by Murthy. Of these, including S.D. Shibulal at present, four have held the CEO position, one after the other. (Of the other three, two left early on and the third retired two years ago.)

But K. Ramachandran, a professor of family business and wealth management at the Indian School of Business, is emphatic that this leadership model is not the right one for Infosys or any other company. “[Murthy] should have shown the clarity of thinking in terms of separating ownership and management,” Ramachandran notes. “Also, the management capabilities required in different phases of an organization are not the same. [Murthy] is aware of it but did not apply the same in his own [case], maybe because of his soft [spot] for his ‘brothers’.”

T.V. Mohandas Pai, a former board member and head of human resources at Infosys, says: “The fact is that the company has not performed well while others have done well. It means that only a merit-based model will work.” Pai was with Infosys for 17 years and quit in 2011 when Shibulal became the CEO.

Murthy’s return brings to mind another question: Can a returning founder or CEO succeed? The most recent example globally is that of Procter & Gamble’s A. G. Lafley. Last month Lafley, who was CEO from 2000 to 2009, returned as chairman and president. Others include Starbucks’ founder-chairman Howard Schultz, Michael Dell of Dell Computers and Apple’s Steve Jobs. In a recent article in Knowledge@Wharton, Wharton emeritus management professor Lawrence Hrebiniak pointed out that “the returning CEO is a known quantity — someone the board and investors might know and trust, which is a plus. But even here, the answer isn’t always clear.”

According to ISB’s Ramachandran, bringing back a retired leader is not a good move. “No organization is or should be individual dependent. In this case, Murthy had a long [tenure] and had retired from executive responsibilities many years ago,” Ramachandran says. “As a board member and founder of the company, he should have facilitated the creation of a crop of [new] leaders at the top instead of taking up the mantle himself. [His appointment] shows the desperation of the company and the board to find a solution.” Ramachandran adds that Murthy’s return reflects the “conservative thinking” among the founding team at Infosys. “It means that they cannot think beyond the ‘family’ for leadership. It is a reflection of repeated poor decision making in terms of choosing key leaders.”

Pai, who has worked with Murthy closely, believes his return will give a boost to the company. “[Murthy] will be able to re-energize the company and get the sales engine chugging again…. He is a strong, decisive leader who thinks strategically and who inspires.”

Meanwhile, in another surprising move, Murthy, who had earlier strongly maintained that the children of Infosys co-founders should not join the company, has brought his son Rohan into the fold. Murthy says that Rohan’s term will be co-terminus with his for five years, and he is categorical that “Rohan’s charter is to be my executive assistant and not to aspire to become the next CEO…. The only role he has is to make me more effective.”

But not everyone is buying that. Shriram Subramanian, founder of investment advisory InGovern and a former Infosys employee, told Indian business daily The Economic Times that Murthy’s move “throws out of the window some of the professed principles around retirement age and [employing] family members of founders.”

So while Infosys may possibly regain its financial leadership under Murthy, has it lost the moral high ground that set it apart from other Indian firms? “Certainly, yes.” Ramachandran notes. “Particularly by Murthy insisting on bringing in his ‘private team’ — including his son.”

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In Work and Life, Emphasizing the Importance of ‘Alignment’

Pic_See-saw_XSmall_opt-300x159As a division president of InterContinental Hotels Group (IHG), Kirk Kinsell oversees 120,000 employees in more than 3,500 hotels in the United States, Canada, Mexico, Central and South America and the Caribbean. The $6 billion company is known worldwide for its signature brands, including Holiday Inn and Crowne Plaza hotels and Staybridge and Candlewood suites.

In a Wharton Leadership Lecture earlier this year, Kinsell shared his strategy for rising to the top of an intensely competitive industry that chews up labor, real estate and capital in immense quantities, yet touts a modest mission of providing “safety and comfort to travelers.”

“My favorite topic is myself because, I think, my personal journey will encourage others. Leadership is a privilege and should be hard-earned,” said Kinsell.

Before becoming president of the Americas division of IHG — which represents 70% of the firm’s business — in 2011, Kinsell was the company’s top executive in Europe, the Middle East and Africa. Today, he is one of four division presidents who report directly to CEO Richard Solomons. IHG, which employs 380,000 people in 100 countries and is listed on the London Stock Exchange, expects to hire 90,000 people within the next three to five years, Kinsell told the audience at Wharton.

“When you live your dream job, you don’t want to get away from it. Working is playing and playing is work. I love Mondays because it’s an opportunity to get back in the game,” he noted. “People want more than a job. They want a mission.”

Kinsell’s definition of leadership includes the standard skills — the ability to plan, communicate, multi-task, exude confidence and humility, find mentors and work well with others. But he also stressed the importance of what he called “alignment,” a concept similar to work-life balance.

According to Kinsell, leaders need a clear sense of purpose in their lives that resonates at home and at the office. They should also strive to follow a consistent behavior pattern or set of core values in both environments. In hotel parlance, this means an employee will be cordial to guests whether or not a supervisor is within earshot. At Kinsell’s level, that means following the same principles no matter where his travels take him, from a five-star hotel in Cairo to a roadside motel in Indiana.

That consistency should also flow to all employees, from bellhop to CEO. Alignment, Kinsell noted, generates energy that allows successful people to move forward smoothly without the speed bumps of conflicting priorities. “What drives you? What do you want to be known for?” he asked. “Figure out what inspires you so you can inspire others.”

Kinsell was president of the franchise division of Sheraton Hotels in the 1990s when the chain was owned by ITT. He does not remember the experience fondly. “We had a saying among the team that if ITT wanted us to have a life, they would have issued us one. I’ve always reflected on that culture and tried to do better. Having a job does not mean not having a life.”

Because hotels, like hospitals, never close, the industry has a reputation for wreaking havoc on a worker’s personal life, Kinsell noted. But he said IHG aims to create careers, not jobs, and that retention of good people is a major goal. “Align the work you do to your purpose and give meaning to those outcomes — and jobs turn into a mission.”

Luck doesn’t figure much in Kinsell’s ordered world, but connecting with valuable mentors does. He credits two former bosses and the ubiquitous book by Stephen R. Covey, The Seven Habits of Highly Effective People, as game changers.

Between 1981 and 1988, Kinsell was president of Trammell Crow Hotel Company, which built and owned hotels and created the Wyndham chain. Working with the legendary Trammel Crow, who built iconic skyscrapers from coast to coast, he learned the “business of risk-taking and that nothing happens unless you make it happen.”

Another role model and close friend is Michael Leven, president and COO of the Las Vegas Sands Corp., which includes the Venetian Hotel, a Holiday Inn franchise, and the Sands Casino in Bethlehem, Pa. Kinsell and Leven crossed paths when Leven was president and COO of Holiday Inn. “Both men taught me the value of humility and the notion of giving back,” Kinsell said.

The downside of leadership is the struggle to keep in touch with the corporate team, particularly for Kinsell, who spends 75% of his time traveling, and the loss of family time. Another concern is feedback. “The higher up you go, the less critical feedback you get,” he noted.

‘Think Balance’

Kinsell, who earned a master’s degree in hotel administration from Cornell and a bachelor’s degree in economics from the University of California-San Diego, did not fall into the hospitality industry by accident; His father, grandfather and older brother all began their careers there. Kinsell interrupted his 18-year career with IHG and its predecessor with detours into the casual dining and dry cleaning businesses.

He told the Wharton audience that the rise of real estate investment trusts (REITs) has shifted the risk of development and renovation capital from the corporate balance sheet to independent investors. “In a large way, REITs have led to the ability of companies to go asset light and focus on the brands, franchising and management,” Kinsell said.

Instead of a portfolio packed with bricks and mortar structures, IHG has evolved into a global franchiser and fee-based management company. Of its 4,600 hotels worldwide, the company manages 650 and actually owns less than a dozen. Of the hotels in the Americas, less than 200 are managed by corporate and the rest are franchised.

Kinsell found his niche while consulting with Holiday Inn franchisees, a diverse group of entrepreneurs and sometimes extended families who may sink their life savings into the chance to own their own businesses.

“Franchising is unique,” he noted. “Both parties are co-dependents. You can’t tell the business owner what to do, but you can give them compelling reasons why they should do something. I learned so much about leadership in that role. It was my ‘Aha’ moment.”

The industry has also moved away from the notion that the only difference between one hotel and the next is the bill. Now, companies are targeting different demographics for specific hotels and selling “creative experiences,” he said.

IHG recently opened the first all snow and ice village in North America at the InterContinental Hotel in Montreal. Guests can sleep in igloos, drink at an ice bar, even marry in a snow-packed chapel and gaze at a replica of the New York skyline chiseled from ice.

The EVEN Hotel is a new, mid-priced concept that caters to people who want to eat and sleep well and continue their work-out routines. The flagship hotel is slated to open in New York City and another in Philadelphia. Rooms come stocked with a yoga mat, a luggage rack that turns into a workout bench and a coat rack that doubles as a pull-up bar. “EVEN Hotels is supporting wellness and tries to solve the challenge of travelers falling off the wagon when they travel [by helping them] to sustain their home lifestyle when away from home. Think balance,” Kinsell said.

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Ann Inc.’s Kay Krill: ‘You Can Have What You Want’

kaykrillAn avid skier, Kay Krill revealed her passion for online shopping and multi-tasking in a single sentence. “I was up in the air on a three-minute gondola ride last weekend in Vermont, pulled out my phone and purchased two things” from a home decorating website, the CEO of Ann Inc., home of the Ann Taylor and LOFT brands, said in a speech during the recent Wharton Women Business Conference. “Shopping online is the way of the future. The challenge is figuring out what that will do to bricks and mortar [stores].”

Dressed in black leggings, high boots and a bolero jacket with tufts of leather and fur, Krill’s elegantly casual look would fit in anywhere — a signature of the brands that make up the $2.2 billion company that she oversees. One of just 21 women in the United States to run a Fortune 1000 public company, Krill notes that Ann Inc. is “a company of women, for women.” Indeed, of the firm’s approximately 20,000 employees, about 93% are female.

When someone at the conference inadvertently called Krill “Ann,” she laughed noting, “I get that all the time.” But Krill did not step into Ann Taylor’s peep-toed shoes — indeed, no such person existed. The firm was founded in New Haven, Conn., in 1954 by Robert Liebeskind, who was given the Ann Taylor name by his dressmaker father. Liebeskind thought “Ann Taylor” sounded classy enough to complement the upscale, tailored clothes on his racks.

In 1977, Liebeskind sold Ann Taylor — now a regional chain — to the Garfinckel’s department store company, which also owned the Brooks Brothers brand. The brand changed hands a few more times before going public in 1991.

Krill’s career started when she took a management trainee job at Macy’s after graduating from Agnes Scott College, a small, liberal arts school in Decatur, Ga., where she majored in psychology and economics. “I didn’t have a clue what I wanted to do. I loved clothes … but I really loved tennis. I thought maybe I would find a career in sports,” Krill said. “The important thing is finding your passion. Life is too short to get up every morning and not love what you do. There is no set time when you will find your passion, but in the long run, don’t settle for less.”

After leaving her job at Macy’s, Krill moved around the country in pursuit of a retail career. She worked for Talbot’s for eight years, followed by a stint at Mark Shale, an upscale retailer in the greater Chicago area that closed late last year after an 83-year run. Later, she took a job at Carroll Reed, a firm known for preppy clothes and must-have ski wear that also eventually folded.

Krill joined Ann Taylor as vice president of merchandising in 1994, three years after the company went public. She became president of the LOFT division in 2001 and president of Ann Inc. in 2004. Krill gained the title of CEO in 2005.

At the Wharton conference, she cited the launch of LOFT in 1998 as a career high. Her marching orders at the time were to create “Ann Taylor light,” a line of trendier, more casual clothes that appealed to a younger demographic than the flagship brand and that were also less expensive (or, as Krill likes to say, were sold at “surprising prices.”)

“My first try was not a success, but I was not giving up,” Krill recalled. “I kept begging the board to give me and my very small team more time. Finally, we did figure it out, which was the highlight of my career. Now, Loft is bigger than Ann Taylor.” Of the company’s 981 stores in 47 states, more than 500 are LOFT locations. Less than 300 are Ann Taylor and the rest are LOFT and Ann Taylor outlets. The company also operates an online business, which includes a line of wedding and bridesmaids dresses.

Rethinking Everything

Despite a recent upturn in earnings, Krill said she slogged through a difficult retail environment amid the 2008-2009 economic downturn. The rise of online shopping forced the company to rethink everything, she noted. As a result, new stores were designed to be substantially smaller with fewer employees.

A share of Ann Inc. stock is currently priced in the low thirties. During the depth of the recession, however, it dropped below $3 a share. Consumer confidence was at an all-time low, forcing many retailers to restructure or bail. “The worst year was 2008,” Krill notes. “But no matter how depressed I was, I had to remain positive. That’s what leaders do. Staying positive is one of my strengths. Getting that stock back into the $30s has been an amazing journey.”

Krill describes herself as good listener with an ability to get along with a variety of personalities. Rather than hire clones, she noted that her inner-circle is composed of a diverse group so Krill is constantly exposed to wide range of opinions.

Selling clothes, shoes and accessories that women want is Krill’s job. Nurturing a business with a soul is her passion. Since 2005, Ann Inc. has contributed more than $25 million to charities, including St. Jude Children’s Research Hospital and breast cancer research. “Financial success is key to leading a company. But so is bringing heart and soul and strong values,” Krill said. “In return, those commitments also help to attract and retain top talent in the retail business.”

ANN, Inc. is also partnering with a global, nonprofit organization co-founded by former U.S. Secretary of State Hillary Clinton in 1997. Called Vital Voices, the group’s goal is to identify and invest in the next generation of women leaders. The company is in the process of selecting 50 rising juniors or seniors in high school to participate in a three-day leadership training conference in April in Washington, D.C. The teens who are selected will have the chance to be mentored by female leaders and executives hailing from across the globe, and to win grant funding to launch service projects in their communities.

To promote the search, signs appeared in Ann Taylor stores during the month of January saying, “Do you know a girl who wants to change the world?” Apparently, 1,000 people did, based on the number of applicants. ANN Inc. plans to invest $1.3 million over four years to support the Vital Voices network. Recently, the company announced the inclusion of actress Kate Hudson as an advisor on the project.

“We are driven to inspire and connect with women to put their best selves forward every day,” Krill noted. “We are proud to launch the goal of finding and empowering the next generation of women leaders committed to making a difference in their communities and the world.”

Among Krill’s words of advice to conference attendees were her views on achieving work-life integration. Giving birth to twin boys at age 44 turned Krill’s life upside down she noted. “You can’t have it all, but you can have what you want,” Krill, now in her late 50s, said. “That’s the tough part — figuring out what you want — and eliminating everything else. I used to go places I really didn’t want to go to. No more. Wild horses couldn’t keep me away from dinner with my family. I have also learned how to get to their sporting events. Trust me. It can be done.”

Earlier in her career, Krill resented bosses who did nothing but work, and expected the same from everyone else. “I lead by example, which gives my staff permission to have a life,” she noted. Krill further advised the audience to “be humble, be authentic and trust your gut. When you get cocky, you only fall harder. Peacock today: feather duster tomorrow.”

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Defense Companies Face a “Transformer” Challenge under Leaner Budgets

Like “Transformer” toy weapons, U.S. defense companies facing the new, lean defense budgets must morph into new shapes be able to offer customers value that supports ongoing growth. David F. Melcher, CEO of ITT Exelis, a defense, aerospace and information company spun off from ITT in 2011, considers the challenges in this Knowledge@Wharton interview. Melcher discusses the need for adapting to a 10-year down cycle in defense spending, forging new, “affordable capabilities” for defense needs, and building on existing technologies to create new products and services increasingly apart from strictly defense revenues.

 

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Partnering to Save the Rainforest

Deforestation is one of the greatest environmental and business challenges of our time because it contributes so much to the rising greenhouse gases shown to contribute to climate change.

One clear measure of the impact: Indonesia is now the world’s third-largest emitter of greenhouse gases, after the U.S. and China, largely because of the country’s historically high rate of deforestation. Just two countries, Indonesia and Brazil, account for some 55% of the world’s deforestation, not including the loss of peatlands, “which can account for half the greenhouse-gas emissions in Indonesia in some years,” says the Washington Post.

But Brazil, ravaged by deforestation in the past, has engineered quite a turnaround, decreasing deforestation by 78% in recent years with new successes on the horizon. Indonesia, by contrast, is still in the early stages of improvement. The key, of course, is to balance the environmental challenges with economic demands, and Indonesia, with the largest economy in Southeast Asia, is defying the economic malaise affecting much of the world by growing at an annual rate of about 6%.

According to the Rainforest Action Network, less than half of Indonesia’s original forest cover still exists, with much of the rest badly degraded. And, a United Nations Environment Program report notes that palm oil plantations are the leading cause of rainforest destruction in Indonesia (and Malaysia). One reason for the outsized impact of palm oil, widely used as cooking oil, has to do with the peatlands taken over to create huge palm plantations. Peatlands are among the world’s most concentrated carbon stores. When disturbed, they release enormous amounts of greenhouse gases.

The deforestation challenges in Indonesia are similar to those in other parts of the world – weak regulatory regimens, lack of international assistance and commercial pressures. The World Resources Institute, for example, estimates that illegal logging accounted for 80% of Indonesia’s timber exports in 2008, depriving the government of more than $100 million in tax revenue annually and often depriving local communities of their livelihood.

Keenly aware that its reputation for deforestation tarnishes its image as a problem-solver, not to mention the negative effect deforestation has on the country’s long-term economic development, the Indonesian government has begun to tackle the conflicting regulations that have hobbled land use management. One notable recent accomplishment was a set of new rules introducing a national Timber Legality Verification System to assure other countries that Indonesia’s own laws are being followed, and that timber and other forestry products leaving the country are certified as legal and traceable to their points of origin.

Greenpeace, meanwhile, conducted a number of high-profile media campaigns aimed at specific companies, many of which responded positively. But its agreement with Nestlé was the most far-reaching. With the help of The Forest Trust, Nestlé developed a plan, just two months after it began talks with Greenpeace, to identify and remove any companies in its supply chain with links to deforestation. The agreement was so complete and reached with such speed that Greenpeace was caught off guard, noting that it “didn’t expect Nestlé to come up with such a comprehensive ‘zero deforestation’ policy so quickly.” It was, Nestlé announced, “the first time that any company has made such a commitment.”

Indonesia is working on a number of other fronts to take on the deforestation/greenhouse gas challenge. For a more in-depth look, see this Knowledge@Wharton article, “Deforestation in Southeast Asia: The Future Is Being Decided in Indonesia,” which is part of a larger special report – “The Pathways to Sustainability in Emerging Markets,” just published in conjunction with Wharton’s Initiative for Global Environmental Leadership. 

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Obama’s Sedate Debate

Mitt Romney got high marks for style in last’s night’s presidential debate, while President Obama was widely viewed as flatfooted. But viewers got a chance to see some clear differences on substance, says Mark Duggan, a professor of business, economics and public policy, and faculty director of the Wharton Public Policy Initiative.

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Increasing Disconnect at Maruti Suzuki: A Warning for Multinationals?

India’s largest carmaker Maruti Suzuki, a subsidiary of Japan’s Suzuki Motor, is in the midst of its biggest ever labor unrest. The company’s plant in Manesar in the North Indian state of Haryana was recently the site of one of India’s worst labor altercations: A senior executive was killed brutally and nearly 100 managers and supervisors were injured by a mob of more than 3,000 workers. The mob also set fire to the office wing and the main gate. Investigations are ongoing and the company has declared a lock-out at the facility. The apparent issue: reinstatement of a worker who was suspended for misbehaving with a supervisor.

A company statement noted: “By any account, this is not an ‘industrial relations’ problem in the nature of management-worker differences over issues of wages or working conditions.” After meeting with the state chief minister, Maruti Suzuki chairman R.C. Bhargava told the media: “We have requested the government to speed up the investigation and treat the matter as a criminal case and not as one of industrial dispute.”

But Maruti is no stranger to labor trouble. In June 2011, there was a 13-day strike at the same plant over the formation of a second trade union with external affiliations. A month later, there was a 33-day standoff between management and workers at the plant. Last October, workers once again went on strike, demanding the reinstatement of employees who were suspended during previous agitations. They also raised the issue of establishing an independent workers’ union. While the management managed to end the strike, its modus operandi raised questions of corporate governance: There were allegations of a payout.

The violence at Manesar needs to be condemned unequivocally, observers say, adding that India needs more sensible labor laws and effective implementation of those policies. One area of major concern is the condition of contract workers: They are often not paid fair wages or treated equitably. The Maruti incident is also being seen as a reflection of growing social unrest due to an increasing mismatch between India’s economic aspirations and reality.

At the same time, Manesar has once again put the spotlight on how multinationals engage with their teams in India. Maruti, for instance, has been in India for almost 30 years, but in the past few years the top management seems to be getting increasingly disconnected with the ground realities. Industry observers point out that ever since expat Shinzo Nakanishi, the current managing director at Maruti Suzuki, took over from Jagdish Khattar in 2007 — Khattar was at the top job since 1999 — it is the Japanese voice that counts more in crucial decisions. Cultural differences by way of sense of discipline and employee engagements have also played a role in increasing the gap.

In another development, Korean firm LG Electronics has seen an exodus of 15 senior executives at its India operations over the past six months. The provocation for this was reportedly the restructuring of the organization and entry of Korean expats in key positions, thereby reducing the role of the Indian executives. Earlier this year, the firm abolished the post of the chief operating officer and created four director-level posts. Three of these new positions are being held by Koreans.

In an earlier interview with India Knowledge@Wharton, Manish Sabharwal, chairman of Bangalore-based staffing services firm TeamLease Services, observed that, unlike in most American and European companies, “in most Korean and Japanese companies, the power tends to reside heavily in the head office. I heard a quip about Toyota that they don’t globalize but colonize. Obviously, these structures have important implications for how labor engagement and negotiations are handled.”

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As Mayer Brings the Pizzazz, Yahoo Waits for the Magic

Yahoo’s hiring of Marissa Mayer — a high-profile executive and innovator ensnared from rival Google — as its new CEO has all the trappings of a coup. But Wharton experts say Mayer will have to move quickly to win the search engine new users and advertisers, and to jump-start product innovation.

“Will Mayer be the one to finally work some magic at Yahoo and restore its glamour in the industry?” asks Wharton management professor Lawrence Hrebiniak, adding that he his happy with the choice. “She brings experience with, and knowledge of, consumer websites gained at Google, a good place to work and learn.”

Mayer’s last post in her 13-year Google career was vice president of the search giant’s local, maps and location services, overseeing product management, engineering, design and strategy. Yahoo credits Mayer — who made Glamour magazine’s 2009 list of “Women of the Year” — with heading up some of Google’s most successful innovations and launching more than a hundred features and products, including Gmail, Google News, and the “look and feel” of the Google experience.

“Marissa Mayer is a great win for Yahoo,” says Wharton operations and information management professor Kartik Hosanagar. “She’s from a relevant domain and is a star exec. She will provide good, positive PR and will help in recruiting some good folks back to Yahoo.”

Prior to Mayer’s hiring, Hosanagar told Knowledge@Wharton Today that Yahoo needed a leader with an “entrepreneurial spark” as CEO. “Marissa is close, but not quite that,” he says now. “She joined Google very early … but she’s been at Google too long and it’s not clear to me she’s the person who comes up with new product ideas and gets them done. I’d have preferred someone who has started and grown a company. Even Jack Ma [founder of Chinese business-to-business trading platform Alibaba.com] would have been a great choice. That said, I think Marissa is overall not a bad choice.”

Mayer will have to hit the ground running at Yahoo, which has struggled to maintain stable leadership at the top and seen a steady decline in revenue over the past few years. “Her focus will be on Yahoo’s core advertising business,” says Hrebiniak. Adds Hosanagar: “The one thing Marissa needs to do is to focus on developing a new winning product at Yahoo instead of financial reengineering, restructuring the organization and the like. Some of the latter is needed, but what will get Yahoo out of this mess will be a new product, much like [the introduction of the] iPod for Apple. Given her background, I think her focus will indeed be on products.”

Hrebiniak suggests that the work done by Mayer’s predecessor, interim CEO Ross Levinsohn, including settling disputes with Google and Alibaba, will allow her to focus on the advertising business.

Closing the Revolving Door?

But Mayer could face other distractions, as well as formidable hurdles to overcome, Hrebiniak points out. “Levinsohn’s being passed over may generate resentment among key managers and employees, which could [lead to] defections and other problems,” he says. “Google and Facebook, which have steadily been stealing Yahoo’s users and advertising revenues, aren’t going away. A frontal attack by Mayer is certainly anticipated and the two formidable foes will assuredly be prepared for Yahoo’s new assaults.”

Mayer is Yahoo’s fifth CEO in as many years, and “a revolving door itself creates uncertainty and possible confusion,” Hrebiniak notes. “Levinsohn, for example, was reportedly in the process of formulating and executing his version of a new strategy. Mayer may upset the apple cart with something new and different, creating confusion and a feeling of ‘here we go again.’”

Wall Street seemed to cheer the choice of Mayer, notes Hrebiniak, but adds that “only time will tell if the trust in her capabilities in a competitive marketplace is warranted.” Mayer has a lot going for her — including a baby boy due Oct. 7 — and has been named in four consecutive years starting in 2008 to Fortune‘s list of the “50 Most Powerful Women in Business.” As one of only 20 female CEOs of Fortune 500 companies, and Google’s 20th-ever employee, “maybe 20 is the magic number,” for Yahoo, says Hrebiniak.

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