Chapter 2995: Professional Managers’ Battle

Charlie Kidder, whose business he was responsible for was not developing well, guessed Feng Yiping's purpose today. Yes, he was bringing his senior executives to pay tribute to Nortel, a former giant.

The purpose, of course, is to learn from it.

It should be said that Nortel, which is also not well known to outsiders, really has this qualification.

When it became a world-class telecommunications equipment supplier, it can be said that none of our domestic related companies had really gotten started.

Back then, Nortel's stock was also favored by capital, rising to more than 120 US dollars at its peak. Therefore, in 2000, its market value climbed to a high of 267 billion US dollars. At that time, Nortel's market value occupied the Toronto Stock Exchange. 1/3 stronger.

You must know that Toronto is the largest city and economic center in Canada, a developed country. The city's total GDP has always been among the top ten cities in the world. In 2000, its total GDP was higher than that of our Beijing, Shanghai, Guangzhou and Shenzhen. It adds up to even more.

At that time, Yahoo had its highest market capitalization, but it was only US$125 billion—less than half of Nortel.

You can also use other data to see how good Nortel was back then. Judging from the highest market value last month, the market value of our company and Microsoft is only around US$230 billion.

Apart from the numbers, we can still understand how good Nortel was back then.

Judging from the current reality, in some key cities in Canada, such as Toronto and Vancouver, everyone will say that the rise in housing prices is because of the Chinese.

But that year, the reason why housing prices in Toronto and the neighboring Canadian capital Ottawa were rising was because of Nortel.

The power of Nortel made Nortel employees very wealthy, so they started buying properties one after another. So much so that at that time, if you wanted to buy a house in Ottawa, you had to queue up in the middle of the night to get a number before you could have a chance to choose a land.

Just one company caused housing prices in the capital to rise. It's no wonder that Nortel was called a national treasure by Canadians at the time.

But now Nortel... believes that after selling their last important assets, which is this batch of patents, it will not take long before they will completely disappear.

"I think the main reason is that the direction is wrong," Lao Ma spoke first, "and that they believe too much in new technologies."

"Technology is good, but it does not mean that companies will be able to develop well if they have good technology,"

Of course Lao Ma is right.

The rise of Nortel is because they made the right bet during the rapid development of Internet companies. When other companies, such as Lucent, had only 2.5G fiber optic products, Nortel began to fully invest in the research and development of 10G products.

Next, the Internet developed rapidly at a speed beyond everyone's imagination. Telecom operators launched new broadband systems one after another. Nortel's 10G products once occupied more than 90% of the market monopoly share, thus achieving huge gains. success.

But as the Internet bubble burst, the former star products became unsaleable stock, with inventories once as high as US$4 billion.

If this can barely be classified as a force majeure factor, then they spent huge sums of money to develop 40G or even 80G capacity optical fiber, which is one of the main reasons for the rapid deterioration of the company's financial situation.

"One step ahead is a genius, two steps ahead is a madman," Lao Ma added.

At this time, another voice sounded, "I think it's mainly because of the several people in charge,"

That's Mayer.

"We saw that it was the poor decisions of those in charge that led to the consequences that Jack mentioned,"

Feng Yiping echoed, "I agree with Mayer's opinion,"

Lao Maxin said, you are two parents-in-law, so of course you will agree.

Feng Yiping then expressed his conclusion, "I think the decline of Nortel is mainly due to this aspect,"

Lao Ma now understands that this is a lesson for everyone!

The reason why Feng Yiping expressed his conclusion at this time was because he was worried that everyone's discussion would go astray.

Why did Mayer speak when Lao Ma still had some unfinished ideas? That's because she doesn't quite agree with Lao Ma's views.

The same is true for Feng Yiping. Relatively speaking, Lao Ma still values ​​​​business methods more, but he still hopes that his company can invest more in the research and development of new technologies.

"We can see that the person who made Nortel prosperous and the person who made Nortel decline rapidly happened to be the same person, John Ross,"

"Everyone, we must keep this in mind. The people who once led the company to create glory are also very likely to be the people who ruined the company,"

"Of course, what really put Nortel into dire straits was John Ross's successor, Frank Dunn. In order to satisfy shareholders, he chose to falsify accounts and falsely report profits,"

An accounting firm that was puzzled by Nortel's data eventually discovered that they had falsely reported profits of more than $200 million.

Under the strict securities regulations in Europe and the United States, such a financial scandal is almost equivalent to a death sentence.

"Of course, we can't rule out that he did this to get a huge bonus,"

Everyone, look at me and I look at you. We have never thought about such a thing.

Feng Yiping stood up, "What I want to say is that if you analyze further, at several critical moments related to Nortel's life and death, some seemingly excellent professional managers made irreparable mistakes."

This is the main reason why he brought everyone here. He thinks that the lessons of Nortel can give them a lot of reference.

At this moment, many people are a little restless.

Some of the people present, whether it is Hastings of Netflix, the three people of Twitter, or Merback of Coinstar, although they are all founders of the company, they can only be regarded as professional managers after being acquired.

Not to mention the rest, including Mayer, all are professional managers.

"The development of Silicon Valley over the years seems to illustrate this point. When the founder is in charge, the company often develops better, but after being handed over to professional managers, although these professional managers are recognized as outstanding people, they often cannot keep the company from continuing to develop at a high speed,"

"Apple, which everyone knows, is a very good example,"

"Ladies and gentlemen, all of our companies will inevitably be handed over to professional managers in the future, so I would like to ask everyone to think about how to make our company not like Nortel,"

"What kind of governance system should we formulate?"

This is the focus that Feng Yiping wants to discuss with everyone today.

I will always have to let go, even Hastings and the founders, as well as Ma, will eventually retire, and the future will only be handed over to professional managers.

Everyone is watching each other again, because this is a problem that is closely related to most of them.

"Is it because professional managers may not have deep feelings for the company, and they may not necessarily advance and retreat with the company, their own interests are not consistent with the interests of the company, or other reasons?" Feng Yiping looked at everyone and asked.

"If so, how should we solve it?"

There was a bit of silence in the luxurious hall of the cruise ship, and finally, it was Sandberg who broke the silence.

"Feng, there are many reasons why professional managers fail to perform well, but I think the most important one is the performance pressure they suffer, and these performance requirements are generally short-term,"

"The pressure of KPI will, to a certain extent, force them to pay more attention to short-term interests, or break down the company's long-term goals into specific, objective and measurable indicators that can monitor employees' work in a timely manner,"

"The result of doing so is often that they will always deviate from the company's original goals in the end,"

Feng Yiping nodded, "That is, we should pay more attention to long-term goals, and fortunately we are currently doing so,"

"The problem is, I think everyone knows that whether it is a 5-year plan or a 10-year plan, relevant indicators must be there, ? "

"This is a contradiction...Do you have any other opinions?"

Merback, who has always been taciturn, cleared his throat, "I think that professional managers enjoy high salaries and benefits, and they all have golden parachutes (retirement compensation), which means that in many cases, even if their work is terrible, they can still get generous compensation, just like the last CEO of Nortel, Zafirovsky,"

"Such a system now has less and less incentive effect, but the negative effect is getting bigger and bigger,"

As soon as he finished speaking, Twitter's Jack Dorsey immediately retorted, "My opinion is exactly the opposite. I think it is such clauses that have greatly mobilized everyone's enthusiasm,"

"Yes," "Yes"

Many people agree with his opinion, and the reason is simple, it is more beneficial to them.

Hastings also said, "Without such conditions, it is difficult to attract outstanding talents,"

Old Ma disagreed, "A common vision is more important..."

Such confrontational oppositions quickly made the discussion intense.

Feng Yiping, who provoked such a scene, rarely spoke later, and sat quietly to listen to everyone express their opinions.

He was not sure about this. Of course, he was still assured of the current group of people, but what about the people after that?

The most ideal situation, of course, is that professional managers closely link their own interests with the interests of the company, but how can we ask everyone to do this?

He only knew that such issues related to corporate development and involving huge conflicts of interest are often difficult to resolve peacefully - there are many professional managers who choose to go to court with their former employers after leaving office for various reasons.

Take Zafirovsky, the last CEO of Nortel and former CEO of Motorola. After leading Nortel's bankruptcy, he also went to court to ask for up to $12.25 million in pensions, salaries, bonuses and other payments.

The eating style is a bit ugly, but how many people can remain calm in front of tens of millions of dollars?

Does face matter...

Such a fierce debate at the moment, the collision of views of people with different demands, to a certain extent, is equivalent to a pre-rehearsal.

After that, the discussion extended to more and more specific aspects, and it was still very intense at lunch.

Feng Yiping also received relevant news. In the first round of bidding for Nortel's patents, Intel immediately offered a high price of $1.5 billion...