Meg Whitman and eBay – Leadership Case Study Case Study Please note: This case study was compiled from published sources, and is intended to be used as a basis for class discussion. While care has been taken to ensure correctness of the facts, accuracy of information cannot be guaranteed. Unauthorized distribution of this document electronically or otherwise is prohibited. Please contact [email protected] for any queries. August, 2008. © www.casestudyinc.com Table of Contents 1. Introduction - eBay CEO Meg Whitman plans to retire......................................3 2. Meg Whitman – Early years and Career Growth ..............................................3 3. Meg Whitman and Leading eBay ...................................................................5 3.1. Hiring the right people...................................................................................5 3.2. Quickly understanding the new business model...............................................5 3.3. Leading eBay’s IPO - a hands-on approach ....................................................6 3.4. Changing eBay’s policy.................................................................................6 3.5. Building one of the most powerful e-commerce systems in the world.................7 3.6. Focus on Metrics ..........................................................................................7 3.7. Customer Focus - ‘Voice of the Customer’ program .........................................8 3.8. Strategic Decision Making .............................................................................9 4. Exhibit I: eBay stock performance graph.......................................................11 5. Exhibit II - Quick Facts/Key Information on eBay ...........................................12 6. Exhibit III - Awards Received By Whitman.....................................................13 7. Exhibit IV - Major Awards Received By eBay.................................................14 Meg Whitman and eBay – Leadership Case Study © www.casestudyinc.com 2 1. Introduction - eBay CEO Meg Whitman plans to retire "In the beginning, I was certainly not an entrepreneur who came up with the idea, but I think I was fairly entrepreneurial in trying to figure out how to bring that idea to life and build a backbone for the company that could take it to the next level,” - Whitman commenting on her journey from a novice to a leader in the dotcom world. At the beginning of the year 2008, Margaret Whitman (Whitman), the chief executive (CEO) of eBay, announced plans to retire so as to breathe fresh life into the company and also provide a much needed radical reinvention of eBay. By March 2008, Ms. Whitman, 51, had served in the position for 10 years. Whitman joined eBay as chief executive in 1998. She was popularly known as Meg Whitman and 'darling of the Internet'. In 2007, she accepted the Lifetime Achievement Award for the community of buyers and sellers that make up eBay. Whitman ranked 22nd on Forbes.com's list of the world's most powerful women. In October 2002, Fortune Magazine ranked Whitman, as the world's third most powerful women in business, after Carly Fiorina and Oprah Winfrey. However, some analysts called Whitman old-fashioned, a low-key manager, a ‘management stodgy’ and a ‘slow-footed CEO’ because even during the dotcom boom, she avoided risk and focused on financial fundamentals. Some felt that she did not possess the ‘star quality’ of Carly Fiorina, CEO of Hewlett-Packard, or the electric energy and charisma of Jeff Bezos, the founder of Amazon.com. But the performance of eBay silenced her critics. When many dotcom businesses crashed in the late 1990s and early 2000s, Whitman steered eBay towards success. EBay was the only Internet Company that had registered continuous growth and profits since its inception in 1995. Under her leadership, eBay's revenues and profits had doubled every year. With her strong belief in eBay's business model and its customers, revenues increased from $4 million to $1 billion by late 2002. She truly succeeded where many had failed. 2. Meg Whitman – Early years and Career Growth Margaret C. Whitman, the youngest child of a Wall Street executive and popularly known as Meg Whitman was born in August 1956. She grew up in Long Island, New York. She was smart, studious and academically oriented since childhood. She graduated in Economics from Princeton University. Her penchant for business was evident when she had The Wall Street Journal delivered to her dormitory at Princeton University - unusual during the disco era of the 1970s. The business inclination took her to Harvard University, where she received her Masters in Business Administration. Her career began as a brand manager at Procter & Gamble (P&G) in 1979. She learnt her marketing basics and gained first hand training in brand management. Three years later, in 1982 she left P&G to become Vice President at Bain & Co., a leading consultancy firm. After almost eight years at Bain and Co., she shifted to a number of different companies and continued to climb the corporate ladder. Meg Whitman and eBay – Leadership Case Study © www.casestudyinc.com 3 In the period between 1989 and 1992, she worked as a senior vice president at Walt Disney’s Consumer Products division where she began the first Disney stores in Japan. She learnt important lessons in operating a business efficiently. In 1993, she joined as President at StrideRite, a major shoemaker and successfully revived the Ked’s brand. In a couple of year’s time, she joined Florists’ Transworld Delivery (FTD), as its President and later became its CEO. She turned FTD from a loss making unit into a profitable one. In early 1997, she shifted to Hasbro, a leading toy maker to head the global operations of Playskool and Mr. Potato Head brands. In November 1997, David Beirne1 called Whitman and offered her the job as CEO of eBay. She had never heard of eBay and so rejected the job offer. Besides, at the time she wanted a more challenging and bright future at Hasbro. She reportedly did not want to risk her future prospects at, in her own words ‘an obscure, no-name Internet Company’ with less than three dozen employees and revenues of $4 million. Furthermore, accepting the job would imply shifting her family from Boston to California. She felt this would be ridiculous as her family2 was well settled in Boston. But on Beirne’s persistence she agreed to fly to California to meet eBay’s founders and investors. They convinced her of eBay’s potential. She liked the fact that that eBay provided people with an opportunity which they did not find before on the Internet and that it helped build an entirely new community. Commenting on what made her accept the proposal, Whitman said, “Two things. One is that this website had created functionality for people that did not exist before the Internet. And then Pierre Omidyar, eBay’s founder, said that people had met their best friends on eBay, had traveled with other eBay users. That people had connected over a shared area of interest. I said, this is huge.” She joined eBay in March 1998. In early 1998, Whitman’s husband was appointed as the head of the Neurosurgery Department at Stanford University Medical Center. Thereafter, the whole family shifted to California. She was quoted3 saying, “There’s no substitute in the land-based world for eBay. I just had an overwhelming instinct that this thing was going to be huge.” Right from the time of her entry, she had to play many different roles at eBay: management consultant, marketer, financial analyst, strategist, leader, and customer. 1 David Beirne, one of the well-known headhunters in Silicon Valley. 2 Her husband was the head of the Neurosurgery Department at the Massachusetts General Hospital and her two sons were quite happy with their school. 3 “Behind the scenes at eBay,” www.cnn.com, January 13, 2000. Meg Whitman and eBay – Leadership Case Study © www.casestudyinc.com 4 3. Meg Whitman and Leading eBay “Truly a visionary, but more importantly she is an exceptional manager. Vision is one thing, and there is a lot of that in the Silicon Valley. Execution is another. She is remarkable at actually getting things done.” - Tim Bajarin, President, Creative Strategies on Meg Whitman’s managerial skills 3.1. Hiring the right people At eBay, Whitman’s first job was to prepare eBay for its first IPO. She compared eBay to a ‘den of geeks’ who were handpicked by Omidyar. As the number of employees was less, she had to do many things personally. She had to bring in professionalism into the company and build the eBay ‘brand’. To build eBay into a leading auction site worldwide, Whitman had to develop an outstanding, experienced and enthusiastic team of senior executives and employees. She began building such a team immediately after she joined eBay. She hired personnel with efficient and experienced personnel from marketing and business consulting domains4 to fill key senior positions. Since many of them had functioned in old economy era, she made it a point to remind them of the differences between other traditional businesses and eBay. All were well-informed about the Internet and eBay’s mission and objectives so that they could apply lessons learnt from their respective fields effectively. Through the late 90s, she also hired thousands of employees for customer and technical support to eBay’s site. Whitman had the ability to attract the right people to the job. Her decision to hire experienced personnel - unlike other Internet companies which hired the younger generation - paid off in the long term. 3.2. Quickly understanding the new business model “I came in and I said Pierre has created something incredibly important here that is growing very rapidly and has clearly struck the consumer nerve. My objective is to find out as much as I possibly can about what he has created and what is wonderful about what he has created.” - “Q&A with eBay’s Meg Whitman,” www.business.cisco.com, July/August 2001. Before making any changes, she concentrated on understanding eBay’s business model thoroughly. She soon realized that the customers (the eBay community) were the powerful force driving the business model.