Playing the Dot-Com Blame Game

Until recently, it was rare to see dot-com chief executive officers lose their jobs or even leave voluntarily. But these are different times — much different — and suddenly the heads of Internet chiefs are rolling with regularity.

Sometimes, the executives make it seem as if they are nobly falling on the same sword they used to lop off a percentage of the company’s workforce. In any case, noble or not, the resignations are usually meant to be proof that companies have become serious about making money or turning a profit or taking over their market.

But here’s the ironic part: In most cases, the chances of a company reaching those goals have nothing to do with who’s in charge. Sure, there are exceptions, but for the most part, the changing of the CEO solves no real problems and does little outside of dressing up the window for a while.

The fact is, if a company is destined to succeed, most anybody can stand at the helm and be showered with stock options and bonuses as the ship sails into port. And if it’s a leaky barge, no one is going to prevent it from sinking.

Mixed Results

Rest assured, investors are watching these CEO shuffles, both in e-commerce companies and in old-economy firms. Just last week, when billionaire Warren Buffett used his seat on the board of directors at Gillette (NYSE: G) to oust that company’s CEO, shares in the company jumped on the news.

It’s hard to know what that reaction is all about, especially when no permanent replacement had been named. Maybe it’s a belief that any change is good. Or, again, that the company knows what it has to do and is willing to make the tough decisions to get the job done.

But whatever the reason, it’s a knee-jerk reaction. Unless the CEO happens to be the can’t-miss kid — and who is in these changing times? — the chances he or she will single-handedly pull the plane out of its nosedive are slim.

Too Much Too Late

Take the example of AltaVista. Incubator CMGI, Inc. (Nasdaq: CMGI) had high, high hopes for that search engine-cum-portal when it took it over from Digital Equipment Corp. in 1999. But a planned IPO has never taken place and market share has been lost to competitors, despite the fact that AltaVista has superior technology in many ways.

Longtime CEO Rod Schrock said last week he wanted to spend more time with his family, but the news came a month after AltaVista laid off about 25 percent of its workforce. He leaves behind a company in trouble, one searching for new and novel ways of making money — such as licensing its technology to other companies.

It’s very likely that the next chief will oversee an asset sale rather than a public stock offering.

Last Ditch Efforts

Making personnel moves to appease or re-interest anxious investors is no way to save a struggling company. It might buy time, but how long will it be before the honeymoon of the replacement CEO ends?

Now, there are times when a change is good, of course, especially now that dot-com whiz kids are stepping aside to let someone with experience in negotiating the financial markets and business partnerships take over.

And CEOs can make a difference by being aggressive cost-cutters and reining in free spenders. But those changes occur at the margins, not in the meaty areas of failure and success, big profit or big losses.

In short, the current rash of changes is more about the appearance of change, meant for consumption both externally and internally. Can it boost employee morale? That depends on how well liked the outgoing leader was and how quickly the incoming person can get employees to buy into his message and style.

Don’t Cry for Them

No tears are being shed here for the CEOs getting their walking papers, since a thick wad of cash is undoubtedly tucked in every briefcase. But these executives are clearly becoming the scapegoats for failed business plans, flawed marketing efforts and above all, a changed economic reality.

Whose fault is it that investors want only the blue-chip dot-com stocks? Who should be blamed for a new scrutiny from venture capitalists? Who knew that Company A wouldn’t be one of the two surviving in our space?

In the end, someone has to take the fall, even when factors well beyond his or her control are in play. Changing one piece of the management puzzle isn’t going to turn a future of gloom and doom into a bright and optimistic outlook. And companies that think otherwise are only fooling themselves.