Zynga, the online game company, has had problems almost from the start. Its IPO was in late November, 2011 at $10.00 a share. Within about three months the stock went up to $14.00, but has been in decline ever since. In fact, it was down to $3.00 back in August of 2012 and really hasn’t moved from the $2.50 – $3.50 range ever since.
Zynga’s initial core products, such as Farmville and Castleville, have proven to have very little staying power. Farmville was made available via Facebook and that relationship worked well temporarily but then fell on difficult times. The fact is people quickly lose interest in games and they are anxious to find new ones. Currently, Zynga’s primary problem is that it is having a hard time in the mobile space.
Given these very critical product problems, coupled with the disastrous stock price, it was not surprising to see it hire a new CEO; a person who is highly experienced in the game business. But, there is a big problem! The founder and CEO Mark Pincus is not leaving. He is staying on as the Chairman of the Board as well as the Chief Product Officer. So the obvious question is, given the severe product problems that Zynga has, who is in charge of products? Is it Pincus, the Chief Product Officer, who has proven himself incompetent in breathing life in to the product offerings of this company, or is it the new CEO from Microsoft?
Most probably the folks at Zynga have an elegant answer to that question but confusion as to who is in charge is always a disaster. Remember when Alcatel Lucent was formed in 2006 where the former CEO of Alcatel became Chairman and the former CEO of Lucent became the CEO of the company? They talked about how they were going to collaborate on key decisions but what they really did was take the stock price from $34 per share down to $3 per share and for the last couple of years the company has been flirting with bankruptcy.
It seems that business people constantly have trouble remembering the following fundamental business principle:
A leader with crystal clear responsibility and full authority is essential to drive significant change or innovation.
At Zynga, maybe Mark Pincus and Don Mattrick, the new CEO, have worked things out so they know who is responsible for what. But with Pincus as the Chief Product Officer, the Zynga changes don’t seem to make sense.