Thursday, May 24, 2012

The firing of Scott Thompson at Yahoo

The board removed Scott Thompson, the CEO of Yahoo, after it was revealed that he lied on his resume. He claimed to have a computer-engineering degree from Stonehill College in Massachusetts, which did not even have a computer- engineering major at the time of his graduation. An investor, Daniel Loeb, representing discontented shareholders who sought seats on Yahoo’s board, uncovered the discrepancy and forwarded the information to the Yahoo board. The New York Times reports that Thompson was evasive and unforthcoming throughout the process of the board’s investigation. For example, he sought pledges of support from some board members without responding to the allegations. He asked a senior executive to support him, and when the latter declined, he asked that the executive not reveal their conversation to board members. On a radio interview he elided the distinction between doing a major in computer engineering, and having a background in computer engineering by saying; “That’s really the background that I have, and it started back in my college days, and I think that’s really the wonderful part of being an engineer is you think that way.” In addressing Yahoo employees, he blamed a search firm for the discrepancy on his resume, which the search firm promptly denied. The New Times reporter, who has followed the story, wondered, “How and why Mr. Thompson’s résumé came to reflect the false claim that he had a degree in computer science remains a mystery. If the company wants to solve it, Yahoo may need to add a psychologist to its investigative team.”
Perhaps the answer to the psychological puzzle lies in Thompson's response to the revelation of the discrepancy. He appears to rely on evasion to cope with difficulty and stress. The practical gains to being evasive are readily apparent. One can create a good impression without quite lying. Hence he references his “background” rather than his major on the radio interview. One can also gain advantage without quite challenging people who control resources.  So he sought support from a senior executive but did not want board members to learn of his politicking.  
If a person learns to use evasion successfully, he is at risk of developing a certain obtuseness, a lacking in emotional intelligence. This is because he becomes comfortable getting what we wants without realistically assessing the obstacles he faces. He evades the obstacles by telling lies, white or not, and so never learns to actually negotiate his way through reality. Over time what is real and what is not take a back seat to how situations appear.  The New York Times article suggests that had Thompson been completely honest from the beginning, and had offered his resignation, the board may have refused it, if only because they had just recently fired another CEO.
One question is; what are the roots of an evasive style of acting? Since an evader is not a sociopath – he has a conscience, and can be burdened by the distinction between right and wrong --it is likely that he evades because he feels that he deserves the opportunity or the resource he wants.  But this belief, that he is deserving, is not based on a sense of his accomplishment, else why would he lie, but rather on the conviction that he has been held back, or unfairly deprived.  In other words, the evader feels entitled.  For example he "surely" could have been a computer engineer had he been offered the opportunity or had gone to a different college or had received proper guidance from adults.   This means that his “small lies” are actually righting a wrong by conferring an advantage that had been unjustly withheld. Ironically, he is correcting a moral imbalance by lying!
One question, which is of always of interest, is how do character flaws affect an executive’s performance. One answer is that sometimes these flaws may create an advantage. For example, the narcissistic executive may exude self-confidence, and the paranoid one may be detect threats sooner than others. Perhaps the evasive person succeeds, at least initially, because the politics of competition and cooperation among executives merits some evasiveness. Power is distributed ambiguously and coalitions of executives who support a strategy are not always stable. It may sometimes help to keep one’s friends, as well one's enemies, off balance. But it is often the case that as you get to the top, or to more powerful positions, Thompson was head of PayPal, reporting into the CEO of E-bay, before he became the CEO of Yahoo, these flaws  catch up with an executive, undermining or destroying his career.


  1. The case is also interesting, Larry, in as much as small lies on the part of leaders are exactly the same as big lies in the eyes of the followers. The reason is that such lies immediately make the leader appear to be an IMPOSTOR, thus feeding on of the core negative fantasies that followers have about their leaders. Its origin, I believe, can be found in the relation to the 'primal father figure' - he is all or nothing. Either authentic and legitimate or phony and impostor.

  2. Interesting idea Yiannis. I had not thought of the psychodynamics associated with the Yahoo employees. Probably the larger issue of Yahoo's stagnation over several year played a role as well.

  3. Interesting idea Yiannis. I had not thought of the psychodynamics associated with the Yahoo employees. Probably the larger issue of Yahoo's stagnation over several year played a role as well.