AOL president Randy Falco and COO Ron Grant took a few thousand cream pies in the face last week (and Randy took some more earlier today, after telling the Washington Post that he had frequently diverted AOL’s DC-NY employee shuttle to an airport closer to his house so his personal commute would be shorter). And certainly, after eight years of death-by-dozens-of-cuts, the remaining staff at the once dominant AOL have many reasons to complain–especially with Randy and Ron having done a poor job of communicating their plans and AOL’s current predicament.
But it’s also time to give some credit where it’s due (or, at the very least, to spread the blame)…
First and foremost, it’s not Falco and Grant’s fault that AOL is in its current situation (dying dial-up access business, haphazard content strategy, declining relevance). AOL’s current strategic woes are the fault of:
- AOL’s much-revered 1990s management team, who failed to diversify the company’s business away from dial-up, even as broadband started to take off, and
- Time Warner’s current senior management, who failed to insist that Time Warner Cable immediately cut broadband and VOIP deals with AOL way back in 2002, when it might have mattered (Instead, the Time Warner side of the shop, eager to see arrogant AOL get its comeuppance, rejoiced as the service tanked–and then finally noticed that this was taking Time Warner down, too).
It was the failure to make the shift to the open Internet and broadband platforms that killed the old AOL, and Falco and Grant had no part in that.
Second, given the reality of AOL’s current situation, significant cost cuts were the right business decision. It’s a pity they weren’t made a year ago, and it’s a pity that Falco apparently told AOL last year that the downsizing was done. It’s also a pity that the list of those who got canned appears to have been at best arbitrary and at worst blatantly political and that so many talented folks were lost (see this awesome, poignant video produced by AOL France). But AOL’s margins in its media business were poor, and the answer wasn’t for senior management to shove its fingers in its ears and its head in the sand (A coherent content strategy would have helped, and hopefully that will soon be forthcoming).
Third, the Platform A Strategy isn’t a bad idea. Granted, it appears to have been a “play the cards you were dealt” strategy rather than a calculated “buy the pieces you need” strategy, but at least credit Falco and Grant with spotting the network opportunity before, say, Yahoo and Microsoft.
Fourth, unlike, say, the folks at MySpace (and many traditional media folks), Falco and Grant understand that, online, content is NOT king–aggregation is king. For example, Falco told the WaPo that he had no plans to create content:
“If by content-creation, [you] mean we’re going to go a Hollywood studio and ask traditional media people to begin to create for us special programming, we’re definitely not in that business,” Falco said.”
For a former TV exec who, just last year, said he was excited about his new job because one day he hoped the Internet would become as important a medium as TV (even as Google’s market cap alone dwarfed the combined value of the entire television industry), that’s a fast learning curve.
Fifth, Randy stopped diverting that company jet.
Do Falco and Grant have some damage control to do? Do they have some employee relations and company morale to repair? Do they have some internal credibility to rebuild? You’d better believe it. They also need to develop a coherent content strategy, and fast, before the value of AOL’s few remaining quality assets erodes away. But they also deserve more credit–or at least less blame–than they’ve been getting.
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