Just a year ago, analysts and investors following Meta were wondering if they were witnessing the beginning of the end for what was once one of tech’s brightest stars. The company, one of the 30 most profitable companies in the world, had spent almost all of 2022 in a steep decline. But under the leadership of Mark Zuckerberg and the Meta board, the company has pulled off one of the most impressive turnarounds of the Big Tech era, offering a nearly textbook case study in how to lead a company through marketplace transformation.
Though Facebook once dominated the social media space, the last few years proved especially challenging for the company. The brand had become stagnant in the face of explosive growth from competitors like TikTok, while changes in data privacy policies from Apple forced Meta to alter how they tracked and targeted ads. A steady stream of whistleblowers saddled the company with both bad press and heightened attention from regulators, while the company took self-inflicted wounds from their emphasis on the seemingly flailing (and expensive) Metaverse. The company was facing a declining growth rate, lower profit impacts, and lower share prices.
Coupled with high costs and bad market conditions, the company was in a tail spin. A particularly disastrous product call in October left almost everyone wondering if even Zuckerburg understood Meta’s long term strategy.
Zuckerberg and the Meta leadership team needed to right the ship — and quickly. Even for a cash-rich company like Meta and one of the 10 most valuable public companies in the world— the ongoing capital expenditures were enormous. The company had become unwieldy and unfocused, expending its energy trying to grow outwards rather than upwards.
It’s a question that’s central to great corporate leadership: how do you navigate through extreme uncertainty and setbacks and come out stronger on the other side? In order to win, Zuckerberg and his team needed not only to be great, but to stay great. And some of the greatest names in business history are remembered for their turnarounds – Lee Iacocca at Chrysler, Jack Welch at GE, Steve Jobs at Apple – and all turned bloated, faltering businesses into agile and focused execution machines.
Zuckerberg and his team at Meta offer us a modern-day roadmap. Here’s what he did:
Immediately following the October product announcement, Meta made the tough call to begin layoffs. Over 21,000 people were let go in an effort to restructure the company to make it leaner and less bureaucratic.
It’s a painful cut that would hurt morale at even the strongest of companies, but Zuckerberg stood strong. He was direct and honest in communications with employees, taking accountability not only for the decision to begin the layoffs themselves, but also for the decisions that led Meta there in the first place.
Zuckerberg did exactly what a good leader does in these situations: He spoke frankly, bore the risk of the decision on his own shoulders, and presented himself with humility. Layoffs — especially at this scale — are hard, but Meta executed them quickly and decisively, with an admission that strategic mistakes had been made in the process.
Focus on efficiency and effectiveness
It’s a B-school cliche, but too many companies still fall victim to the sunken cost fallacy when their backs are against the wall. They’re unwilling to cut major projects – and when they finally and belatedly do, they cut so deep that they kill any technological momentum they’ve achieved. The leadership at Meta had to balance the company’s need for innovation with its need for increased financial discipline.
It’s a task easier said than done, akin to deciding to run a marathon and going on a diet at the same time. To ensure their success, Meta focused on increasing the adoption of automation and AI tools to boost efficiency, removing unnecessary processes from the company to create more agility and faster response times.
Meta also remained committed to making longer term bets; critically, they didn’t back down from their big Metaverse gamble, understanding that in a complicated and fluid marketplace, longer term ideas will be essential to winning tomorrow. Rather than balking at the cost of the endeavor, Zuckerberg held sight of his north star for the company, and leaned on alternative options to achieve cost savings.
Stay focused on profitable growth
At the front edge of the tech world, innovation will always win the day. Despite layoffs and automation investments, Meta still needed to be able to prove they could bring exciting new offerings to market. Most impressive about Meta’s turnaround was their ability to continue to incubate startups throughout a tumultuous time. By June, the launch of the hoped-for “Twitter killer,” Threads, showed that Meta still had innovation and risk-taking chops.
Built and developed in just five months, Threads attacks Elon Musk on his home ground while X/Twitter struggles to find its footing with advertisers. Meta was able to quickly develop Threads via an integration with Instagram that allowed for rapid adoption by an eager audience. Over 70 million people signed up in just two days, giving Zuckerberg his biggest victory of the year, while demonstrating that Meta could still innovate in their wheelhouse.
The road ahead for Meta is far from easy, but Mark Zuckerberg has done the work to refocus the company and foster innovation while maintaining financial discipline. Meta’s turnaround demonstrates that companies can indeed still grow while making cuts — if anything, the cuts enable a degree of growth.