I’ve tried to ignore the endless speculation swirling around Twitter ever since the world’s richest human made an absurdly overvalued offer to buy a company respected (as a business) by virtually no one. But the ironies and lessons learned from this stranger-than-fiction melodrama have proven just too intriguing to ignore.

For starters, while Twitter is widely viewed as having been mismanaged for years, the company has actually enjoyed greater shareholder value growth over the past 5 years than Google, Snap, Meta, or Amazon — more a reflection of its perceived perennially untapped value potential and Mr. Musk’s unfathomable recent generosity, than the company’s less-than-stellar past performance.

Then too, let’s not forget Twitter’s absentee management issues. After facing criticism for years for being led by a part-time, insouciant CEO (co-founder, Jack Dorsey), and paralyzed for months by Musk’s on-again/off-again gamemanship, Twitter now faces the prospect of being run by a CEO already leading 4-5 companies, depending on how you count CEO, Chairman or lead investor in other endeavors as management distractions.

But these are just my intrigues. As a Columbia Business School faculty member, I’m especially grateful to Twitter for providing so much fertile material that illustrates what may otherwise be thought dry academic theory. The following topics are immediately related.

1. There’s a difference between Creating and Capturing value. Uber and Twitter are two examples of companies that do this. Create lots of user value (as measured by largely happy, loyal customers), but are saddled with weak business models that don’t CaptureValue (as defined by profit, or absence thereof)

2. Strategic priorities need to respond to “the hand you’ve been dealt.” Too often, companies in deep distress wind up merely putting lipstick on their pig, rather than honestly, appropriately, and urgently responding to the severity of their situation. As a case in point, Twitter’s agonizing deliberations over whether to add an edit button to its anemic subscription offering (Twitter Blue) is not even remotely up to the task of reversing the company’s decline.

Lest there be any doubt of the perilousness of Twitter’s current condition, remember that the company is essentially 100% reliant on an ad-based revenue model facing:

· Anemic growth, falling further behind faster-growing competitors (hello TikTok) in the battle for user engagement and digital ad dollars

· An increasingly hostile environment for digital ad spending, given deteriorating macroeconomics and the bite of Apple’s stringent ad-tracking restrictions

· Buyer reluctance to sponsor brand ads on Twitter, given the platform’s unpredictably toxic and polarizing content

· Twitter’s relatively poor analytics and targeting capabilities compared to Meta, YouTube and others

· Additional deep-pocketed competitors entering the digital ad marketplace (Netflix, Uber)

· Chronically low Twitter penetration in market segments attractive to advertisers, notably younger users

· …All contributing to Twitter’s negative and declining operating income and free cash flow over the past few years.

All is not lost. If nothing else, Musk’s impending buyout will shake Twitter out of its strategic slumber, given the urgent need and …read more

Source:: Social Media Explorer

Author: Aaron