Drip-drip-drip — We have to patch that hole before it sinks us

USS_Towers_DDG-9_sinkingMr. Jim Romenesko continues to be spattered with leaks from Patch, the local news arm of AOL, which he promptly, like a dog shaking off the wet, publishes on his blog (here.)

I have followed this leakage with, frankly, an increasing sense of amazement, starting with the leaking of the less than graceful and very public firing of Patch employee Mr. Abel Lenz by Mr. Tim Armstrong, the CEO of AOL (read about this here.)

Recently, the sales objectives of Patch were leaked in the form of two memorandums written by Mr. Jim Lipuma, Patch’s head of sales in the United States, and we promptly dissected this information in a posting (here,) where we arrived at the following conclusion:

    If we assume 260 working days, Patch’s sales people in the United States needs to secure $26 million per year in net new sales.

    If we instead assume that the days that Mr. Lipuma is referring to are calendar days (more likely, I think,) then Patch’s sales people in the United States needs to secure $36.5 million per year.

Today, it would appear that someone linked the actual sales goals and the attainment numbers for the United States market for Patch to Mr. Romenesko, and, of course, Mr. Romensko published them in his blog together with pictures from the meeting where Mr. Lenz was fired (you can see Mr. Romenesko’s blog posting here.)

Here are the sales goals and the attainments in a nice table form:


So, my $36.5 million sales target was almost spot on. At $9,038,230 as a target for the quarter, and assuming that the is baked-in growth quarter over quarter, the annual sales goal, as reflected in the leaked table, is $36.2 million. Moreover — and this should be enormously alarming to the AOL Board of Directors — the year-to-date achievement of the sales goal is seriously bad.

The firing of Mr. Lenz was clearly a mistake of the highest order and the subsequent mea culpa… eh… mea innocentia by Mr. Armstrong (read about it here) should cause some raised eyebrows in the board room of AOL.

However, it is becoming clear that, Mr. Armstrong’s odd behavior aside, the leaking is a critical problem, which has the potential for throwing Patch and AOL into a state of in extremis, and that must be dealt with immediately.

Sales goals and sales achievement numbers is extremely sensitive information, in particular in publicly traded company, and not withstanding Mr. Armstrong’s bizarre sweeping aside of the fact that AOL and Patch is evidently leaking more than the Titanic on April 15th, 1912, is something that should be dealt with decisively and immediately.

This is a corporate governance issue of the highest order. On-the-spot firing of someone that takes pictures at an internal meeting seems a little excessive and could reasonably be expected to make the Board of Directors question the judgement of the CEO of a multi-billion dollar corporation. Not taking immediate and extensive steps to finding and stopping the leaking of sales goals of and sales achievement numbers in a publicly traded, multi-billion dollar corporation is totally unacceptable and should make the Board of Directors question the judgement of such corporation’s CEO.

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To leak or not to leak — that is the question at Patch

Courtesy of Bundesarchiv, Bild 183-C0212-0043-012 / CC-BY-SA

Courtesy of Bundesarchiv, Bild 183-C0212-0043-012 / CC-BY-SA

Yesterday (here) I wrote about the firing of Mr. Abel Lenz, who worked for Patch, a part of AOL, by Mr. Tim Armstrong, AOL’s CEO, on a supposedly morale boosting all-hands call — apparently because Mr. Lenz took pictures during the call.

As chronicled by Mr. Jim Romenesko on his blog (here,) Patch Media has been under extreme pressure recently, culminating in the apparent decision to reduced the number of sites from 900 to 600 (Patch, or Patch Media, provides local news through web-sites.)

Naturally, on the heels of this of this pressure there has been much uncertainty among the staff at Patch, and, as can be expected in this day of age, rampant media leakage from within the company.

Pressure in an organization tends to result in a build up of pressure in key persons, and unfortunately for Mr. Lenz, Mr. Armstrong was such a key person and had difficulty holding the pressure, and, as they say, the rest is history.

Today, after a full one million people had listened to the recording of Mr. Armstrong firing Mr. Lenz, Mr. Armstrong released an internal memorandum to the AOL staff, sort of, kind of, but not really, acknowledging that the impromptu and public firing of Mr. Lenz was a mistake. Here, courtesy of Mr. Romenesko’s blog (here) and, I guess, another leak at AOL, is some of what he wrote:

I am writing you to acknowledge the mistake I made last Friday during the Patch all-hands meeting when I publicly fired Abel Lenz. It was an emotional response at the start of a difficult discussion dealing with many people’s careers and livelihoods. I am the CEO and leader of the organization, and I take that responsibility seriously. We talk a lot about accountability and I am accountable for the way I handled the situation, and at a human level it was unfair to Abel. I’ve communicated to him directly and apologized for the way the matter was handled at the meeting.

My action was driven by the desire to openly communicate with over a thousand Patch employees across the US. The meeting on Friday was the second all-hands we had run that week and people came to Friday’s meeting knowing we would be openly discussing some of the potential changes needed at Patch. As you know, I am a firm believer in open meetings, open Q&A, and this level of transparency requires trust across AOL. Internal meetings of a confidential nature should not be filmed or recorded so that our employees can feel free to discuss all topics openly. Abel had been told previously not to record a confidential meeting, and he repeated that behavior on Friday, which drove my actions.

So Mr. Armstrong thinks that he did wrong, but perhaps not so much, since this was a confidential meeting and you should not record or photorgraph a confidential meeting.

Sounds understandable to me. A little schizophrenic perhaps, but somewhat understandable in view of the company’s crisis and what appear to be a culture of leaks. After all, leaks cannot be condoned.

But wait… didn’t Mr. Armstrong just, seconds before firing Mr. Lenz, legitimize or endorse the culture of leaks? According to the transcript (Courtesy of Mr. Romenesko again, here):

I don’t care what the press says, I don’t care if people leak information. I’ve already lived through that at AOL — when I took over AOL — so if you need somebody to blame for why we’re making changes at Patch you can blame me. I take full responsibility. …

I also want to clear up the fact that leaking information or anything around Patch isn’t going to bother me, doesn’t bother me. I’m not changing direction. When you hear about what we’re doing at Patch it’s very serious and it’s very forward-thinking and anything that happens around Patch isn’t going to change that direction.

So, what is it? Are leaks OK? If so, why fire Mr. Lenz for “recording” the event? Or are they not OK, and, if so, why did Mr. Armstrong say that they were?

In the spirit of the open communication that Mr. Armstrong seeks, I think that the Patch crew has the right to know.

And, certainly, at this stage, Mr. Lenz have the right to know as well, so that he can start the process of Vergangenheitsbewältigung that everyone who is fired has to go through. But, of course, no longer being an insider, Mr. Lenz will, as will the rest of us, have to rely on leaks to get that information.

There are clearly problems at Patch, but they may, as it is often the case, originate at the very top of the organization. Certainly, the fact that we now have leaks of the — presumably confidential — discussions of the leak is proof positive that there are deep problems at Patch and AOL. The question is, I think, what the heights of these problems are.

Donations, please….

As usual, if you found this posting useful or entertaining — or if it saved you time, you can express your appreciation through donation via PayPal right now.   For this type of posting a one-off donation of $10 is suggested — however, any donation is, of course, appreciated.