Some Reflections on Adobe, Realignments, and the Economic Paradigm

Responding to low Q4 revenues and economic uncertainty, Adobe Systems laid off 600 employees reinforcing its conservative posture amidst the growing epidemic of fear in the markets. The cuts were wide and deep and many very talented people were let go. I was among them. This move was surprising for a company on an innovative surge with zero debt and over $2Billion cash in the bank, and is certainly ominous and portends to a long recessionary slump across the industry. Indeed, the entire global economic paradigm is faltering and losing faith in itself sending waves of fear up into the highest ranks.

I started contracting at Adobe in the beginning of Jan 99, then converted to full-time in June 01. I’ve been working for the company for 10 years but I learned long ago not to personalize such realignments. I’ve been through several, barely spared. It’s business, nothing personal. The move will probably strengthen them through the slump but I do feel there may have been less severe options with fewer side-effects. The company is well-positioned to innovate and capitalize in this downturn and could easily operate at a loss for 16 months if necessary. To be certain, profits are down but certainly not negative. In the aftermath, Adobe should capitalize on its lightened books and quickly reinforce its core properties and revenue streams with enough resources to get the job done, instead of further retracting to spare the nerves of The Street. It will be interesting to see how Adobe balances its highly innovative and ambitious platform play against its very conservative financial posture.

More importantly, however, I feel strongly at odds with the fundamental notion that a business must continually grow and deliver heavy dividends to the shareholders in order to be of value. The very paradigm of relentless growth is clearly unsustainable. It appears to be a dying system built on top of ancient biological imperatives. Get as much as you can, spread out to cover the broadest swath of territory, always struggling against the other big dogs in the pack. Meanwhile, the Long Tail slowly, steadily, patiently cuts into your markets from every edge. If nothing else emerges from this global economic meltdown, hopefully the principles of sustainability, transparency, fairness, and accountability will find their way back into the market. Friedman, Keynes, and even Adam Smith can all rest in peace.

But I am not a CEO or CFO and I must accept a certain degree of faith in those trained and entrusted to steer the ship. Indeed, there is a tremendous amount of responsibility that rolls up to executive teams. They must manage a huge multinational business as if it were a living being and a host to thousands of lives. Employees and investors must get paid for their support and markets must be carefully tended and nurtured and defended. Disgruntled board directors could be just a bad day away from outright hostility towards the CEO if things are not being run with maximum diligence to the benefit of the Trust.

And to be fair, Adobe is an exceedingly open & honest organization that has operated with great integrity since its inception. I do want them to succeed and it’s my passion (and admitted ignorance) that makes me worry this may have been a damaging move. The company has been injured by its own hand. There will be a lot of work to rehabilitate the degree of commitment and passion needed to execute on its strategic directives. Letting go of respected contributors who know your business inside & out is always detrimental to the troops and the brain trust, and often helpful to your competition. As I’ve noted elsewhere, there are a lot of really exceptional people hitting the streets, looking for a new work family to fight for and wondering which company will snatch them up and capitalize on their talent.

Would I return to Adobe? Absolutely. They have a huge future and a great vision. Like all organizations heading up their growth curve, they should take time to carefully re-evaluate some of the fundamental assumptions and operating procedures that may have served well in earlier iterations but are now working against their optimization and execution.

The greatest advice I have to Adobe is this: be paranoid, fix your installers and look at performance & stability as the #1 feature. Do whatever is necessary to incentivise point products to work cooperatively and collaboratively across the Suites. Instead of reducing the workforce you should be reinforcing it. Realign without reducing headcount. Marshall the forces and move when your enemy is weak. Don’t assume the brand is untouchable and understand that managing the narrative of your business is just as important as managing sales. Turn that cash & credit into product innovation. Bring the future to the world again just like you did with Post Script and Photoshop and Flash.

I will be fine and have been working up my own transition for months anyway. For me the hardest part is the damage to close relationships. The hugs and tears among boxes piled up in the hallways. Shots of tequila with managers & directors heavy with the decisions they were forced to make. There was such a swelling of good will between colleagues who had worked together so many years, decades even, as the boxes pilled up in the hallways. The warmth and friendship of the workplace will be hurt, as will the functional networks optimized for efficiency over years of collaboration.

My layoff is simply a single point in a much larger dysfunctional global economic paradigm. Everyone is in panic, uncertain of what the next day will bring, but knowing that, surely, it cannot be the same as it was yesterday.

2 comments

  1. Nicholas Bonsack

    It’s good to hear that you’re doing well and that there are no hard feelings. =) Hope you find good work for good pay, soon.

    I, too, hope Adobe comes out of this crisis as a strong competitor and an innovator in the software industry. Apart from focusing on their core products, eliminating the enterprise-friendly dead weight in their software lineup and focusing on bettering what the software does well rather than cater to every niche… I’m at a frustrating loss as to what else Adobe can do to improve.

    I worry that Flash, despite its continued use and popularity, will eventually falter and crash as Java did for Sun. I see many of the same promises made for Flash that were once made for Java. That might be what has Adobe scared enough to cut back on staff right now.

    They’re trying to add more to Flash to make it a better sell. But what comes after Flash?

    I hope Adobe has the answer to that. If they don’t, that may well be their only achilles hell in this crisis.

  2. chris

    Thanks for your sentiments, Nicholas. Adobe is definitely taking a chance on the Flash/Flex/AIR platform play but so is everybody in the industry that’s trying to anticipate the movement of digital culture into the cloud. There’s a tremendous amount of change happening in technology and many players are trying to figure out the best strategy. Whether or not they can successfully execute on the strategy, I do believe in Adobe’s vision as articulated by Kevin Lynch. I just hope they can keep the ship in order amidst these heavy seas…

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