Abstract

The case discusses the problems faced by social media platform Twitter and its future under the ownership of Elon Musk. After he acquired Twitter for US$44 billion in October 2022, Musk primarily known for his innovative efforts, introduced a list of controversial policy and feature changes to the platform. These included rebranding Twitter to ‘X’, making policy changes and sweeping layoffs, resorting to cost cutting, reinstating accounts, and introducing paid verification. This resulted in widespread chaos and turmoil within the company. Within days of taking over Twitter’s operations, Musk fired several top executives and rolled back policies that had restricted what kinds of content could circulate. In response, numerous brands suspended or decreased their advertising spending on Twitter. Halfway through December 2022, approximately 70% of Twitter’s top 100 ad spenders from before Musk’s acquisition had allegedly stopped advertising on the platform over concerns about security and hateful content. Musk also rolled out a Twitter subscription model that required users to pay US$7.99 per month for a blue checkmark, a feature that used to be free. He folded Twitter into an entity called X Corp. According to experts, the chaos had consequences as Musk’s antics eroded Twitter’s brand value. Twitter’s revenue declined by almost 40% after Musk took over, having lost more than US$20 billion in value. In June 2023, Musk appointed Linda Yaccarino (Yaccarino), former chairman of global advertising and partnerships at NBCUniversal, as the new CEO of Twitter, while he maintained an active leadership role in the company as executive chairman and chief technology officer (CTO). He also unveiled a new logo to replace Twitter’s iconic blue bird as part of a major rebranding exercise. As Musk turns Twitter into an “everything app”, analysts wondered whether he could overcome financial and regulatory challenges and steer it to profitability. With Musk continuing to play an active role and with his ownership of Twitter, what degree of freedom could Yaccarino exercise as the new CEO to take bold decisions and turn around the fortunes of the company?

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the causes of organizational crisis
• Understand the impact of Musk’s leadership style on Twitter
• Demonstrate the scope for a required strategic change in an organization
• Examine the stages in a turnaround strategy
• Identify the issues and challenges in turning a company around

Keywords

Organizational Crisis; Acquisition; Leadership; Turnaround; Strategic management; Revival; Business ownership; Change management; Rebranding