Yankowski, Carl

(1948-)
Palm, Inc.

Overview

Carl Yankowski's career is a litany of company giants: over his thirty–year career, he has worked for such well–known brands as Proctor & Gamble, Memorex, PepsiCo, General Electric, Cadbury Schweppes, Polaroid, and Sony. His last stop was with Palm, Inc., the leader of the handheld computing industry.

Personal Life

Carl J. Yankowski was born in 1948 in Butler, Pennsylvania. On June 11, 1977, he married Patricia Pamela Petraglia. They live in Dover, Massachusetts. Along with electronics and aviation, his hobbies include classic automobiles—she is a member of Porsche of America Club—gardening, antiques, and woodworking. He was educated at the Massachusetts Institute of Technology, receiving a Bachelor of Science degree in electrical engineering and management in 1971.

Career Details

Yankowski began his career in 1971 as a computer analyst for Proctor & Gamble. However, he soon found that he enjoyed selling products and ideas rather than analyzing data. Therefore, in 1973 he transferred to a position as a marketing executive, where he remained for the next three years. Included in his responsibilities were marketing campaigns for Pringle and Duncan Hines cake mixes. In 1976 he was hired by Memorex as a product manager and was part of the development of the highly successful "Is It Live or Is It Memorex?" campaign. After just a year, he left Memorex in 1977 and joined PepsiCo as a marketing manager. In 1978 he became the director of marketing for PepsiCo, and a year later he was promoted to group director of marketing. While at PepsiCo, Yankowski worked on the three–year marketing ploy The Pepsi Challenge, which resulted in the only time that Pepsi outsold Coca–Cola.

Yankowski left PepsiCo in 1981 to become the general manager of marketing for General Electric, where he remained through 1982. While at General Electric, he helped develop the "Spacemaker" line of products and the "We Bring Good Things to Light" campaign. In 1983 Yankowski changed jobs again, this time to become the president of Sodastream. In 1986 he was named president and CEO of Sodamate. Sodastream and Sodamate are owned by beverage producer Cadbury Schweppes. In 1988 Yankowski became a corporate vice president of Polaroid. During his four years at Polaroid, Yankowski's efforts resulted in substantial increases in profits and revenue in the business imaging market globally. In 1992 he was promoted to chairman of the AsiaPacific division of Polaroid and helped establish Polaroid's AsiaPacific headquarters.

In 1993 Yankowski left Polaroid to become president and chief operating officer of Sony, Inc., a position he retained for the next five years. During his tenure with Sony, Yankowski's strong leadership and marketing skills propelled the company forward. Focusing on the development and marketing of new products, Yankowski increased the company's revenues from $6 billion to more than $10 billion—although not everything Yankowski touched turned to gold. In fact, while at Sony, Yankowski oversaw the development of one of the earliest versions of a handheld computer. The Sony Magic Link was a small lightweight device that ran on a newly developed portable operating system developed by a software startup company. However, the product, with wireless e–mail capabilities, was a flop. Yankowski later expressed his disappointment, telling eWeek, "I failed with Magic Link. That was mine. I invested $12 million."

In 1998 Yankowski was named president and CEO of Reebok International Ltd, renamed Reebok Unlimited during his tenure. Although he spent less than two years at Reebok, Yankowski led the company through significant restructuring and global expansion. Yankowski implemented his strongest skills at Reebok—longterm vision and a clear, objective company mission. As Reebok's leader, Yankowski was critical of the manner in which Reebok had followed in the footsteps of Nike, its chief competitor, which resulted in the myriad of very similar products, one indistinguishable from the other. In 1999 Yankowski told SGB UK: "There has been a certain sameness in the technology that has existed over the last 20 years, and that is a long time to run down the same street. The market is struggling with a wall of white and it is very difficult for the consumer to figure out the benefits from many different products. . . .We have chased the competition too much and tried to be a mini–Nike or Adidas, rather than Reebok."

Yankowski spent much of his time at Reebok focusing on global expansion and reorganization. He also pushed the company to develop innovative strategies for the future designs of the products and their marketing. In an effort to make Reebok a global company, Yankowski traveled extensively to Reebok's markets around the world. Over the first nine months of his tenure, he visited about 90 of Reebok's global markets. His experiences included a ride on an elephant and hanging a python around his neck. Because of Nike's dominance in the U.S. markets, Yankowski was looking to take advantage of the global possibilities for his company. Although he continued to pursue Nike as the market leader in the United States, Yankowski saw global expansion as vital to the future of his company. To objectify Reebok's commitment to a market with no boundaries, the company's name was changed to Reebok Unlimited.

One of his first acts as CEO was to restructure the company into six strategic business units: performance footwear, classic footwear, kids footwear, apparel, business development, and retail. Yankowski made his expectations for each division clear: be accountable for the U.S. and global markets and be accountable to customers. He laid out five operating principles to achieve these goals: focus on customers; innovate and be willing to take risks; look to the future, not to the past; always go beyond what the customer expects; and build up a positive corporate environment based on team building. Yankowski also worked hard to get to know his employees and to be sure that the right people were in the right position. As he explained to Business Week: "This is why I travel so much to ensure that I personally have the opportunity to learn more about each country. I try to know and ensure that everybody from the janitor to the board of directors is saying that this is the direction in which Reebok is moving. Then, everyone is proud to move in the same direction. It is as simple as that."

Yankowski also envisioned a new future of the sports shoe industry as technology continued to make advances. "If you think about it," Yankowski told Business Today, "in the 1950s, 1960s, and 1970s, the basic shoe was the sneaker. In the 1980s and the 1990s, we discovered segmentation, which meant we had running shoes, walking shoes, tennis shoes, and adventure shoes. And now in 2000 and beyond, we will shift to the era of personalization of products, and focus the benefit of technology on the product." According to Yankowski, the athletic shoe of the future will be custom made to each customer, offering a perfect fit based on electronic measurements of each individuals foot. To usher in this new age of shoes, Yankowski adopted what he termed "humanity positioning" under the catch phrase "Are You Feeling It? " The goal was to redirect consumers' thoughts to the comfort of the shoe and to the love of sports and away from the dominance of athlete hero worship used so extensively in marketing campaigns during the last two decades of the twentieth century.

In the fall of 1999, Yankowski began being courted by the leadership of 3Com, of Santa Clara, California, who wanted Yankowski to head Palm Computing. A world leader in providing computer networking services and equipment around the world, 3Com had inherited Palm when it bought U.S. Robotics in 1997. Palm, the leading manufacturer of handheld computers, was originally created by Donna Dubinsky and Jeff Hawkins who later sold the company to U.S. Robotics and then left to create its main competitor, Handspring. With Palm's products flying off the shelves, garnering some 75 percent of the market share, and 3Com already committed to spinning it off as an independent company, Yankowski could not refuse the challenge: On December 13, 1999, he became the new CEO of Palm.

Chronology: Carl Yankowski

1948: Born.

1971: Hired by Proctor & Gamble as an analyst.

1973: Moved to Proctor & Gamble's marketing department.

1976: Became a production manager for Memorex.

1977: Joined the marketing department of PepsiCo.

1981: Became general manager of marketing for General Electric.

1983: Hired by Cadbury Schweppes to run Sodamate and Sodastream division.

1988: Named corporate vice president of AsiaPacific market of Poloraid.

1993: Hired as president and chief operating officer of Sony.

1998: Named chief executive officer of Reebok International Ltd.

1999: Became chief executive officer of Palm, Inc.

2001: Resigned from Palm, Inc.

When Palm was cut loose by 3Com in early March 2000, its initial public offering of stock pushed prices from $38 a share to $95 a share. According to Money, that left Yankowski holding more than $1 billion in stock options. Over the first year, the new CEO received high marks from analysts. In November 2000, VARBusiness reported, "Yankowski has made remarkable progress by successfully taking Palm public and transforming that 3Com division into an independent company with a $30 billion–plus market cap. He has repositioned the company from a manufacturer of personal digital devices to a supplier of wireless Internet solutions. . . .He's even helped transform Palm from an emerging U.S. operation to a cash–positive world leader." The Economist reported, "[Yankowski] is a big, dressed–in–black gadget guy with just the right combination of the consumer–marketing experience and technology savvy to straddle the gap between computing and consumer electronics."

Palm operates under two different umbrellas. First, it makes many models of handheld computers. As the first successful handheld introduced to the market in 1996, Palm almost instantly acquired nearly 90 percent of the market. Over the next several years, competitors ate into that number, but in 2001 Palm still retained a 56 percent market share. Second, Palm owns and licenses the Palm operating system (OS), used by many of its competitors, including Acer, Handspring, IBM, Nokia, Samsung, and Sony. Palm then licenses developers to write software applications that operate on the Palm OS. In 2001 nearly 175,000 developers—up from just 30,000 in 1999—registered with Palm to develop software. By the end of 2001, the work of these independent agents had resulted in more than 12,000 software applications and 100 add–on devices.

The first bad news came in March 2001 when Palm announced that it was being affected by the economic slowdown. Because sales had been so strong the previous year, Palm sped up production but then found itself with too much inventory and not enough buyers. Then in May the company reported a delay in the production of its newest devices, the Palm m500 and m505. Now, not only were the shelves full, but they were full of soon–to–be–outdated models—and with no new models to replace them. In the first five months of 2001, Palms stock price plunged 78 percent.

Some analysts acknowledged that many of the problems that emerged in 2001 were either due to the economy and out of the control of Yankowski or already in place within the company when Yankowski arrived. Nonetheless, the high praises heard in 2000 evaporated and criticism of Yankowski escalated. He was blamed for focusing on the corporate market rather than the consumer market; he was accused of not paying close enough attention to the internal inefficiencies of his management team; and he was criticized for pushing new innovation without a plan for its implementation. As early as June 2001, questions were being raised about Yankowski's future at Palm. Rob Cihra, an analyst at ABN Amro in New York, told the Wall Street Journal, "Palm's management is under the gun to prove they should even be at the company. And ultimately, the buck stops with their head guy. Will the same management team be in place in a few months? Maybe, maybe not."

Although Yankowski told the Wall Street Journal that he was "up to the challenge," the company's situation failed to improve. In a speech in July 2001, according to Twice, Yankowski told his audience, "We realize there are things we could have done better but many of the problems were market–wide." "Of course," he added, "it is certainly fair for us to be scrutinized but we're heading in a good direction. The Palm economy is vibrant and growing—and committed." The same month, Palm split its hardware and software divisions, establishing the Platform Solutions Group, which handles the Palm OS platform, as a wholly owned subsidiary. Despite the brave talk and continued changes, by mid–October 2001, the stock price, which started the year at $28.75 a share, had fallen more than 90 percent to $2.09.

On November 8, 2001, the seemingly inevitable occurred—Yankowski stepped down as Palm's CEO. In a press release picked up by the PRNewswire, "Yankowski stated that once the company was divided into two separate entities, he would be left with only half under his control. My role has changed, and it no longer matches my aspirations." He concluded, "It has been an honor to lead Palm." Despite widespread concurrence among analysts that Yankowski was pushed out, he did not leave empty–handed. Although details of his severance package are undisclosed, he was entitled to a lump–sum payment equal to two times his annual salary ($666,667 in fiscal 2001), along with stock options and paid health benefits. Following the November 8 announcement of his resignation, Yankowski did not discuss his future plans.

Social and Economic Impact

Yankowski clearly saw the future of computing in the development of the handheld computer. According to Twice, Yankowski told a convention audience in January 2001 that "the future of handheld computing had arrived. Handheld computing has changed the way we work and live," Yankowski declared. "The handheld will do for computing what the Walkman did for music." He went on to say that, although handhelds would probably never completely replace the desktop personal computer, handhelds were making new inroads, while the mainline computer industry had stagnated on creating faster and bigger machines with little regard for the usability of their products. "Computers were never designed with average people in mind," Yankowski told his audience. "Why should a consumer know what a C drive is? The computer is great for spreadsheets and word processing, but you don't have instant access to information you need daily. "

Because the handheld computer allows the user mobility, a major jump in the access to information takes the form of access to the Internet. Yankowski was aware of the importance of Internet capabilities for the hand-held industry. In an interview with Interactive Week, Yankowski argued that "a tethered PC model has dramatic limitations in terms of the mobile shifts that we're seeing in our culture today. People are on the go and want to access information anytime, anywhere. . . .It's very difficult to get that, even with a larger notebook or a smaller notebook. But you can get that with a very thin client elegantly tied wirelessly to a server or Internet–type structure, and people are gravitating towards this. They are gravitating to e–mail on these devices, Internet access on these devices, [and] personal schedule management."

Yankowski's enthusiasm and far–reaching predictions were not without merit. The industry has pushed technology to the edge and caused an incredible outpouring of creative and technical energy to make computing an everyday, every minute, everywhere affair. As a result Palm generated more than $2 billion in revenue in 2000. The holiday season of 2000–2001 showed a growth of 165 percent over the same period of the previous year. Yet suddenly and with tremendous force, the bottom dropped out. Now the question remains: can the handheld transform itself into a common personal and professional accessory, such as the cell phone has become? Can Palm create an image and a product that is not seen by the business or consumer markets as a handy yet extravagant expense, making it the first on the list of purchases to be crossed off the list when the economy is slow? Like Yankowski, the future of Palm and the hand-held computer industry in general remains in question.

Sources of Information

Bibliography

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