Shanda Seeks Stability in New President 盛大集团任命新总裁，求稳定
If ever there was an Internet company that seems full of lost potential, it would be online entertainment firm Shanda Group, whose temperamental founder Chen Tianqiao is both one of the company’s greatest assets but also its greatest liabilities. After years of storminess that have left Shanda as a company rich in assets but poor in performance, Chen finally seems to want to give his firm a better chance at success with the naming of a new president in the form of a Taiwanese investment banker named Robert Chiu. (Chinese article)
From my perspective, I like the fact that the ambitious Chen is finally realizing the limitations of his own difficult management style, which has seen him become famous for firing CEOs of his empire’s many different units. I’ve also heard good relatively good things about Chiu, meaning perhaps this move could be the start of a turnaround that will finally transform Shanda from its current dysfunctional state into a well integrated online entertainment leader.
Let’s take a look at the news reports, which say that Chiu will take over from Chen as president of Shanda Group, the holding company whose assets include a wide range of online entertainment companies. Those include Shanda’s its original online game business Shanda Games (Nasdaq: GAME), as well as its online video unit Ku6 Media (Nasdaq: KUTV) and Cloudary online literature unit, which is also preparing to make a New York IPO. Shares of both Ku6 and Shanda Games, which have been chronic underperformers due to Shanda’s management problems, both shot up 9 percent in Tuesday trade on Wall Street, indicating investors may be holding out big hopes for change under Chiu’s new management.
Chen has become legendary in the last 3-4 years for his hot temper, which has seen him fire managers of nearly all of his company’s major units at one time or another. One media report this week said that in the last 3 years, no fewer than 22 top level managers at Shanda’s various units have left the company. (Chinese article) Many attribute the problems to Chen, who is considered a strong visionary in terms of corporate strategy and a good dealmaker, but relatively lacking in people skills.
Realizing his own limitations, Chen is bringing in Chiu to fill the gap. The hope is that Chiu can not only bring some stability to Shanda, but also that he can make its various parts work better together to help the company realize its potential. So, what are the chances that Chiu can actually pull off this difficult challenge? I would probably put the chances at about 50 percent, with the critical factor being how much support he gets from Chen himself.
The kinds of entrepreneurs who head Shanda’s various units are a notoriously difficult bunch of people to work with, but apparently that’s one area where Chiu could do well due to his strong skills as a communicator. Chiu’s background as a banker will also help Shanda find ways to better monetize its various assets by helping them work together.
So Chiu seems to have the skills he needs to succeed, but only time will tell if he gets the support he needs from Chen. Given Chen’s big ego and lack of people skills, I could easily see this experiment ending in failure if he doesn’t get along with Chiu. But if Chiu indeed proves effective and gets the management room he needs from Chen, then Shanda could do quite well in the next 5 years and perhaps even finally start to realize some of its potential.
Bottom line: Shanda has a 50 percent chance of starting to realize its potential under a new president, though success will hinge on the support he gets from founder Chen Tianqiao.
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