Leadership Case Problem:

Can Wayne Inouye reboot Gateway?

INTRODUCTION
Wayne Inouye is born in born 1953 formerly served as Gateway's
president & CEO. Inouye announced his departure from Gateway on
February 9, 2006. Inouye became president & CEO of privately held e-
Machines in 2001, where he quickly turned the company into one of the
fastest-growing, most efficient PC companies in the United States. e-
Machines was acquired by Gateway in March 2004. Inouye had several
decades of senior executive experience, first at The Good Guys!, where
he worked for 9 years, and then as Senior VP of computer
merchandising at Best Buy, where he worked from 1995 to 2001.He
serves as the Consumer Merchandising & Channel Advisor of Fuhu, Inc.
and Executive Officer of Fugoo, LLC.

The sudden resignation of Inouye, to pursue other interests, comes

in the midst of a rebound for the company. In 2005, Gateway saw its
market share in the U.S. rise to 6.1 percent, making the company the
third-biggest PC maker in the country. Shipments in 2005 grew by 33
percent, one of the fastest rates in the United States (where Gateway
sells the vast majority of its PCs).Inouye, who became Gateway CEO
after the March 2004 acquisition of budget PC maker e-Machines, also
stepped down as a Gateway director. He will, however, serve as a
company adviser during the transition. Inouye, who came to Gateway as
CEO of e-Machines, successfully pushed the computer maker into the
retail market. As a former executive of electronics retailing giant Best
Buy, Inouye was able to get e-Machines and Gateway computers onto
store shelves of major retailers, expanding the company's presence
beyond its direct-sales roots. The company sold nearly 1.36 million PCs
during the three-month period, up 13 percent from the year-earlier
period. The gains, in part due to its retail performance, made Gateway

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the second-fastest-growing PC company in the U.S. year over year,
according to IDC.

About:Ted Waitt
Ted Waitt was born in Sioux City, Iowa, into a family that had been in
the cattle business for four generations. After a reportedly wild period in
high school (during which he failed computer science), he ended up at
the University of Iowa majoring in marketing. During a trip to Des
Moines with some friends he met someone who worked for the
computer retailer Century Systems. Intrigued, Waitt decided to drop out
of school and learn the computer business on the job.
In mid-1987 Texas Instruments offered owners of their computers a
new IBM-compatible PC for $3 thousand. Waitt and Hammond knew
they could beat this price and rolled out a system with two disk drives
and other features for only $1,995. By the end of 1987 Waitt renamed
the company Gateway 2000 and moved the growing operation to the
Sioux City, Iowa, Livestock Exchange Building. At the end of 1993
Waitt decided to turn Gateway into a publicly traded company.
Gateway's initial public offering (IPO) was a success, making Waitt,
who had been paying himself only $200 per week, an instant billionaire.
From 1994 to 1999, despite a few down quarters, Waitt, now CEO and
board chairman, expanded Gateway's sales, staff, facilities, reach, and
focus. In 1999 Gateway brought in $9 billion in revenues and employed
19,000. It entered the world markets, building production facilities in
Ireland and Malaysia. Gateway Country Stores, showrooms offering
support, service, and training, debuted in 1996 and grew to the hundreds
in the United States and 40 overseas. To achieve these goals and manage
the growth of Gateway, Waitt brought in a succession of executives and
managers from other companies.

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Feeling secure in Gateway's future under Weitzen's leadership and worth
more than $8 billion, Waitt stepped down as CEO at the end of 1999.

PROBLEM AND ANALYSIS

Through the first half of 2000, everything seemed to be going smoothly,
with Waitt serving as board chairman and long-range visionary. He left
the general operation to Weitzen, who Waitt described in BusinessWeek
as "probably a better manager and CEO" than himself (June 5, 2000).
After a disastrous performance in the second half of the year, however,
Waitt ousted Weitzen and was reinstated as CEO on January 24, 2001.
Weitzen had attempted to change the corporate culture through very
unpopular policies, which lowered morale and caused many long-term
employees to quit. He also instituted commission and support policies
that cost millions and hurt customer satisfaction. Anticipating continued
growth in the market, Weitzen opened more than a hundred new
Gateway Country Stores and stockpiled a large inventory for the holiday
season. When demand fell and Gateway was unable to match Dell's
prices, it posted a $94 million loss for the fourth quarter of 2000. Waitt
became increasingly frustrated with Weitzen's decisions through the
year, culminating in Weitzen's retirement in January. Waitt immediately
fired eight top managers, rehired or reinstated his earlier staff, and
revoked a series of initiatives and policies.

Gateway entered a long period of retrenchment and rein-vention. Waitt

declared a "back to basics" plan in 2001, "selling one computer, one
customer, at a time" ( Fortune , April 30, 2001). However, the lower
demand and slim-to-nonexistent margins on PC sales resulted in a new
emphasis on other products and services a short time later. Gateway's

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share price tumbled from a high of $80 at the beginning of 2000 to $2.10
in March 2003. Waitt lost more than $7 billion in personal net worth, but
continued to search for a successful niche for his company. In 2003 he
told Business 2.0 , "The glory days of the PC business are gone, over,
done, finito" (August 2003).

Solution:
Instead, Gateway tried offering products and services to small and
medium-sized businesses and hoped to transform itself into "branded
integrator," offering consumer electronics for the digital home
environment. Gateway had success with a top-selling plasma TV, but
profitability still eluded the company, and in March 2004 it announced
the purchase of e-Machines, a company specializing in low-end PCs sold
through retailers. Still hoping to regain profitability and increase the
consumer-electronics line, Waitt once again stepped down as CEO,
appointing e-Machines CEO Wayne Inouye in his place. At least six
other top e-Machines executives took positions at Gateway, ousting
many who were hired the year before to support Gateway's
transformation to a consumer-electronics company. Waitt remained as
board chairman. Inouye quickly announced the closing of all 188
Gateway Country Stores, a new headquarters location in Orange County,
California, and the end of manufacturing at the South Dakota facility,
although other functions continued to employ 1,500 there. The idea of
the Waitt to step down from the post of the CEO and make the CEO as
the Wayne Inouye was the great move and really helps the Gateway
Computers to build their name and fame once again and also helps in
making the profit to their company. Wayne Inouye was a great leader as
he immediately get to know where his company is lying behind than the
others. So in goodness of the company he immediately took some
important decision.

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Questions&Answers
1. Which leadership role is Inouye occupying in his plans to
revitalized Gateway?

ANS:
Wayne occupied strategic planner role because he pushed the company
towards its original mission of marketing personal computers according
to the core objective of firm. He also took some important decision
which includes downsizing of employees and shutdown of its some
retail stores for cutting the overhead cost. All the above decisions show
that he occupied a strategic planner role.

2. How realistic are the growth goals that Inouye has established
for Gateway?

ANS:
From the case here two points of view can be generated:
 1st the Wayne goal can be realistic if I consider the figures of the
case. His company already achieved 6.1 billion sales once.so it is
easy for them to achieve 10 billion business in next 3 to 5 years.
2nd the goal can be unrealistic because it is difficult to take place
of HP and Dell company because they are already the market
leaders and also according to the market statistics HP already
caters 60% share of the market where as Gateway grab just 30%
market share.
3. What impact do you think Inouye’s personal frugality will
have on his credibility as a leader during Gateway’s
transition?

ANS:
There are positive as well as negative aspects of his personal frugality on
his credibility.

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 Positive includes : Detailed focus on key financials can help him
to reduce more incurred cost
 Negative includes: He can easily compromise quality on cost

4. What leadership challenges face Inouye as he attempts to

implement his turnaround of Gateway?
ANS:
Firstly, Wayne started lay off employees, this act demotivated his
employees. Demotivation decreases the employee morale and in
this case it can be also a challenge for Wayne to achieve his goal.

Secondly this creates insecurity within employees which mean

company can also fired them anytime. This situation can make
problem for Wayne to implement his new strategy of fix the core
objective of the company.

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Roles that Leader Played
1. Integrity

An effective manager leads by an example. A good leader not only does

the right thing but is seen to be doing the right thing, i.e. Wayne has
maintained the integrity and unity even in hard times of Gateway
Computers.

2. Team building

Managers must pick the right people for the job regardless of gender,
ethnicity and other differences. Being a good leader Wayne had built an
enthusiasm and inclusive workforce.

A good manager gets everyone on board, building core values and

ensuring the whole team works together towards a common goal. And he
or she must be able to foster relationships both within the organisation
and outside it – with customers, suppliers, service providers and the
general business community.

3. Positivity

If managers don't believe in the companies they work for, why should
their teams? Managers need to be organisational champions. They need
to be on board with the direction of the organisation.

Effective leaders encourage and support the company's decisions and

directions; they don't undermine them. This is particularly important
when an organisation is trying to implement change.

4. Communication

To get the most out of their teams, managers must be able to clearly
communicate their goals and expectations. A good manager ensures
everyone knows what their role is, and explains the expectations for that

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role. And clear goals and expectations keep employees engaged, with
something to work towards.

And honesty and openness are skills that build trust. Good leaders are
able to provide honest and effective feedback, and they don't shy away
from the difficult conversations.

5. Listening

Listening goes hand in hand with effective communication. Managers

need to really listen to their employees, not just hear what they want to
hear. Want to know if your employees have what they need to succeed?

Ask them. And really listen to their answers. Listening is key to building
relationships with employees, because it lets them know they are valued.
And encourages them to participate and contribute. Your team has good
ideas and skills, gleaned both in the workplace and from their broader
experiences. Let them know you are listening, and they'll feel free to
share them, adding value to the team.

6. Emotional intelligence

These days it's clear that emotional intelligence is a skill that cannot be
ignored. It's important to be able to recognise that things don't and won't
always go your way. A good manager takes the good with the bad.
Moreover, he or she will take responsibility and learns from mistakes.
And emotionally fit leaders are able to manage their stress levels. They
don't take their emotions or frustrations out on their team.

Moreover, managers that are empathetic – who understand what makes

their employees tick – are able to motivate and inspire those employees
more effectively.

7. Delegation

Learning to delegate tasks to the right employee or team is a key skill for
managers. The more a leader takes on, the less they achieve because they

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are stretched too thin. Take a step back, figure out who the best person is
for the job, and then trust him or her to get it done.

8. Decision-making

It's the nature of business that problems will arise. The measure of a
good manager is how they solve those problems. Managers need to be
able to make the tough decisions – and quickly.

A lack of decisiveness leads to missed opportunities. And it's just as

important to make sure that once made, those decisions are then
implemented, and achieve the desired results. If not, leaders mustn't be
afraid to change course. Leadership is a series of decisions, made with
competence and confidence.

9. Collaboration

It's imperative for today's organisations to share information across all

departments and levels. A lack of collaboration leads to power struggles
and lowered productivity.

Managers must be able to promote collaboration by unifying teams,

setting common goals and incentivising collaborative working.

10. Flexibility

No two people are the same – everyone has a different style of working.
An essential skill for managers is the ability to adapt their management
style to the diverse needs within their team.

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Attitude – Leadership
Having the right attitude in life is important, but more so having the
right attitude in leadership. Attitude is in the realm of choice, meaning
that you can control it at any point in time, no matter the circumstances
you are facing. In fact, learning to adjust your attitude is the first step in
self-leadership: you lead your frame of mind before anything else.

The dictionary defines attitude as a manner, disposition, feeling,

position with regard to a person or thing; a tendency or orientation
of the mind.

Simply put, it’s the posture that you choose to look at life in general.
Attitude is the way we mentally look at the world around us. In other
words, it is our worldview.

How you answer this question is how you answer every question. By
these lenses, by these attitudes you see the world. Besides the complete
worldview; we have our attitudes toward other details in life like work
(Is it a chore or a joy), problems (challenge or dead-end), relationships
(joy or pain) and in this case, Leadership.

This is how powerful your attitudes are. In fact, the success of your
organization is most dependent on the leader’s attitude. If you are a
leader, the good news is, you can make that choice.

We have a choice to choose a positive yet realistic attitude toward the

people you’re leading. We have a choice to push away the attitudes that
think the worst about people. But more than our attitudes towards
people; our attitudes toward life will make all the difference as well.

To have a great attitude in leadership, we must constantly be aware

of the things that are influencing us. Although you are constantly
influencing people, you yourself are constantly influenced by your
surroundings.

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Social media like Facebook and Twitter are generally negative. People
complain, accuse, lay blame under the veil of anonymity. If you spend
long enough on social media, it won’t be surprising that you become
negative, angry and dissatisfied.

Like it or not, all these things influence our thinking and your attitudes.
Leadership Geeks seeks to equip you with the right attitudes by
constantly sharing key leadership principles and thoughts that will help
us shape our thinking and be progressive in our growth journey.

The right influence brings the right attitudes and behaviours. Stay with
the right influence and you’ll begin to see yourself becoming a better,
stronger and more effective leader wherever we are!

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Bibliography
1. https://www.managementstudyguide.com/role_of_a_leader.html

2. https://en.wikipedia.org/wiki/Wayne_Inouye

3. Case study is taken from Andre J Dubrin 2008th edition ,

Dreamtech press

4. "Wayne R. Inouye: Executive Profile & Biography - Bloomberg".

www.bloomberg.com

5. https://www.referenceforbusiness.com/biography/S-Z/Waitt-Ted-
1963.html

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