Words With Friends. FarmVille. Scramble With Friends. We’ve all heard or played these games, or we have watched our friends on Facebook or Twitter interact with these games. These games are created by Zynga, a company that is nearly six years old based in San Francisco, California. This past week Zynga’s CEO Mark Pincus announced an 18% job cut for employees throughout the gaming company.
Who or what could possibly be the cause of such an 18% job cut? Pincus, in his blog announcement, acknowledged the fact that Zynga has struggled with adapting and entering the mobile space like many other companies. Larger companies, such as Facebook, have also admittedly publicly to have struggled to get a firm grasp on the market that caters to smaller devices that have smaller screens where users expect a fast, seamless and intuitive experience – with less ads. Is this lack of leadership on Pincus’? Or could it be Zynga’s lack of innovation?
This move to lean the company is certainly one thing – focusing on the future. By decreasing the size of the company today, Zynga was able to fairly compensate the newly departed associates. By making this move now, Pincus believes that Zynga is saving money in the long run. He believes making the deep cuts now will allow Zynga to take the risks it was once able to take before it expanded.
There are many similarities in this recent move by Zynga, and the the past few recent years of Chicago based, Groupon. These small start-up online companies expand exponentially all too quickly which brings up the questions, is it lack of leadership? One difference between Zynga and Groupon is that Pincus acknowledging the issues, and addressing them head on from the get go where as it can be argued that Groupon’s first CEO (yet to be replaced), Andrew Mason, failed to take the initiative to help his company early on. Mason, after months of criticism, left by similar fashion – a blog letter written to employees riddled with his off-based humor.
Companies that scale too quickly can easily lose their focus and their identity. Pincus is taking a risk to help his company in the long run. It is a difficult decision to make, but could potentially be the right one to correct Zynga’s projection path. Do think Pincus is making the right move?