Sonos has announced that it is launching yet another reorganization (it had one in 2024, and another one before that in 2023) with a “reduction in force” this time impacting 12% of its entire workforce. It seems remarkable that at a time when it continues to struggle to extricate itself from the La Brea tar pits it fell into via 2024’s app disaster, one of its first solutions is to let people go. More than 1 out of every 10 employees has been terminated to “…improve the Company’s operating model and cost structure to set the Company up for long-term success.”
See more on the Sonos layoffs
So I get it – the company has recently reported its financial results for the first quarter of its fiscal 2025, and they were pretty ugly – revenues down, profits down, etc. But this reorganization will add another $15 million to $18 million in costs, “all of which are related to employee severance and benefits costs,” the company estimates. Those costs are all expected to hit in the second quarter, the one they’re in now.
The layoffs were announced in an all-hands conference call with company employees earlier this month. That call was then followed by a letter to employees from new interim CEO Tom Conrad, who mostly reinforced what he had already told employees on the call that morning.
Interim CEO’s Letter: ‘This is a Terrible Outcome’
Conrad’s letter was not evil…he showed some compassion. “To those we’re saying goodbye to today, I want to thank you for your contributions to Sonos,” Conrad said in the letter. “There’s no way around the fact that this is a terrible outcome.”
A 12% cut in headcount works out to about 200 employees. A report in the Wall Street Journal said that the 200-person total also includes about 50 managers and executives.
Is It Really a Defective Company Structure That Caused This Poor Performance?
What I find dubious is that Conrad suggests that the path forward to getting the company back on track is to rework the structure of the company by getting rid of people.
One thing I’ve observed firsthand is that we’ve become mired in too many layers that have made collaboration and decision-making harder than it needs to be. So across the company today we are reorganizing into flatter, smaller, and more focused teams.
Tom Conrad, Sonos Interim CEO and Board Member in a letter to employees
Fewer Bigger Business Units, Smaller Number of Available Employees
The Interim CEO went on to add some detail to the new structure, telling employees – both those staying and those leaving – that the company will be organized into “functional groups for Hardware, Software, Design, Quality and Operations, and away from dedicated business units devoted to individual product categories.”
Of course, with the company becoming smaller with fewer human resources…and categories getting larger with more work in each one, this new structure “will require us to do a much better job of prioritizing our work,” Conrad notes. In a bit of criticism, he added “…lately we’ve let too many projects run under a cloud of half-commitment.”
Simple Math
However, it seems pretty obvious to me that this layoff has little to do with an overly bloated company structure being the source of poor performance. It’s most likely the opposite – with revenues and profits down, it is simple math – costs must be cut. With that being the case, labor is costly and so it must be cut.
We don’t know with any degree of specificity, just exactly what went wrong at Sonos that caused it to roll out a horribly flawed software update. Most likely, product introduction schedules were rushed, shortcuts were taken, and quality checks were either not performed or not conducted with the same level of precision and detail implemented in previous launches. Up until the Great App Disaster of 2024, Sonos enjoyed a solid reputation of good product quality with consumers. That reputation has been shattered, and the company finds itself trying to rebuild it.
The ‘Sound Experience’ Company Launched an App Update That Ruined the Experience
Having myself been a key leader at a major company responsible for advancing innovation, expanding solutions, and developing markets – I firmly believe that the buck stops at the top.
The fact of the matter is this: for a company that prides itself on offering innovative products that deliver a better “Sound Experience,” the launch of a disaster of an app that ruins the experience of using Sonos products is completely inexcusable. Spence offered a lame half-step explanation that he had encouraged his team to speed up new product introductions and that approach backfired.
There is simply no reasonable excuse for introducing a software update that was so outrageously defective as to disable systems, dropping popular features, and leaving consumers at a loss as to how to figure out how to get their systems working again. For sure, much ground has been regained since that time, but the very fact that it took months of so many update iterations shows you just how defective that original software update was.
Employees to Bear the Brunt of Management’s Failings
Sadly, employees, doing as they were directed, will largely bear the brunt of management’s failings. Yes, Spence is also paying a price, but his package provides millions of soft cushions upon which he will land. The vast majority of the employees in this round of layoffs won’t enjoy the same level of comfort.
What I’m waiting to hear is Mr. Conrad – or perhaps a newly hired permanent CEO – articulate a vision for a brighter future, with a return to more incredible innovation…and a company built solidly upon a deeply internalized value for product quality that is unwavering, permanent…such that consumers can again rely on Sonos’ “Sound Experience” as a joyful one.
Learn more about Sonos at sonos.com.
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