Can Jack Dorsey Help Twitter Find Its Way?

Rumors have been circulating for some time now that Twitter co-founder Jack Dorsey might be taking on more of a role at the company, and Monday, Dorsey confirmed he is going to head up product development at Twitter as executive chairman, while continuing in his existing role as CEO of mobile-payment startup Square. The move to give Dorsey more authority appears to be an attempt by Twitter to show its putting more emphasis back on the product, rather than just on making money something the social network has been catching a lot of flak about lately. But can Dorsey help steer the company back onto the right track?

The most recent dust-up for Twitter was the response to new rules around using its API for pulling data into third-party applications. In contrast to the more open approach the company took in its early years, where developers were encouraged to create apps and services that leveraged the growing social network, the new rules seemed to clamp down on many aspects of Twitters ecosystem. Combined with some heavy-handed responses to Twitter app providers such as UberMedia, this struck many as showing a different and much less attractive side of the company.

There was also some sharp criticism from users about a recent update to Twitters official mobile clients, which introduced a new feature called the Quick Bar (quick! ly dubbe d the dick bar after CEO Dick Costolo) one that seemed designed primarily to push the networks new advertising-related services. Some users said Twitter was shutting down alternatives at the same time its own apps were becoming less useful.

Angel investor and Hunch co-founder Chris Dixon said in an email that he hopes Dorseys return to Twitter means good things for the company:

I just think the history of tech companies shows again and again that having a great product-focused founder at the helm has always been the best thing for the company and for its customers/users. So I think its great to see @jack back at Twitter. As an active Twitter user who loves the product Im really looking forward to seeing what he does next.

Twitter founder Jack Dorsey

Dorseys return to prominence at Twitter is a reversal of fortune in many ways for the co-founder and his former boss Evan Williams. Dorsey started Twitter with several colleagues in 2006 as an experimental side project within Odeo, a media startup that was created by Williams after he sold the Blogger platform to Google. It soon became obvious that Twitter was more interesting than what Odeo was originally doing, and Williams shifted his attention to the new service effectively forcing Dorsey out as CEO, something Dorsey compared to being punched in the stomach in a recent profile for Vanity Fair magazine.

Last year, Williams stepped down as CEO to devote more time to Twitters product development, and was replaced by former Feedburner chief executive Costolo, ! at which point the network started focusing a lot more on business opportunities and a lot less on developer relationships. According to a statement from Twitter today, Williams is no longer involved in day-to-day duties at the company, but continues to have a close relationship providing strategic advice and remains a board member. One report says the former CEO is hard at work on a new startup.

The big question for Twitter, and for Dorsey, is whether the network can push forward with its attempts to control its ecosystem and find new sources of monetization, while still maintaining the strengths that made Twitter so appealing in the first place. Thats a tough assignment for someone who already has a full-time CEO job at a different company, and the stakes for Twitter continue to rise along with its market valuation.

Post and thumbnail photos courtesy of Flickr users Rosauro Ochoa and David Shankbone

Related content from GigaOM Pro (subscription reqd):