Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Tuesday, January 22, 2008

Yahoo, Please Don't Put Up a Fight


Forget the nice market analysis - unfortunately, it's irrelevant. Yahoo's problem is DNA. And bad DNA means Yahoo can't - evar - make the right decisions; and that it must continue to be a deadweight loss to the mediaconomy.

Yahoo - You've held back thousands of very talented people for the last 5 years, and prevented them from making the fullest use of their talents and insights.

We would all be better off if these guys were freed from your shackles; keeping them inside your doors - working on dead-end projects and hamstrung by political infighting reminiscent of an industrial era monolith like GM - is by far the least productive use of their time.

It is, ultimately, because your management is lame.

You guys all let Terry Semel make the third fundamental error of strategy - to mistake deal-making for strategy. In the process, you sold out a deeper set of principles; you forgot that the job of a revolutionary is never to sell out, and the point of a strategy is fundamentally to create new value.

The fundamental assumptions behind your thinking are deeply in error, and so your strategy is in massive decay. So please, don't put up a fight - let these guys go build the cool startups and pioneer the radical innovation you've stifled and suffocated for the last half-decade.

-- umair // 1:52 PM // 5 comments


Hahah! Umair, I was totally waiting for you to say something about this. =)

Bad DNA? No S**t! I commented on their release about the layoffs, while on ContentSutra the other day. And here's the most relevant extract:

“Yahoo! plans to invest in some areas, reduce emphasis in others, and eliminate some areas of the business that don’t support the Company’s priorities.”

This is rich, because on their website, their 4 business pillars are:

-Content: Access it, personalize it, contribute to it.
-Search and Marketplace: Locate and display any and everything.
-Community: Empower users to express and connect, enable people and information to interact.
-Personalization: What, how, when and where users want Yahoo!”

And I'm really curious...which one(s) gets voted off the island??

I've chit-chatted with some really fun people at Yahoo! not so long ago and let me tell you..what THEY talk about, and what Yahoo! shows us are miles apart.

So yeah...I know that Yahoo! will put up a "fight"...I just hope they do a DNA-flush first, else this is about the last time we hear of them.
// Blogger anon // 3:12 PM

"You guys all let Terry Semel make the third fundamental error of strategy - to mistake deal-making for strategy.?

Nice post.
// Blogger Scott Crawford // 6:33 PM

Nice post.

"You guys all let Terry Semel make the third fundamental error of strategy - to mistake deal-making for strategy."
// Blogger Scott Crawford // 6:34 PM

Fairly preceptive.

Yahoo's management structure is too deep and too slow to move nimbly. They fail to see threats in time and hesitate to act when they do see threats.

They fail to see who are the true innovators and let them innovate.

Attending lots of meetings consumes a lot of time, but it's not the same thing as getting something accomplished.

Ultimately, it won't matter how many people they lay off because as long as they maintain their deeply flawed management structure, they won't be able to move fast enough. The world is passing them by.

Sadly, it's in their DNA to be laggards instead of leaders.

- an ex-Yahoo employee
// Anonymous Anonymous // 8:13 AM

I disagree that the company has defective DNA. I do agree that it does do defective things. Whether Yahoo! is going to become another Novell or another Apple is really up for debate. I personally think their fundamental problem is that they have a lazy board of directors. Remember that the board's job is to help guide the ship, not rubber stamp management's recommendations - although that's probably the easiest thing to do and Yahoo!'s board seems far too willing to do that. On top of that, they are top-heavy with executives far too eager to network for their next job - with possible exception of Jerry. I know these because here is a company with great cash flow and traffic that can't seem to find a footing.

If history has taught us anything, its that repositioning through layoff-rehire does not work. Didn't work at Sun, Novell, Lotus, or Apple. It probably won't work here either. I think Yahoo! is at a similar juncture... it can sell itself (Lotus) or become irrelevant while chasing after the next, next thing (Novell), or reinvent itself like Apple did and Sun is trying (with some luck). The problem with reinventing yourself is that you just can't do it with the guys who helped you get in the bind to begin with - and that's most of Yahoo!'s board, management, and employees. I don't think they need a layoff, I think they need a purge. If you think about it, and look at other companies who've been where Yahoo! is today, you'll find that IF they managed to turn the ship around it was because eventually all the old gang was gone. Most companies get there by painful evolution. I think Yahoo! might be better off to revamp its board, purge its executive management, and go through a massive layoff before attempting to even think of a "new" mission. It can start by spinning off smaller "units" that have technically innovative solutions but are tied down by Yahoo!'s confused mission and poor management; killing all the pet projects (and I'm sure there are lots and lots of them) then hiring managers that have small company backgrounds rather than career bureaucrats out Kaiser or Bank of America.

The company has impressive assets - but so did the railroads before the airlines came along. The question now is not whether or not Yahoo! can make it. The questions is whether or not Yahoo!'s board has the courage to make the tough decisions, the first of which should be firing of most of the sr. management and a good percentage of Yahoo!'s employees - before turning in their own resignations.

Yahoo! needs to become small and nimble again.
// Anonymous Anonymous // 10:25 AM
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