Sunday, 13 May 2012

Yahoo: The Worst Way Ever to Pick a Corporate Strategy

So Yahoo has burned through another CEO, and I'm sure the next step will be a lot of media sermonizing about the need to be honest in your resume, the power of the Internet to rally outrage around an issue, and importance of making an immediate and full disclosure/apology when you're in the wrong.  All good lessons.

But to me the most important issue, and I think a damning one, was contained in this comment down at the bottom of Kara Swisher's article on the resignation (link):

"Thompson was pushing forward a vision of adding a much more significant data and commerce element to Yahoo’s largely ad-based business.  That is likely to be less stressed under media-focused Levinsohn, who will be essentially trying out to be the permanent CEO."

A number of other articles say the same thing, that the change in CEO (and Board members) will also mean a change in Yahoo's strategy (link).

For as long as I can remember, Yahoo has seemed unable to decide whether it was a media company or a technology company.  As a result it has usually seemed to optimize for neither one.  Technology assets like Flickr languish, promising API initiatives wither on the vine, and competitors gradually eat away at Yahoo's display advertising franchise.

Articles like Swisher's said Scott Thompson wanted to focus Yahoo as a technology company, although I haven't been able to find direct quotes of him saying that.  Instead, I found a lot of rhetoric from him about focusing on core properties and cutting less profitable initiatives.  But whatever direction he had chosen, the decision has now apparently been unmade yet again.

I'm not sure which is the right strategy, but it's pathetic that the decision is being determined by a fudged resume.  And how incredibly sad it is for Yahoo's employees and shareholders that the company just wasted another five months of precious turnaround time. 

When you're trying to revive a company, the worst thing you can possibly do is be unclear on the strategy.  Employees can't commit, priorities can't be set, everything freezes while the staff waits to hear what they'll be asked to do.  Every time there's s shift like this, another round of experienced employees put their resumes on the street.

I think Yahoo still has enormous assets that could make it a vibrant, profitable player in the Internet for the long haul.  And it may well be that a media-focused strategy is the better focus for the company.  But make no mistake about it, this change isn't a victory.  You're watching people argue about fire-fighting technique in a burning house, and while they argued another room just collapsed.

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