by Michael Voellinger, EVP, CIO Global Forum
We have all heard the phrase speed kills, and slow and steady wins the race. But in the industry of the internet, neither statement holds true. Ask Carol Bartz, now former CEO of Yahoo. Taking the reigns of the wandering search and advertising giant in 2009, Bartz quickly made first impressions with her brash style and intentions of reorganizing and refocusing the company. In hindsight her intentions were spot on, although she may not have been the right fit for the organization. Yahoo was, and still is, a tech giant in search of a new and clarified purpose.
Yahoo’s troubles are peaking at what is arguably one of the most turbulent and disruptive periods of economic and technological change. Not that long ago, many internet users started their day with the Yahoo! landing page. It was an optimal source of consolidated information, entertainment and functionality in an increasingly complex web. But over time, the marketplace evolved. Smartphones and tablets have fundamentally reshaped the dynamics of content distribution – and most important consumption – dramatically. A great example of the issue is reflected in Yahoo’s web photo-sharing business, Flickr. Users of Flickr have uploaded over 5 billion images to date, and continue to add roughly 150 million more each month. In contrast, Facebook users upload over 3 billion photos each month. The absence of a strong play in social media, combined with a lagging ability to create compelling differentiation, has left the company in part on the periphery of relevance.
The stakes are now enormously high for Yahoo. Market reaction to their next set of intentions will be immediate and terse, and shareholder tolerance for long term change has likely diminished. But Yahoo, being an early pioneer and established internet brand, has a genuine shot at recovery. Here’s how.
Commitment to Search and Advertising Businesses
The blood is in the water, and Yahoo must stabilize the trajectory of business fundamentals and economics. A recommitment to their search and advertising businesses, which have positive momentum, would go a long way to minimize fears of Yahoo again pursuing non-lucrative objectives. The timing is also excellent for an established brand like Yahoo to help reengineer the way search and advertising are coupled, and to provide further innovation for mobile and social channel integration. This would pave the road to creative partnerships in core and adjacent markets, and begin positioning Yahoo as a strong integrator of audiences and the distribution of content.
Capitalizing on Strong Assets
Yahoo may need to reinforce the basics short term, but that shouldn’t preclude them from exploiting other holdings that point to a more exciting future. Yahoo Sports and Yahoo Finance, which remain two of the most visited web pages on the internet, are great examples of the audience potential they continue to command. Yahoo.com itself is the 4th most visited site globally on the internet. Yahoo mail has more than 250 million users, providing another potentially lucrative venue for Yahoo to monetize. The company holds, or has filed for, over 600 mobile patents. The recent Google – Motorola transaction demonstrated how valuable mobile patents can be, and the premium they command on the open market.
Genuine Leadership and Culture
The Yahoo story is not that different from other recent casualties of changing business models, including RIM and Hewlett Packard. It will be imperative that the Board selects a CEO that can offer a strong track record in decisiveness and innovation, but who also understands the need for a culture built around those tenets. Yahoo’s future viability will rest on the shoulders of the employees who have endured years of uncertainty about their business. They will need to be reenergized by a clear, concise vision and rally point.
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