Yahoo has a new CEO, but Steve Jobs points the way

Posted by Rob Enderle

Much like Carol Bartz, Scott Thompson is leaving a company at which he was successful.

And, like Bartz, Thompson hasn't managed to demonstrate "turn-around" experience or proved he can relate to Yahoo's dynamic business model. However, unlike with Bartz, there is a chance Thompson could actually help Yahoo transform itself into a successful company he'd be comfortable running. And that may just be his saving grace.

Yahoo has a new CEO, but Steve Jobs points the way Think about it: that’s precisely the lesson Steve Jobs taught by example. Meaning, the way to turn a company like Yahoo or the old Apple around is to first change it to match the skills of the new CEO.  

Apple Example

The most successful turn-around in tech was Apple. As you may recall, towards the end of the 90's, the corporation was in deep trouble, and at one point, even appeared to be within a year of going under. This occurred after a series of CEOs attempted to fix a number of endemic issues and largely failed.  

So how did Jobs succeed where the others failed? When he re-assumed command, Steve restructured the company around his skill set. You see, he had been successful at Apple when it was largely a consumer focused computer company with a very simple product set. 

In the interim, however, Apple had expanded to sell digital cameras, printers, hand held computers (Newton), and to serve both consumers and corporations. He immediately took the company down to a core of consumer PCs he could manage and then built a simple, and very successful, consumer electronics business.

Essentially, his first move was to take a company that - by any measure - had way too many complex problems to fix, and cut it down to a set of problems he could address.  This is what Thompson is going to have to do. While such a strategy is by no means simple, it is likely the only real path, outside of simply packaging the company for sale and haranguing the board.

Why Bartz Failed

Carol Bartz came to Yahoo from Autodesk where she had been building a strong packaged software business. The core problem for Bartz and Yahoo? There was no reasonable path that would turn Yahoo into a packaged software company - so as Bartz was trying to figure out how to direct Yahoo she was also learning Yahoo’s business. This was hardly a sound business strategy.

It is hard enough trying to figure out how to turn around a damaged company, and demanding someone learn a unique and very different business at the same time is practically impossible. You have to understand that sometimes the skill gap is just too broad and CEOs aren’t all interchangeable. In defense of Bartz and the Yahoo board, it was likely this lack of skills that made her think she could actually do the job - and probably explains why folks that were more qualified turned it down.   

How Thompson Could Succeed

Like his predecessor Bartz, Thompson's skill match likely got him the job. Then again, if he’d actually understood the difficulty, he probably wouldn’t have accepted the role of CEO, which suggests this won’t be a walk in the park for him either.  

Nevertheless, Thompson was the CEO of Pay Pal, a financially focused on-line property, something which is at least somewhat tangential to Yahoo. The Yahoo Finance property, given his financial background, provides a core from which Thompson could build a new Yahoo around his existing skill set. The platform features a car finder and shopping site that sort of resembles eBay. And real estate is also in-line with his past experiences.  

From these properties, a new Yahoo could be built with additional services. Obviously, Thompson's knowledge of eBay’s weaknesses would be critical for the possibility of a better eBay/PayPal combination - but under Yahoo’s brand.   

The news sites could either be eliminated or grouped under another executive, likely hired from outside, that could better manage them. However, the future would likely be closer to the online commerce experience that Thompson brings to the table. He might even consider a property swap with Microsoft,  picking up some of their commerce properties in exchange for his news sites - allowing both companies to optimize their respective specializations. In short, if Thompson adopts a classic Steve Jobs approach, I can honestly see an outcome for a stronger Yahoo.

Wrapping Up:  Long Shot

Few CEOs know how to execute a successful turn around, and fewer are actually given the time to complete it successfully. Remember, it took Steve Jobs about 4 years to really get Apple back into competitive shape and longer to make the company shine around its new core consumer products (iPod, iPhone, iPad). You could argue the full turn around wasn’t really complete - where Apple was hitting its full potential - until nearly a decade after Jobs took over. Indeed, there were several years during which many wondered if he would make it.   

This brings me to my final thought. For Yahoo to be turned around, the employees, investors, and board all have to be willing to take at least 3-5 years of additional pain. If they aren’t, well, then this effort will likely fail. Remember, Bartz didn’t make it three years. Jobs took over Apple in 1997, yet Cupertino was still underperforming 4 years later in 2001. Think about it: if Steve had been subjected to the same time constraints as Bartz, we'd like be remembering him as a failure.