How Yahoo can be turned around

Posted by Rob Enderle

There is a unique skill to turning around a company. It requires pragmatism and an inherent toughness because, typically, you have to first cut the corporation down to a foundation you can build from.  

You also have to make a choice early on as to whether you are packaging the firm for sale or building a new independent company, as the process is different for each path.

How Yahoo can be turned aroundUnfortunately, Carol Bartz failed at this task, largely because she lacked the unique skills and didn’t acquire them in her team - which were obviously a prerequisite to either turning around or running a company like Yahoo.

So let’s talk this week about what it would take to restore Yahoo to the point where the corporation has a chance of exceeding its former glory. Of course, packaging the firm for sale would be the easiest route to take, but I personally find that path far less interesting. 

Job One: Vision

Part of the problem for a board hiring a CEO to turn an ailing company around is the proverbial cart and horse issue. Meaning, without a vision they can’t properly define the skill set required in a new CEO. To frther complicate matters, a board typically wants the new CEO to set the vision. This likely goes a long way explaining why Carol Bartz was a bad selection from the get-go.   

The board sought an individual who had ostensibly succeeded in turning a company around. Still, because they had no real idea what Yahoo might be turned into they chose someone who couldn’t possibly succeed.  

At Autodesk the vision for the company was largely set prior to Bartz by the extremely focused nature of the firm. In short, when you basically only have one well defined product, setting the vision of what to do with it should be pretty obvious. Of course, Yahoo was a far more difficult problem to solve than Autodesk, but even the Autodesk rescue offered strong hints as to how to Bartz could have proceeded at Yahoo.  

Job Two: Simplify

Ironically, had Bartz thought about her success at Autodesk, it may have helped her pave the path to salvation for Yahoo. You see Yahoo, much like Apple was when Steve Jobs took over, remains far too complex.  

It is weighed down by multiple properties, remnants of anachronistic strategies from prior leaders which offer little or no synergey with each other. For example, Yahoo boasts a news aggregation portal, a financial portal, instant messaging, email, search (from Microsoft), Flickr, and a lot of partnerships to fill other needs.
    
However, the news section is far short of a Huffington Post, IM is pretty much out of favor, Yahoo mail trails Microsoft and Google, Finance appears to be mostly pulling from Dow Jones and Flickr doesn’t seem to get much focus. 

In short, Yahoo feels like it is a jack of all Internet trades but really not a master of any of them. It is rather reminiscent of an aging department store in a world of popular malls where buyers go to niche shops. In short, Yahoo, like Sears was just a few years ago, has become a parody of itself.

So the first step would be to select a few items that Yahoo has the resources to lead in, strip the company down to them and execute a market leadership strategy.

Job Three: Rebuild

In effect, this would take the firm down to something that looks more like a young startup, simple, with a flat organization and winning in a given market. Touting a "winning goal" is obviously important, as it gives employees, customers, and investors confidence the firm can succeed. In essence, confidence is at the center of any successful effort - because if folks don’t believe they can win, well, they generally don’t. 

The next step? Slowly add capability to a successful core business and by the end, (I’m obviously making this sound far easier than it is), you have a successful firm. But if you don’t first take the company back to a core of products or services, it will only ensure the continuation of a cycle plagued by saturated resources and a lack of focus - leading to an outcome like we just saw with Bartz.   

Wrapping Up: The Most Important Part

The most important part of all of this isn’t a superstar CEO, in fact that can often work against you. The most important aspect (and this is the same with a startup), is the core team of people who run the company, including the board. If these folks don’t have the right skill sets, can’t get along, or don’t collectively have the knowledge needed to get the job done, well, the company will fail.  

They say a child needs a village, and whether a company is a startup or an established firm, it requires a viable core team. This was a mistake Bartz shared with the board, simply because Yahoo never really seemed to find the collective skills it needed. Too much of the load was placed on Bartz and she fell short, but might have succeeded had she fielded a team capable of mitigating her shortcomings.      

In the end, Yahoo boasts a valuable brand and in its properties are the seeds of a great company. So let’s hope the board secures a veteran team to transform those seeds into the successful firm we all know Yahoo could eventually become.