Monday, December 20, 2010

Can Yahoo Be Fixed?

I think so.  The company is going through terrible pain right now - downsizing hurts a lot in Silicon Valley - perhaps more than elsewhere.  Engineers and creative people, while they can work well under pressure, don't like the extraordinary stress that comes with layoffs.

Yahoo is certainly in disarray, at least for the moment.  That's what a layoff and reorganization does to people - it creates anxiety and stress and fear.  Those who lose their jobs are devastated - and that seems true even when didn't necessarily like their jobs - and those who stay have survivor guilt.  Either way, nothing productive gets done for a while.

But is Yahoo is some kind of permanent downward spiral?  I'm not sure.  The site search stats don't seem to point to an imminent tail spin (though this reflects just one of their business areas):

Site traffic data from

But what should Yahoo do to right the ship?  The network of companies across the valley provides a continuous stream of innovation for Yahoo to access.  And they have been making some very good buying choices - but not doing a great job of post merger integration.  As a result, all these amazing properties like Flickr and Delicious are not revitalizing Yahoo, despite a lot of love from their customers.

Since it's Monday morning, let me offer some Monday morning quarterback suggestions:

  1. Wield That Axe.  As much as it sucks, killing products and slashing costs are essential to turn-arounds.  When Steve Jobs returned to Apple, he axed many beloved products and made painful cuts. 
  2. Standardized & Streamline Processes.  From procurement to hiring, companies in turn-around situations need to free up money for big investments in growth and innovation.  That means aggressive process management and cost control.
  3. Get focused on core businesses.  The truth is, I don't really know what Yahoo's core business is, but they should find out.
  4. Spend big on innovation.  Internal and external.  Buy companies and build big, exciting projects.  That's where the savings goes.
  5. Integrate.  Yahoo is a web conglomerate.  Work like one -make the different pieces of Yahoo feel like a real, integrated network, not just a collection of sites.

If I have a crticism of Carol Bartz, it's maybe that she is being too timid.  Nobody who does this job is going to get any love.

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