What is Yahoo? There’s always the big strategy question “What do you want to be when you grow up?” Is Yahoo a technology company? Or a media company? Yahoo choose to become a media company. Semel was hired (and fired) for brining the company closer to becoming a media company. Yahoo came to fame as an innovation company (both technology and user experience) and when a media man took over, technology and innovation was put in the back. Yahoo is one of the pioneer innovators that transform and reinvent media (new media). Semel is a classic media executive and didn’t get the transformative nature of the business.
Under Semel, Yahoo was getting better and better at selling media space and impressions, and even tried to create content, while other nimble start-ups were getting better at innovation. They were late in the game in the big social networking and micro-blogging etc. This is not about what they do but about who they are. Yahoo at heart should be a technology and innovation company, that brings them closer to Google. The transformation to a media company was destroying Yahoo’s innovation culture and those bright engineers didn’t think Yahoo was the right place for them. Yahoo needed to be a place where the next big thing should happen and they can make a difference. They don’t want to work in Hollywood, they want Silicon Valley. They want to create the next whatever platform. They need to pick a core competence, content creation or software innovation? Difficult to have both.
The reason that Google is unstoppable is that they are good at taking complicated technology - and build an uncomplicated business around it: selling advertising aimed at consumers based on Google’s understanding of their needs and wants, gleaned from their search patterns. And Yahoo? They are content providers, content distributors and technology innovators and trying to excel at al three. Here’s Jerry Yang’s memo to all Yahoos today. There isn't anything that help Yahoos to see the future. It is a pretty depressing memo.
i feel it’s important for me to reach out to you after our earnings announcement, and before our all hands meeting tomorrow.
we as a company have been through a tremendously challenging year; and managing the increasingly turbulent global advertising climate has been an important focus for the last three months.
throughout the first three quarters of 2008, we have been balancing between investing in our top priorities, and managing our cost structure. beginning in september, with the help of Bain & Co., we initiated a series of steps to determine how we can become more efficient and productive as an organization.
we heard from you through the YEES survey, and through your suggestions on backyard, and we’ve identified many areas that we all feel we can improve upon. our productivity efforts, based in part on what we heard from you, will involve initiatives such as streamlining our organizational structure through reducing layers and increasing spans of control, and eliminating redundancies. longer term structural efficiencies include consolidating facilities, improving procurement, and standardizing our global technology platforms.
today as part of our q3 earnings release, we said that our goal is to reduce our current annualized cost run rate of roughly $3.9 billion by more than $400 million before the end of 2008. we are targeting non-headcount expenses wherever possible, such as facilities and outside services. however, because compensation expenses are the single largest part of our costs, we anticipate a reduction of at least 10% of our global workforce by year-end.
affected employees will be notified of layoffs in the next several weeks. we understand that hearing this news now creates uncertainty, but we are moving ahead in a way that balances speed with a clear focus on accomplishing what is necessary to set the organization up for long term success. going forward it will continue to be important for us to make the right decisions to keep our business efficient and strong.
having layoffs is very difficult, particularly in light of all we’ve experienced this year. but we don’t take these decisions lightly, and are committed to treating affected employees fairly, offering severance and outplacement services.
the steps we are taking are not easy for us as a company, but as we become more fit as an organization, decision-making will be faster and it will be easier for us all to get more done and stay focused on our strategy. these changes will also prepare us to better deal with the macroeconomic downturn. as with previous downturns, yahoo! continues to be a place where consumers turn for information and communications, and is an integral part of their internet day. as the global economy improves in the future, i certainly believe that we will be stronger and benefit from the actions we are taking now.
as always, i thank you for all you do as yahoos.
best,
jerry
Jerry is a super bright mind, that’s not a question. I don’t think he can provide the leadership (business and strategy) to transform Yahoo out of this crisis. Organizations evolve and change, reacting to new disruptive technologies and new user behaviors. In a large company like Yahoo, these shifts go on more or less unnoticed. But sometimes a company must change more quickly than this gradual evolution allows; it needs a break with the past, an accelerated pace of change—a transformation. I called this Escape Velocity – a term I use to describe how companies need to defy gravity.
Times like this place a lot of burden on CEOs. It is the leaders of companies in crisis who may be best placed to achieve a true transformation. Interestingly enough by contrast, most transformations undertaken in non-crisis conditions end up failing: employees’ attitudes and behavior remain unchanged, ambitious targets slip downward, and the program is finally abandoned, leaving the company worse off than it was before.
Jerry faces a daunting challenge: nothing less than creating a new corporate reality that changes the way employees, customers, and investors perceive the company. With the Microsoft deal in the air, the cloud of uncertainly is not helping. I predict he will be moving on in 3 months. Yahoo will go back to search, but this time it is for a new CEO and a buyer.
The transformation of Yahoo requires tens of thousand of employees to adopt a new view of its future, a future they must regard as essential. Before employees can arrive at this deep conviction, three things must be absolutely clear to them – What is it for them? What is the 'new game' we are trying to play? How can we win this game? Our experience shows that the best way to ensure transformation success is for senior leadership to establish the context and overarching goals of change, and then to create opportunities where employees can translate these goals into action. In essence, the leadership task is to translate the company's vision of a new game (that is, its transformation objectives) into simple, contextual goals. These goals provide the frame within which people can take ownership of the actual transformation of processes, ways of working, and even the creation of new processes and activities. Yahoo's future is in the hands of the thousands of smart Yahoos, not Yang.
