Saturday, February 16, 2008
A Company That Grinds, Will Falter
Yahoo's problem is similar to that of many Silicon Valley companies. They have a difficult time determining what are their key priorities. Concurrently, they do not know how to rank what ideas matches the goal of their company.
We believed that these companies lacked the strategic overview from top to bottom.
Without a strategic overview, these companies are grinding step by step, never knowing what is the road ahead. They never realized the Compass of their Tangible Vision.
With our Compass AE process as a decision-making tool, the decision makers determines what are their key priorities by studying their planned outcome, their priority ranking of value points and other strategic specifics of their Tangible Vision.
By gaining an strategic overview, Compass AE enables the decision makers to position themselves ahead of the competition.
Does your strategic process enables you to position ahead or does it place you into a situation of grinding behind your competition?
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February 8, 2008
Is It Too Late for Yahoo?
By MIGUEL HELFT and BRAD STONE
SAN FRANCISCO One of the first questions that Jerry Yang and his top lieutenants pondered after he became chief executive of Yahoo last summer was whether the company could remain independent. They quickly answered yes.
But Mr. Yang, who founded Yahoo along with David Filo in 1995, had a harder time coming up with convincing answers for many of the more complex questions facing the company. How exactly would an independent Yahoo sharpen its focus, shed marginal projects and become a stronger competitor to Google, the runaway leader in online search and advertising?
Mr. Yang, a cerebral, highly analytic executive who, by all accounts, cares deeply about the company he helped build and its workers, appears to have run out of time to answer those questions. A $44.6 billion bid from Microsoft is once again forcing Mr. Yang and his board to consider the viability of Yahoo as an independent company.
This time, Mr. Yang, 39, faces enormous pressure as he decides whether to try to rescue the company from the clutches of Microsoft, or accept the bid and watch Yahoo become part of Microsoft’s arsenal in its no-holds-barred brawl with Google.
Some analysts and several current and former Yahoo executives are, meanwhile, wondering whether things would be different had Mr. Yang been quicker at making some of the tough choices that Yahoo faced.
He came on board, announced a 100-day strategic review and promised there would be no sacred cows, said Mark Mahaney, an analyst with Citigroup. One hundred days went by, and no cows were slaughtered.
It took until last week, more than six months into Mr. Yang’s tenure, for him to announce that Yahoo would cut 1,000 employees. At the same time, however, Mr. Yang warned investors that he had decided to make larger-than-expected investments in the business. The announcement sent the company’s shares down to their lowest level in more than three years, precipitating Microsoft’s bid.
Why couldn’t those things be hashed out in the first 100 days? Mr. Mahaney asked.
Yahoo declined to make Mr. Yang available for an interview. But other Yahoo executives strongly defended his short tenure, saying Mr. Yang had quickly set priorities and laid out a precise strategy for making Yahoo more competitive.
We have moved quickly and aggressively to implement our strategy, said Hilary Schneider, an executive vice president in charge of Yahoo’s network of advertisers and publishers.
By most measures, Mr. Yang is one of the most successful entrepreneurs in Silicon Valley history. He helped build Yahoo from an early directory of Web sites into a sprawling Internet giant that offers services from online dating to e-mail that are used by nearly 500 million people around the globe. His wealth is estimated to top $2 billion.
Early on, as Yahoo’s business grew, Mr. Yang and Mr. Filo recognized that they did not have the experience to run the company. They called themselves Chief Yahoos and hired others to fill the chief executive post: Tim Koogle and then Terry S. Semel. Mr. Filo worked as an architect of Yahoo’s computer systems. Mr. Yang played the role of strategic adviser and represented Yahoo in front of investors and business partners.
Last June, Yahoo investors became increasingly disenchanted with Mr. Semel, as Yahoo struggled to compete with Google in the online search business and faced growing threats from successful social networks like MySpace and Facebook.
Mr. Semel resigned and Mr. Yang was unexpectedly thrust into the chief executive job. He inherited a long list of problems, including a demoralized work force and a company that had grown bureaucratic and cluttered with too many projects.
At the time, Mr. Yang said his years as a Yahoo strategist had prepared him well for the job. And he dismissed speculation that his tenure would be short-lived.
But many Yahoo executives, as well as some of Mr. Yang’s friends, say he accepted the job only reluctantly, out of a sense of responsibility and care for his company.
Mr. Yang himself, at times, suggested that some of the burdens of his new role weighed heavily on him. Speaking to Yahoo advertisers at a conference in October, he described the chief executive job as lonely.
As a founder everybody loves you, he said. When you become C.E.O., you can tell somewhat the behaviors change. He later added: You have to make tough calls.
Mr. Yang is generally well liked by Yahoo’s workers, and his appointment helped improve employee morale. He took steps to restore aspects of the company’s start-up culture, for example, by being more open about the challenges facing it. He held some meetings with executives in the middle of the cafeteria.
Mr. Yang and Yahoo’s president, Susan L. Decker, also moved quickly to hash out a strategy. The two thought that Yahoo’s business plan was basically sound but that the company needed to be better managed and had to get out of some businesses that were not vital to its future. They reorganized to make business units more accountable, and they made some acquisitions to build Yahoo’s advertising and e-mail technology.
They have moved faster than they have in the past and focused on increasing the value they provide to the advertiser, said David W. Kenny, chief executive of Digitas, an interactive marketing agency that is part of the Publicis Groupe.
Mr. Yang and Ms. Decker also began meeting regularly with an expanding group of top executives in the offices of Stone Yamashita Partners, a consulting firm in San Francisco. According to executives who attended those meetings, Mr. Yang and Ms. Decker were quick to outline Yahoo’s top priorities: becoming a starting point for consumers on the Web, developing technology and relationships to sell ads on Yahoo and other Web sites, and opening up Yahoo to outside programmers and publishers.
But to achieve those, Yahoo also had to cut some things. In particular, it had to prune its sprawling Internet portal so that employees could be reassigned to crucial projects.
You can’t place your chips on every spot and every color and every number, said Dan Finnigan, an executive vice president who ran Yahoo’s HotJobs site and left last year. Businesses like travel, shopping, music and even HotJobs were all great products, but none were going to make a huge difference in the fight with Google unless we used them to drive the main search business.
Many other executives agreed that Yahoo had to focus on fewer things. To stress the point, Mr. Yang invited Steven P. Jobs, Apple’s chief executive, to give a pep talk to some 300 Yahoo vice presidents. Mr. Jobs told them that years earlier many Apple insiders wanted the company to compete with Palm’s personal digital assistants. Mr. Jobs said he decided against it, and noted that had Apple gone after Palm, it might not have been able to develop the iPod.
But cutting was not easy for Mr. Yang, who choked up in front of employees years ago when Yahoo made its first significant layoffs after the dot-com crash. When a group of executives presented options, he stalled.
Instead of saying yes or no, there were no decisions, said a person who attended many of the meetings. These decisions are agonizing for him. It’s his caring about the people and the company that make him both great for this job and difficult for the job.
One top executive countered that Mr. Yang had already shuttered some projects and turned Yahoo into a more efficient company, without jeopardizing profitable businesses.
Some analysts said the only move that could have averted Microsoft’s bid was for Yahoo to outsource its search advertising business to Google something the company is now considering.
Jordan Rohan, an analyst with RBC Capital Markets, noted that this decision would have required Mr. Yang to admit defeat in a critical area. It would also have required a sense of urgency that Jerry has not necessarily shown, he said.
On Wall Street, patience was running thin. Yahoo shares kept declining, from a high of more than $34 in October to about $24 at the end of the year and a low of $18.58 last week.
We are still trying to do too many things, and fund them in a way that we need to in order to win, said a senior executive who has grown disillusioned with Mr. Yang. With the stock at $24 or $25, we’d be having a very different conversation now. But there were decisions made that were naïve that have left us in a position where we can’t control our destiny.
Copyright 2008 The New York Times Company
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