Yahoo’s manifesto for change

If you are a big company getting your butt kicked, it seems like the thing to do is issue a memo.  Bill Gates did it after Microsoft lost out on the first wave of the Internet.  Ray Ozzie wrote one for Microsoft about the importance of software as a service last year (see an earlier blog post).  The most recent memo is from Brad Garlinghouse of Yahoo (see WSJ Article - annoying that it is password protected) who wrote a "call to arms" for Yahoo to stop doing everything and to focus on a few things and to do them well.  According to Brad, "we want to do everything and be everything -- to everyone" which means they are investing in too many areas and are spread way to thin.  Brad goes on to outline a number of basic issues that can and will kill any business, small or large (see memo here):

1. We lack clarity of ownership and accountability
2. We lack decisiveness

Rather than just outline the issues, Brad recommends some much needed solutions:

1. Focus the vision
2. Restore accountability and clarity of ownership
3. Execute a radical reorganization (blow up the matrix where there is no clear owner and kill redundancies and overlap)

This is all just basic Business 101, but sometimes if you grow too quickly and don't take a step back and strategize about what's important, you can get lost pretty quickly.  Whatever happened to the whole media group in LA with Lloyd Braun?  How about all of the turf wars between the tech team in Sunnyvale with the media guys in LA?  As an example, whenever one of my portfolio companies wanted to do something with Yahoo we were always never sure of who the real owner of the decision was and consequently it made it incredibly frustrating to work with them.  When there is no overarching vision and when there is overlap in terms of responsibility, you can imagine how much time executives can spend fighting amongst each other rather than focusing their aim on the competition.  And inevitably this leads to slow movement, bureaucracy, and an exodus of top talent.  While outlining a vision can sound hokey, it is important for every employee to not only know, but live, eat, and breathe the company mission.  It sounds like Yahoo's mission to be the "most essential global Internet service for consumers and businesses" lacks clarity for the executives.  While I do use and love a number of Yahoo services, I always use Google for my searches.  I am sure all of these basic changes and suggestions, if taken up by Yahoo, will help them execute in a more streamlined and efficient manner, but at the end of the day it is going to be tough to outsearch Google in terms of technology and monetization (2x the monetization rate per search for Google vs. Yahoo).  Assuming Yahoo does narrow its focus, I can't wait to see what ultimately will be the top 3 priorities for the company.

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This post was written by who has written 358 posts on BeyondVC.

6 Responses to “Yahoo’s manifesto for change”

  1. Eric Ni Nov 18, 2006 at 4:54 pm #

    I have a sense that vision and “listening to your consumers” are counterintuitive.

    Listening to your consumers is more about improving your product or service on the marginal level. But when that’s all you do, you start to lose focus of your vision because you end up with your hands in every jar. When you let customers become the voice of your vision, then it’s no longer a vision.

    Vision is completely unrelated to listening to your consumers. Its about anticipating what your customers don’t know they will like. That’s not to say that part of that vision may very well be focusing on listening to your customers. Nor does it mean you can’t develop a successful business by giving your customers what they want. Listening is really the easy part which comes with experience, vision comes with talent.

    So companies like Yahoo start out with a vision, and then get really good at listening to their customers. But eventually start consulting their customers about every issue.

  2. Eric Nov 18, 2006 at 9:54 pm #

    Hi Ed:

    I agree. What will they be?

    They had to decide this when Terry came in 5 years ago. Now, they’re at the same crossroads.

    I think then, like now, there was a need for change at the top.

    Jerry and David should be playing a key role in discussing this. Here is an open letter to them for their consideration:

    link to breakoutperformance.blogspot.com

    Cheers,

    Eric

  3. Mark S Nov 19, 2006 at 9:04 am #

    Hey Ed, aren’t you going to spank Eric for his open letter like Arrington did? Your blog is going to hell man ;-)

  4. Robert Banks Nov 30, 2006 at 9:39 am #

    Yahoo! has just made a drastic change and will lose a few subscribers. I think their Customer Care is a joke! A misnomer. They do not care about certain subscribers. (Such as me.)
    I speak of Yahoo’s TV listing and grid, which as of this past Tuesday, Nov.28, 2006 was the best on the internet.
    I was able to get a title of the episode as well as it’s number, if it had one, and future broadcasts, if any, of a TV show or movie. This allowed me to make my own schedule a week in advance.
    We have five tv’s a t home so missing a show is very unlikely.
    Now they changed this grid to make it one of the worst I have ever seen.
    Gone is the episode title and future broadcasts of it. Gone is the production number of that episode.
    I have emailed their alleged help desk and had to go through a lengthy process entering my inquiry three times.
    So now I am trying other tv listings. So far AOL who upgraded theirs is in the lead.

Trackbacks/Pingbacks

  1. Alec Saunders .LOG - Nov 19, 2006

    Peanut Butter is De.licio.us

    Sorry couldnt help myself on that headline. 
    Yesterday morning, while having breakfast in Boston, I read the Journals front page story on Brad Garlinghouses Peanut Butter Manifesto.  My reaction at the time?  Meh …

  2. Next Intuit - Nov 19, 2006

    Vision vs. Listening to your Customers

    I posted this comment as a response to this blog post by Ed Sims:
    Yahoos Manifesto For Change
    I thought Id share it here.
    I have a sense that vision and listening to your consumers are counterintuitive. Listening to your con…

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