Yet Another Unsolicited Yahoo Turnaround Strategy – YAUYTS

first_imgWatching Yahoo’s decline is rather sad. If you take any pleasure watching it, you must’ve enjoyed a weak kid getting beat up by a couple of bullies in the schoolyard. Yahoo’s decline is the result of nothing more or less than creative destruction. Meeting that challenge head-on is incredibly tough. Very, very few companies make the transition. IBM, led by Lou Gerstner, met the challenge of the PC era in his epic turnaround (described in the book Who Says Elephants Can’t Dance). Microsoft has struggled mightily to remain relevant in the Web era and they are as smart and driven as it gets. What’s so incredible is seeing the speed of these transitions – to see a big successful Web start-up like Yahoo marginalized by technology shifts.The companies that faded from view in earlier transitions are far too numerous to mention. Most of them suffered from the boiling frog problem. They never hit a crisis that forced fundamental change. They were profitable and had plenty of cash reserves. Customers (not all but enough) loved them. The problem was always “too little, too late”. Faced with creative destruction, a radical strategy is usually needed, something that looks almost crazy and high risk. It also has to be really simple to understand, so that employees, investors, partners and clients can understand.FWIW, here is my unsolicited advice to the Yahoo Board:* Jerry Yang has to go. He is too associated with the past. Radical turnarounds need a new leader. His 1.0 act was brilliant and he can enjoy the financial fruits of that. His post Semel 2.0 act was dismal.* Nix both the Google and the Microsoft deals in a way that it is clear they mean it. Signal an independent path. So what if investors dump your shares? Another investor will buy. This happens all the time, it is just “noise on the line”.* Understand what happened, without any rose-tinted glasses. Basically Yahoo is not a player in the two major shifts – search and social. It is still very good at Web 1.0 and that still makes a lot of money, but Yahoo missed both of the big transitions. * Come up with a simple strategy that everybody can rally around.Here is my attempt at a simple strategy for Yahoo:1. Re-energise the current core money-makers.2. Disrupt the current leaders with a new proposition for developers.The first is not really a new strategy, it is just better execution. When Lou Gerstner took over IBM he got a lot of flack for saying something like “the last thing IBM needs right now is a new vision”. What he realized was that the company simply needed better execution and that was not simple to do, it required a massive cultural shift internally. The same is true for Yahoo today. Re-energizing the current core money-makers is possible if Yahoo accepts that there is really very little synergy at the end user level. People use different services because they work for them at the time, there is no lock-in at all. Recognizing this would mean managing these lines of business more like a Private Equity Fund manages a portfolio of companies:* Lots of autonomy for managers* Ways for managers to make a ton of money if they perform (more than the CEO)* No mandate to use any other part of Yahoo – can use external resources if that is better. Synergy is loosely coupled and voluntary* Very low corporate overheadThis model will work well for current lines of business as well as new acquisitions. There are plenty of start-ups looking for an exit that has public stock, but will give them autonomy to perform.The second part (disrupting current leaders with a new proposition for developers) should not be unveiled until there is something substantive. Yahoo has an opportunity to take a leaf out of Amazon’s AWS book, but go a lot further. Yahoo can open up all their search, content, communication and community services to developers via well-defined interfaces. If they do this really radically, Yahoo could lead the next wave of the “programmable web” or the “web operating system”. This has to be radical. More “too little, too late” won’t work. Radical means:1 Simple pricing. This is where Amazon did well. A start-up can understand how to build their costs into a plan.2 Cost plus pricing. This is again where Amazon did it right. They look at it like a retail “I buy infrastructure at $x and sell it at $x plus y%”. Nothing wrong with that model at scale.3 Loosely coupled. You can use just the services you want. But you end up using lots of services as it is simply easier to integrate than something else and the price is right.Yahoo has lots more to offer than Amazon. Nor do Yahoo need to worry about cannibalizing their core e-commerce business (which does constrain what Amazon is willing to offer).This developer offering has some risks. Theoretically, any start-up can compete with Yahoo’s existing cash cows, using Yahoo’s own assets. In practice a) start-ups will tend to focus on new markets and b) start-ups can compete with Yahoo anyway, with or without their help.Yahoo can score four ways with a really open suite of services for developers:1. They make money immediately from fees for the services.2. They empower start-ups to compete with Google and Facebook.3. They become exciting again, getting talent back on board.4. They get a steady flow of acquisitions with zero integration cost. Yahoo has occasionally done things that excite developers, such as Delicious, Pipes and SearchMonkey. They need to take that to a much higher level and offer everything they have via interfaces and promote that like crazy. That is how Microsoft won the PC era. With the right leader, Yahoo could still do this in the Web era. Top Reasons to Go With Managed WordPress Hosting A Web Developer’s New Best Friend is the AI Wai… Related Posts Tags:#Analysis#Features#web center_img bernard lunn Why Tech Companies Need Simpler Terms of Servic… 8 Best WordPress Hosting Solutions on the Marketlast_img