In late January 2013, roughly six months after Marissa Mayer became CEO, she said she’d take Yahoo back to its roots. In my newsletter back then, I wrote that Mayer was saying it right, since back to basics can often be a successful turnaround strategy, but that the outcome would depend upon how well Yahoo actually did go back to its roots.
Now, three years later, Yahoo continues its struggle to revitalize. And, investor activists want to replace Yahoo’s entire board of directors. According to the March 25, 2016 Wall Street Journal article “Battle Begins for Yahoo Investors” by David Benoit and Douglas MacMillan, investor activist Starboard Value LP is proposing a new slate of directors to replace Yahoo’s entire board. The article also reported that Starboard is saying that Yahoo should focus on search.
As I see it, based upon my years of researching business success and failure patterns, focusing on search can be good for Yahoo. It could be the kind of back to its roots that Marissa Mayer called for three years ago, but that never seemed to happen at Yahoo. Instead of going back to basics and emphasizing areas like search, Yahoo under Mayer seems to have focused upon items like mobile and creating glitzy, original content.
Granted, beefing up mobile can benefit Yahoo. Tech companies generally need to keep up with major technology changes, even when going back to basics. Mayer, herself, recognized this back when she said she’d return the company to its roots. But, merely strengthening Yahoo’s mobile capabilities is not enough. Yahoo needs to be strategic about what it will offer via mobile and how that ties in with a return to Yahoo’s strengths.
Furthermore, unlike Google, whose business was search from day one, Yahoo’s business roots are as a portal, which entails more than just search. And, Yahoo probably should not completely abandon its non-search areas. But, Yahoo needs to shift its emphasis away from creating expensive, glitzy, original content, and toward building a better business out of areas from its roots, such as search.
While making this adjustment in emphasis, Yahoo needs to evaluate the role of original content in its business. Expensive original content should not currently have the prominent role it has taken at Yahoo. But, now that Yahoo has amassed resources in this area, a key question is whether or not original content can still play a toned down role as a useful adjunct to search.
Additionally, the very nature of Yahoo’s business leads to challenges in assembling the right functional expertise at the top, both in the CEO and the board, since Yahoo needs a range of backgrounds at the top. As a tech company, Yahoo needs technology expertise at the top. But, Yahoo’s top echelon also needs a grasp of areas like selling advertising and attracting consumers as users.
Mayer has a tech background as well as a background with user experience in an ad supported company like Google. So, it would seem that Marissa Mayer could be a good fit as CEO of Yahoo. Granted, Mayer’s pre-Yahoo exposure to ad sales may not be oriented toward major big budget advertisers, instead entailing ads sold to everyone from solo entrepreneurs on up. But, otherwise, Mayer’s expertise seems rather well tailored to many of Yahoo’s needs. A major problem, however, is that Mayer’s focus at the company seems to have been heavily oriented toward areas outside of the strong prior background she brings. Mayer seems to be emphasizing Yahoo being a source of glitzy, original content, which unlike search and user experience, is not an area where Mayer is well known to have extensive prior expertise–even if attempts to justify such content might treat it as enhancing the user experience.
It’s difficult to say whether or not Yahoo can be turned around. But, focusing so heavily on areas apparently outside the CEO’s prior background, combined with moving away from a company’s roots, can make a turnaround effort much tougher. Still, back to basics is a good way to attempt it. That’s why areas like search, not glitzy original content creation, would be more appropriate at forefront of Yahoo’s efforts. And, since going back to basics benefits from institutional memory, there are advantages to retaining at least some of the players at the top, rather than replacing the entire slate as activists have proposed. Especially since Yahoo is a company that requires such a mixed managerial skillset not generally available in a single person, keeping some institutional memory at the highest echelons can be beneficial as the company works itself back to basics.
