Carol Bartz, the Yahoo CEO so publicly fired on Tuesday, had the right idea.
She wanted to slim down the company, knew that it couldn’t compete with Google in search and was dealing with a tired board. But the problems with Yahoo pre-date Carol, and the solution is much more radical than the current board is capable of addressing.
Yahoo requires a revitalized vision and mission that both motivates its staff and inspires its customers. Carol’s inability to deliver either was at the heart of her failure.
As the longest serving General Manager of the largest Yahoo media property, Yahoo! Finance, my experience informs my perspective. I worked at Yahoo from 2000–2005, during which time I saw the company stumble during the bubble burst, then rebuild into a strong and powerful marketing force before beginning this latest, long stall.
The path forward for Yahoo is not going to be painless but here are three smart and decisive moves that need to be taken to preserve shareholder value and customer loyalty. They are Porkchop, Pare Down and Find Humility.
1) Porkchop
First, sell off the following assets: Asian Assets, Yahoo! Finance and Yahoo! Sports.
The Asian Asset sale is a no-brainer and one that has been suggested before. Yahoo! Finance is in desperate need of a new owner: the staff is two times what it was in 2005, while revenue is only one and a quarter times, six years later.
It is still one of the most popular financial sites yet there has been no major launch, redesign or innovation on Yahoo! Finance in six years. Yahoo! Finance would be a valuable asset for Bloomberg to acquire as a feeder site for paid services while they would both benefit from a fit of innovation.
2) Pare Down
What are all those 14,000 people doing? I have a few simple formulas for undertaking a reduction of 7,000 employees.
- Anyone arriving after 9 a.m. and leaving before 5 p.m. more than once a week: OUT
- Anyone spending more time with the baristas than at their desk, meeting with people from areas of the company that have nothing to do with their business: OUT
- Anyone not replying to email within 24 hours 90% of the time: OUT
- Anyone working from home more than one day a week, let them start looking for a job. WFHs: OUT
- Anyone meeting to “talk about doing” rather than doing, or trying to graft onto a VP, SVP, EVP meeting for airtime more than once a day: OUT
From my observation, the above rules might get you down to 5,000 people which would be even better than my target of 7,000. The 5,000 people left were doing the work anyway, now at least they’ll get the credit!
3) Find Humility
Yahoo’s first CEO, Tim Koogle, always told employees to check their ego at the door. It worked.
Yahoo has had a series of ego-driven leaders more focused on themselves, their compensation, their positioning and PR for the last decade.
The company should focus on great products, innovation, disruption and consumers rather than watching executives publically take pot-shots at one another; scream about moving a Finance business to L.A. and distract the media by talking about the f-bomb. The ego-maniacs being thrown about as saviors are stuffed suits and careerists who have spent more time jumping about for their own benefit rather than what matters, which are the consumers and the products.
Yahoo desperately needs to get back to basics like Friday morning product smack-downs, engineering-led innovation and using their own products with pride. The $16 billion challenge for any new leader is to create a leaner company with a fresh agenda—but in the meantime, these urgent triage measures are required.
While there’s still time.
The above views are the personal opinions of the author and do not reflect those of the Gilt Groupe or its partners.
Photo: Daniel Acker, Bloomberg via Getty Images
