January 28, 2008 4:00 AM PST
At Yahoo, a need to hit refresh
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For nearly 10 years, Yahoo has delivered Web services to millions of people daily, and in the process made billions of dollars. But somewhere along the way, it has become mired in bureaucracy and an embarrassing inability to respond to more nimble (though considerably larger) Google. The question for Yahoo now: how do you reinvent a corporate culture and find a way to get an estimated 14,000 employees working on innovative projects once again?
More details of a plan executives hope will do exactly that should become public Tuesday. If early media reports are correct, Yahoo will announce plans to cut between 5 percent and 10 percent of its workforce when it releases fourth-quarter earnings.
Such a move will punctuate more than a year of internal wrangling at Yahoo, beginning with the departure of Chief Operating Officer Dan Rosensweig and entertainment head Lloyd Braun in December 2006, followed in June 2007 by CEO Terry Semel's exit. In the almost eight months since Yahoo co-founder Jerry Yang stepped in as chief executive and Sue Decker became president, the Sunnyvale, Calif., company hasn't managed to quell investor anxiety and stem losses in key search market share.
While the layoffs are a step to reduce expenses at the still-enviably profitable company, they won't solve the biggest problems at the Silicon Valley icon. In interviews with CNET News.com, Yahoo insiders, analysts, and others close to the company say changes in the executive suite have done little so far to change a company bogged down by ineffective group decision-making and a damaging aversion to taking risks.
"The biggest challenge Yahoo has is cultural," said Umesh Ramakrishnan, vice chairman of executive search firm Corporate Technology Partners. "It's gotten away from the creative company it used to be--that's the difference between it and Google. Yang needs to bring that culture back and bring innovation to the forefront."
In fairness, many Yahoo watchers do believe that cuts, which would be the company's first major paring since 2001, would be an opportunity to start fresh. Specifically, JP Morgan analyst Imran Khan said cutbacks would help Yahoo reach profitability targets, trim poor performing units like its social network Yahoo 360, and help reinvest in search, graphical ads, and partnerships.
Still, one source familiar with the situation said the proposed cuts don't weed out unproductive units or employees. Rather, Yang and Decker are likely to make cuts across the board, even within divisions that are performing well or are considered strategic imperatives, such as data services, according to the source.
"Instead of finding failing programs, they'll demoralize people hitting on all cylinders," the source said.
A culture is born
Yahoo, like Google, enjoyed a long period of growth and innovation during its first seven years. Under the direction of co-founders Yang and David Filo, and then-CEO Tim Koogle, it defined the term "portal." It launched hits like Web-based e-mail, instant chat, and Web search. In 2001, however, the dot-com bust hit the company hard, pushing its stock from a high of $475 in January 2000 to a low of $4 in September 2001.
Former Warner Bros. chief Terry Semel joined Yahoo in 2001 to turn the company around and build a media powerhouse with close Hollywood ties.
By many accounts, the Semel era transformed the company from a free-wheeling and innovative dot-com to a buttoned-down outfit where new products were subject to review by committee. Departments became responsible and rewarded for their own profits, much like many U.S. companies. At the time, the approach made sense and Yahoo saw dramatic financial improvements.
But those "big company" controls had a downside: they caused people to think about how to protect their own turf and put themselves--instead of the company--first, according to people familiar with Yahoo.
Of course, this sort of organization isn't unusual. Many mature organizations set up reward systems that ultimately pit one division against another--a structure that can prevent the exchange of ideas and teamwork and stall standout products, according to Raymond Miles, professor emeritus at UC Berkeley's Haas School of Business who recently published a paper called "The Ideology of Innovation" in the scholarly journal Strategic Organization.
"Now suddenly my boss is competing with your boss, because his department is less willing to share knowledge," Miles said. But "new ideas don't pop out of whole cloth of someone's head, they pop out of four or five people's heads."
See more CNET content tagged:
Jerry Yang,
Yahoo! Inc.,
vice chairman,
Terry Semel,
co-founder
What mostly helped Yahoo grow into what it is now is Simplicity.
Hey, Yahoo! As a user of many years, I give this advice: [b]K[/b]eep [b]I[/b]t [b]S[/b]hort & Sweet!!!
Knock off all the complication, go back and look at your roots, LEARN from your early Simplicity. ;)
for a long time its operating profits came from bank interest on its war chest. now, it's a dinosaur.
the brand itself is aging, and lacks any means to refresh, without purging some of its dust, like yahoo personals, which is a serious money maker for it, but just another reason to use MySpace's less meat-rack formulas for opening a dating circle; find real ways build community that has site -stickiness (a 90s term) and get organisedly back into the vision of what a portal is.
the recent "web 2" makeover is jarring, and, by my tests, a ram hog.
overall, imho what yhoo reallly needs is to find out what people actuallly want, and then see if it can deliver it.
You can access Yahoo email by going to http://mail.yahoo.com
directly.
finance.yahoo.com and sports.yahoo.com just the way they are. I
use those everyday. Except for occasionally checking
news.yahoo.com, I don't usually use much more from them. But
those are great sites -- the best in their class in my opinion. I
hope their cuts don't affect anybody in those divisions.
and start selling stereos and steam irons or something with the
Yahoo brand. Yang and company need to just pull the plug and go
away. Yahoo just doesn't have anything unique to offer. After
being horribly mismanaged by the incompetent Terry "I make the
most money for doing nothing" Semel, Yahoo needs to die a quick
death and go away!
Sure there is the MSN messenger, but so what, I like Yahoo better and got used to it.
YAhoo can still come around, nothing is too late, if they stop counting beans and start to concentrate on inovation (what got them started), stop hiring managers, lawyers and function bean counters and start hiring young fresh mind with ideas, pay them the Big bucks, cuz no laywer or business manager can come up with anything other than a report comparing this quarter to the prior.
There is only two types of people in this world: Leaders and Followers. Yahoo used to be a leader, now it's just catching up and following.
Get rid of all the fat pork that made you to follow, and start leading again, or you will be R.I.P. and I will have to switch messenger clients.
Also Yahoo-Ebay-Skype-Paypal-Craigslist would be better under the same roof, and it would be a force to recon- with...
It would happen if Yahoo and Ebay would announce a merger.... I think that would be a better company.... It would certainly add some "umpph" for Yahoo's failed Yahoo Auctions and slightly lack luster performance of "Yahoo MarketPlace".... A Paypal/Yahoo Market Place could soooooo totally compete against Google's upstart "Google Checkout" online store service....
I`been using for years,Idid everything that I was supouse to be able to regain the acces with no luck.
Is there a way to communicate directly to a costumer helper,by phone?. I d`nnt want to lose the addresses of so many friends.
Tia:antonio384@Gmail.com