Spotting the Once Sacred Cows

Friday, July 20, 2007
Posted by Jim Hedger @ 8:25 am

A couple of days ago I wrote a long article at the blog titled “Yahoo! to Shed Sacred Cows?” in response to comments made by Yahoo!’s new CEO, Jerry Yang. Earlier this week, Yang wrote an open letter to anyone interested in Yahoo! outlining impressions and ideas that had formed in his 30-days as chief exec. Promising action after a 100-day strategic planning period, Yang suggested changes are coming and that there would be no sacred cows.

I was asked my thoughts about Yang’s comments on WebmasterRadio yesterday during the first ten minute segment of my show, The Alternative. Unfortunately, the question came in the middle of the segment and I wasn’t able to fully answer the question. I’m not even sure I scratched the surface.

What does Yang mean when he says there are “no sacred cows” at Yahoo! anymore? What is, or was, sacred in Sunnyvale? Is Yang promising a core shake-up of the company he and partner Dave Filo started a dozen years ago? Does it come down to who shows Jerry the money?

The problem is, nobody really knows what ails Yahoo! except when defining it by the success of its rival, Google. It has extraordinary technologies, a far better than average search engine, a massive paid advertising network, a slew of social networking applications, one of the most popular email services on the web, one of the most popular news and information sources (Yahoo News) in the world. Still, Yahoo! is lagging behind, or so it appears to most observers.

Yahoo! is a vast collection of divisions, acquisitions, and regional offices, an empire divided into several smaller fiefdoms. The company looked like it was in an uncomfortable limbo for the better part of this decade. Damaged by the dot-com crash of 2000 and consistently compared with Google, Yahoo! has struggled to maintain dignity and momentum in its second place position as a search engine. It has also struggled to meet the hype-driven expectations of investors and analysts in virtually every quarter since Google’s August 2004 IPO. There has been an exodus of executive talent over the past two years due in part to the vesting of stock options combined with historically low moral.

Being a very large corporation, Yahoo! is a very political place, as witnessed by the famous Peanut Butter Memo written in November 2006 by Sr. VP Brad Garlinghouse and subsequently leaked to search analyst Paul Kedrosky and to the Wall St. Journal. The memo became the internal straw that broke the tenure of former CEO Terry Semel though it took another six months for Yahoo!’s board of directors to request his resignation.

Today, Yahoo!’s management team is made up of four “C-level” execs (CEO, co-founder, President, and CFO) and 16 divisional vice presidents. This is likely one of the spaces to watch to spot the sacred cows. Take a look at the names of the divisions each VP is responsible for and the aspects of Yahoo!’s services those divisions cover. Watch for changes over time to any of those divisions or responsibilities.
Another is in the following internal rivalries pointed out by Garlinghouse in his memo/missive.

- YME vs. Musicmatch
- Flickr vs. Photos
- YMG video vs. Search video
- vs. myweb
- Messenger and plug-ins vs. Sidebar and widgets
- Social media vs. 360 and Groups
- Front page vs. YMG
- Global strategy from BU’vs. Global strategy from Int’l

Yahoo! is known to be streamlining many of its divisions. The strongest of these various initiatives will likely survive after the first round of change but second or third rounds will certainly depend on their success against competing initiatives offered by other companies.

Yahoo! also holds a vast portfolio of agreements and deals with thousands of technology, entertainment, publishing and news gathering organizations. In one of the 2006 shake-ups, Hollywood and entertainment focused VP Larry Braun left the company.

The only other sacred cow I can possibly see at Yahoo! is search and, though the search world will always compare them with Google, I don’t see how they could abandon it or innovation in search technologies. Perhaps the real sacred cow is found in the playbook left by Semel, the pre-Yang strategic planning. It is very hard to say at this point.

One thing that is certain is Yang’s new broom is going to sweep at something. Much more on this in 98 days.

1 Comment »

  1. Hi, very good website! , I like it anyway I found another website with good services in seo.
    (edited – thanks for the compliment. I’m sure you understand us removing an advert for a competing firm though. jh)

    Comment by kevin — Thursday, August 2, 2007 @ 1:13 am

RSS feed for comments on this post. TrackBack URI

Leave a comment