Yahoo! is regularly in the news as the business community for what seems to be a series of missteps by the firm. Here are four things we can learn from what has transpired to date
For anyone who follows tech developments outside of the Caribbean, the firm, Yahoo Inc. (Yahoo!), is regularly in the news. For most us, it has become a source of bewilderment and confusion, as it has moved from being one of the most progressive platforms and highly valued firms in the late 1990 and early 2000s, to one that has appeared to have lost it way and has no idea how to recover.
Founded in 1994, Yahoo! started as a search engine, but evolved to include a multitude of products and services, such as, a web portal, Yahoo Mail, Yahoo Messenger, Yahoo Sports, Yahoo Finance, Yahoo Music, Yahoo Movies, Yahoo Weather, Yahoo News, Yahoo Mobile and Yahoo Shopping, to name a few. From about 2008, the company started to struggle. It began to downsize considerably and also started to go through a string of Chief Executive Officers (CEOs).
Having said this, Yahoo! Is still very popular. It! is the highest-read news and media website, with over 6.6 billion readers per month, and as at May 2016, it was the fifth most visited website globally (Sources: Alexa; SimilarWeb). However, from all reports, the firm is floundering. While we will continue to see how the firm evolves, below are four things we can learn from what has transpired to date.
1. It cannot be quick wins all the time
Since 2009, Yahoo! has had five CEOs – the latest and still current being former Google executive, Marissa Mayer. From most reports there appeared to have been some expectation that the CEOs would have implemented measures that almost immediately, would have considerably improved the fortune and prospects of the firm. However, unless one has a very nimble and lean organisation, and even under the best of circumstances, the results of whatever changes have been made, may take some time to yield results. Further, depending on the situation at hand, a single adjustment might not do the trick; and things may have to get worse before they get better.
2. It is crucial to be ahead of the curve
Among its market experts and even its own management team, there has been a recognition that one of the reasons Yahoo! Has been floundering is that it was late appreciating the impact of mobile. While firms, such as Google, had their ears to the ground in the mid-2000s, and began to adjust their businesses to capitalise on the then imminent mobile wave, Yahoo! did not. Reportedly, it is only after Marissa Mayer took the helm in 2012 was there a decided strategic focus on mobile. However, most of Yahoo!’s competitors would have had at least a four-year head start (Source: Harvard Business Review).
This part of the Yahoo! story seems to mimic that of another firm: BlackBerry. Regardless of the wave your business might be riding at a particular point in time, next big thing is always around the corner. In order to remain relevant and competitive, one cannot afford to be complacent.
3. Unhappy staff can bring a business to its knees
At the best of times, and more so in the hotbed of innovation, Silicon Valley, firms can struggle to keep their staff, as firms tend to be always on the lookout for great talent. As a result, many take extra care to create a fun and salubrious workspace. Over the years, Yahoo! has had some massive staff layoffs,which no doubt, would demoralise the remaining employees, and foster a sense of uncertainty.
While Yahoo! might has bigger issues with respect to its longer term viability and strategic direction, the support and commitment of the team is crucial in realising that success.When morale is low, more often than not, employees might be more inclined to perform at the bare minimum, whilst being eager to consider other opportunities.
4. A firm seldom loses its way overnight
As indicated earlier and over the past few years, there have been numerous reports on the woes and misfortunes of Yahoo!. While we might ask ourselves how such a prominent firm could have lost its way so badly, we ought to remind ourselves that this did not happen overnight, but rather one bad decision at a time.
Invariably, some decisions have been worse than others, and have more severe consequences than others. However, there may be opportunities for redemption, but it not be possible to return to the original trajectory, but rather to try improve and grow from where the business currently is.
Image credit: DWGLogo
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I think I have not seen any article relating to the business end of Yahoo, and it’s great to see and read one. My take on this is that in addition to the points highlighted, I think there two major points that probably require mention:
1. Yahoo are not dominant in any of the the verticals in which they collect revenue, namely Yahoo Sport, Yahoo News, Yahoo Mail, Yahoo etc. For each one of these there are already dedicated websites or portals providing the service/information more comprehensively than they are would be doing ( in the eyes of the advertiser, at least ). Hence advertising revenues in these verticals would gravely be subdued.
2. As uplifting as the strategy to enter the mobile platform ( through what they are calling MAVENS ) would sound, they have had to face huge entry costs, especially in terms of Traffic Acquisition Costs ( TAC ). These are the payables to firms that direct consumer and business traffic to their websites. Hence we see that while Google have built a network of “affiliates” ( called distribution partners or network members ) to provide these services ( hence reducing the cost, through group concessions ), Yahoo don’t have. Attempts to bull-dose this can be seen in Yahoo’s 300% sudden rise in TAC as % of revenue in 2015. Google have maintained theirs between 18-20% as % of revenue ( and, in fact, steadily reducing with corresponding rise in gross revenues ).
My view is that these will likely form part of the major defining components in Yahoo’s business strategy going forward viz: Are those verticals ( and as many as they are ) the best incubators for advertising revenue? How are they to manage the largest components of their costs?
Excellent points Kamutula! Thanks!