Embracing a Reinvention Opportunity
By studying Carol Bartz' prospects as Yahoo's new CEO, executives across the technology industry can enhance their own reinvention strategies.
By Nilofer Merchant, Rubicon Consulting
Mar. 24, 2009
For many of us in the tech industry, Yahoo is more than a company, it's a Silicon Valley icon. By putting in the kind of strong management Carol Bartz represents, I hope the board is signaling the company's intent to reinvent itself and thrive once again.
Since the days when I worked with Bartz at Autodesk, I have gone on to form a strategy consulting firm that is defined by the diversity and experience of its members. We're all tech industry veterans, and we each have unique perspectives on what it will take for Yahoo to succeed. Importantly, Yahoo's opportunities speak to opportunities that every tech firm faces. We believe that all executives can learn from the experience Bartz is about to have.
Making the Right Cuts
- Nilofer Merchant, Rubicon CEO
During an economic downturn like the one we're experiencing now, there's not a consumer product company that isn't cutting spending. Such cuts are rooted in fears that customers will stop buying, advertising will slow, and the conviction that it's better to cut quickly and hunker down for the rough road ahead. It's the business version of "fight or flight," and it causes severe problems.
You want to get ahead of the market trend, but slashing without a strategy is not the way to do it. Cutting randomly can reduce profitability by cutting your strongest market segments. Or you may cut your weak market segments too little, and they'll continue be a drag on revenue.
But how to make the right cuts?
The first thing Bartz should do is to figure out what Yahoo really is, and what it aspires to be. I've heard some of her predecessors describe it as a media or technology or software or communications company - sometimes it seemed like there was a new identity for every day of the week. It is time need to pick one. Bartz should focus the brainpower of the board and exec team on this core question.
Next, Yahoo's C-suite needs to develop a perspective on how the future might play out, so that strategic bets can be placed. The bets must be relevant across the company because everyone must be engaged in this discussion. And the team should not just talk to themselves (I suspect that's why Yahoo is where it is) New data is needed, which means fact-finding with analysts and other smart people in the industry. Then, the execs need to debate that information within the confidential walls of the company to evaluate what has been learned. Given where Yahoo is, I'd recommend choosing no more than three big disruptive opportunities because any more and none of them will be accomplished.
Then and only then should Bartz begin to look at Yahoo's current portfolio, keeping in mind its new opportunities. What fits and what doesn't? Not many people remember that when Steve Jobs came back to Apple in 1997, he cut huge parts of the company, including significant revenue streams. He did it knowing he needed to focus. The market will accept this if there is a story to tell. And I know there will be.
It is simple but not easy. But Bartz has never been one to back down from a tough and fair fight. She can do this in the next 90 days.
-
Since the days when I worked with Bartz at Autodesk, I have gone on to form a strategy consulting firm that is defined by the diversity and experience of its members. We're all tech industry veterans, and we each have unique perspectives on what it will take for Yahoo to succeed. Importantly, Yahoo's opportunities speak to opportunities that every tech firm faces. We believe that all executives can learn from the experience Bartz is about to have.
Making the Right Cuts
- Nilofer Merchant, Rubicon CEO
During an economic downturn like the one we're experiencing now, there's not a consumer product company that isn't cutting spending. Such cuts are rooted in fears that customers will stop buying, advertising will slow, and the conviction that it's better to cut quickly and hunker down for the rough road ahead. It's the business version of "fight or flight," and it causes severe problems.
You want to get ahead of the market trend, but slashing without a strategy is not the way to do it. Cutting randomly can reduce profitability by cutting your strongest market segments. Or you may cut your weak market segments too little, and they'll continue be a drag on revenue.
But how to make the right cuts?
The first thing Bartz should do is to figure out what Yahoo really is, and what it aspires to be. I've heard some of her predecessors describe it as a media or technology or software or communications company - sometimes it seemed like there was a new identity for every day of the week. It is time need to pick one. Bartz should focus the brainpower of the board and exec team on this core question.
Next, Yahoo's C-suite needs to develop a perspective on how the future might play out, so that strategic bets can be placed. The bets must be relevant across the company because everyone must be engaged in this discussion. And the team should not just talk to themselves (I suspect that's why Yahoo is where it is) New data is needed, which means fact-finding with analysts and other smart people in the industry. Then, the execs need to debate that information within the confidential walls of the company to evaluate what has been learned. Given where Yahoo is, I'd recommend choosing no more than three big disruptive opportunities because any more and none of them will be accomplished.
Then and only then should Bartz begin to look at Yahoo's current portfolio, keeping in mind its new opportunities. What fits and what doesn't? Not many people remember that when Steve Jobs came back to Apple in 1997, he cut huge parts of the company, including significant revenue streams. He did it knowing he needed to focus. The market will accept this if there is a story to tell. And I know there will be.
It is simple but not easy. But Bartz has never been one to back down from a tough and fair fight. She can do this in the next 90 days.
-
