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Summary:

Like a lot of you, I spent some time this past weekend reading Brad Garlinghouse’s “Peanut Butter Manisfesto” to fellow Yahoo executives… also reading all the reactions in and around the blogosphere. Not to make light of a serious situation, but I have to agree with […]

Like a lot of you, I spent some time this past weekend reading Brad Garlinghouse’s “Peanut Butter Manisfesto” to fellow Yahoo executives… also reading all the reactions in and around the blogosphere. Not to make light of a serious situation, but I have to agree with Nick Denton when he dubs Garlinghouse as Silicon Valley’s own “Jerry Maguire”.

While Garlinghouse’s memo was full of common sense and practical suggestions, I didn’t feel that it addressed the root of the problem at Yahoo. In my view, Yahoo’s most significant dilemma is a high-level strategic one… where the question is: Do we need to, and want to, be the king of search? Put another way… is Yahoo in direct competition with Google? The world certainly perceives it as such.

To further analyze this strategic question, let’s zoom out even more. At its core, search is a content aggregation and distribution platform. So to some extent, if your goal is to be the king of search, it is synonymous with wanting to be the king of aggregation and distribution for all the world’s content (hence, Google’s mission statement). But I say “to some extent” because search may not prove to be the optimal platform for all media types. Clearly, search has proven its efficacy with text and documents, but it still has a long way to go when it comes to pictures, videos, and audio.

Given that, one must qualify the desire to be the leading content aggregation and distribution platform with the specific media type/area one wants to dominate. For instance, as video becomes the next wave of media type to conquer, it remains very unclear whether search is the best path to aggregation and distribution. In fact, if YouTube (and most other video-sharing sites) are leading indicators, one can conclude that community is a far more effective filter for precision and recall when it comes to non-text media types. Which would actually prove tremendously beneficial to Yahoo… and therein lies the opportunity (one that doesn’t go head-to-head against Google’s strongest assets).

If you strip away all the layers that make up Yahoo, what you’ll find is the Internet’s largest communications and community company. And being so represents a comparative advantage versus Google… in all the areas where communications and community matter most. The challenge is to turn that comparative advantage into a competitive advantage by developing the vision and strategies that hit Google where they are most vulnerable. Put simply, Yahoo needs to leverage its strengths in communications and community to become the dominant content aggregation and distribution platform for all non-text media.

Ironically, the senior executive in charge of communications and community at Yahoo is none other than Brad Garlinghouse. As such, he is the one who needs to be held accountable for making sure that his operating/business units provide the necessary resources for overall strategic execution. Perhaps that’s what he has been trying to do internally but ended up hitting a wall. Whatever the case may be, it is Garlinghouse’s domain that needs to be opened up and become accessible by all groups/divisions within Yahoo.

And I’m not trying to be a Monday-morning quarterback here… in fact, 14 months ago I wrote a piece about the strategic implications and significance of community, and how companies like Yahoo would increasingly gain their competitive edge from the consumers themselves (now that they are also producers and developers). As such, it’s critical to realize that the priorities of “marketing” have been inversed… whereas the primary function of marketing used to be to broadcast a product’s benefit to consumers, the priority of marketing now should be to be a proxy for consumer control, because it is the consumers who will lead your company to success. Just look at the recent successes of MySpace, YouTube, Facebook, etc. These companies let their users create their competitive advantages… the win did not come from central product planning. That said, I was wrong back then when I stated that Yahoo seems to be doing it right… they failed to execute.

Google injects every initiative it can with its core search DNA. Yahoo must do the same with its communications and community DNA. And on that front, my advice is to first dismantle the ill-conceived Yahoo Media Group and reorganize its interface to traditional media and Hollywood with its core social media assets. They made a very big and expensive mistake by bringing in a traditional broadcast TV executive to run this group… one that AOL seems destined to repeat with their recent executive shuffle. The rules of broadcast media are antithetical to the factors that drive social media, and the thing that I will agree with Brad on is that such insights and visions must be something that is intuitive and native for the leadership at the top.

Photo via Flickr by Football Squares

  1. What should Yahoo do to address the root of the problem? Simple. Fire useless people like Garlinghouse. What has he done besides collecting fat paychecks?

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  2. WWYD? great post, and insightful, and i more than agree…i also think that yahoo should back off the search space, and instead just do a deal and focus on their ad network…better still, they should prep for sale to microsoft and give their combined user base the most complete and comprehensive suite available, a true something-for-everyone solution all the way up the enterprise ladder…

    also, if ‘consumerization’ is driving the enterprise sw space, you also have to wonder why yahoo is not doing more here to leverage their know-how to build solutions for businesses…it seems like they’re really leaving money on the table in that particular area (their recent reorg show s some attention to this area, but nothing solid)

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  3. good to read a post that doesn’t just heap praise upon peanutbuttergate dude for being ‘courageous’ and all sorts of other nonsense.

    the ‘inverse marketing/groups’ stuff seems spot on – i’ve been saying the same. i just started another google group a week ago – b/c it’s decent. yahoo groups are pathetic and are not decent. Groups is among SVP Yellow/Purple’s product responsibilities. It’s a shambles.

    can’t defend that Semel dude. that he hasn’t canned this dude already for incompetence show how lazy Semel is.

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  4. Buy Zoho and make money out of Office 2.0

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  5. One of the better thought out pieces on this issue. Whatever the motives for the memo, it is clear that while Yahoo is strong, and might have tricks up its sleeve, to users such as myself it appears jaded and listless. The company has some wonderful assets (del.icio.us is always the first one that comes to my mind), so it shouldn’t be too hard to re-focus and emerge as the king of community (not something Google is even trying to do).

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  6. I think it’s important to highlight the fact that he probably didn’t want this memo to be leaked, so maybe he is trying to change the strategic direction of the company… I’ve posted this elsewhere: Google buys technology to complement an existing and supported project or concept… Yahoo buys traffic when some random website becomes popular. And perhaps that goes back to the Gates theory, that Yahoo is at its core a content company, not a technology company. Maybe it should just license the Google adwords algorithm and concentrate on it’s only competitive advantage, the #1 internet property.

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  7. Yahoo – disorganisation by acquisition?…

    The problems with Web 1.0 companies acquiring lots of small Web 2.0 assets are outlined in a Yahoo internal memo – but the solution proposed here seems to be more dangerous than the problem!

    Allegedly by Brad Garlinghouse – a Yahoo senior V.P – and …

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  8. here are my 3 suggestions for what yahoo should do:
    1) fix monetization (better CPC)
    2) fix monetization (implement CPA)
    3) buy more stuff, & faster

    longer explanation on my blog:
    http://500hats.typepad.com/500blogs/2006/11/yahoojustneed.html

    but seriously, the problem isn’t focus… it’s just monetization. if they fix that, they’ll be fine. if they don’t, they’ll be taken private and/or acquired by someone else (MSFT would be my guess).

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  9. I think Yahoo is doing a great job of collecting the community’s feedback… starting with this memo “leak.” Sure… they are going to have to wade through a bunch of useless posts and comments but there is definitely a lot of good input out there.

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  10. Here’s a radical idea, drop Microsoft as a strategic partner and merge with Google. Imagine that. Google’s engineers with Yahoo’s content and traffic. If you can’t beat them…

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