Learning from Marissa Mayer and Yahoo!

 

yahoomayer

I’ve just finished reading a book about Yahoo! and its current CEO, Marissa Mayer. A fairly slim tome, I got through it in a day on my Kindle.

It’s well worth a look for anyone interesting in how technology companies work (or in this case, don’t) and also how large companies can go around changing the way they work.

Overall, I think if Mayer is given enough time, she can make Yahoo! relevant again. It might not be in the shape that perhaps many of its investors would like, but it could once again be innovative and delivering real value to its users.

More on Yahoo! and Mayer by John Naughton and Jason Calacanis.

Here are my big three takeaways from the book.

There’s no fix for not knowing why you exist

Yahoo!’s well documented problem is that nobody knows what it is for. It’s birth was as a straightforward directory for the emerging web, something that is just no longer needed. All it has is a homepage that still has lots – although a decreasing number – of visitors.

Strategically, this is a killer. Not having a commonly understood vision makes it incredibly hard for an organisation to move forward, particularly during a time of change.

Before Meyer’s appointment, Yahoo!’s board had a decision to make. Was it a media company or a product company? They plumped for the latter, and appointed Meyer, who had a great track record in product development at Google.

Great start, but was everyone bought into the vision of Yahoo! the product company? Did they have the stomach for the fact that it would take years to move the company forward in that direction?

Undoubtably this is the biggest challenge at Yahoo!, and indeed any other organisation that has a problem identifying its reason for existence.

Stack ranking – no matter what you call it – is a bad idea

On her arrival, Meyer faced a problem – Yahoo! was overstaffed and had a lot of people who weren’t performing. Her solution was to bring in a performance review system that she had experienced at Google, and was used in other tech companies.

Here’s how it works. A manager sorts everyone on their team into five different rankings – from totally smashing it, to utter failure every quarter. These rankings over a period of time decide how big someone’s bonus is, or whether they even keep their job.

Sounds pretty standard. But where stack rankings differ is that managers have to have a certain percentage of staff in each ranking. So even if everyone on your team meets, or even beats, their targets, some of them will still have to be rated as failing.

This kind of thing can work well in the short term, in that it quickly weeds out those who really aren’t performing. Soon though, it starts to breed resentment, mistrust and a lack of collaboration.

The case of Microsoft’s use of stack ranking is a good example of how it can create a poisonous corporate culture.

Pitting employees against each other, no matter what the short term gains, is not the way to build a healthy, collaborative environment to work in.

Hiring is hard – but you have to get it right

Probably Meyer’s biggest failure at Yahoo! (so far) was the disastrous appointment of Henrique De Castro as Chief Operating Officer.

He joined the company with a huge financial package and when it didn’t work out, it ended up costing Yahoo! over $100m (!) for little over a year’s work.

A huge, costly, mistake and perhaps what makes it so bad is not the money wasted, but the time. The point of hiring De Castro was that it would enable Mayer to focus on product while someone else took care of the day to day media and advertising business.

For any organisation, hiring the right people is just so important. The people in an organisation forge its culture to a massive extent, and the time wasted, expense and sheer pain of getting it wrong can be incredibly damaging.

When clouds don’t taste so delicious

There appears to be a considerable amount of uncertainty about the future of Delicious, the web’s preeminent social bookmarking service.

Not sure what social bookmarking is? Here’s a video:

It seems a shame that Yahoo! have been unable to find a way to make a service with plenty of active and dedicated users pay for itself. I know I would pay a few quid a month to keep it going.

Either way, the service will be sold on or shut down in the nearish future. Users are looking for alternatives, with the likelihood being that if everyone leaves, who cares what happens? It’s easy enough to export your data from Delicious, and I would recommend you do it right away.

The two options at the moment seem to be Diigo or Pinboard. The former is much more polished than the latter, so it’s a case of choosing what matters to you. There are other options discussed in this post on SearchEngineLand.

Personally, I use Delicious mainly as a publishing tool – to get the links posts published every so often here on DavePress. Most things that I save to read later go into Evernote.

Flickr?

The potentially more worrying issue here is that Yahoo! also own Flickr, the photo sharing site. Bookmarks and links are one thing, but photos entirely another. I’d always advise users of cloud services to back up your stuff locally just in case something goes wrong – it’s good practice anyway.

That’s fine for those of us who have PCs or laptops at home where you can store media locally. But what of the future of low-cost computing – like the ChromeOS netbooks I wrote about the other day, where the machines themselves have virtually no storage and everything is held on the servers of companies like Google, Microsoft, Amazon and, er, Yahoo!.

This is one of the implications of cloud culture, where increasingly our cultural artefacts – books, music, films, photos, art – are being stored and curated by tech companies rather than traditional publishers, museums, libraries etc. The medium is also changing of course, from physical objects to digital ones.

The book won’t disappear anytime soon, of course, nor will painting on canvas. But the everyday access and storage of this stuff will be moving online, and we all need to have a proper think about how we deal with that.

Bookmarks for August 11th through August 18th

I find this stuff so that you don’t have to.

You can find all my bookmarks on Delicious. There is also even more stuff on my shared Google Reader page.

You can also see all the videos I think are worth watching at my video scrapbook.

Bookmarks for May 14th through June 2nd

I find this stuff so that you don’t have to.

  • TWiki – the Open Source Enterprise Wiki – "A flexible, powerful, and easy to use enterprise wiki, enterprise collaboration platform, and web application platform."
  • How digital engagement can save councils money – A great paper from Anthony at the Democratic Society. Read this!
  • Living in a world of the merely improbable – Great post, covering why organisations need to figure out their approach to digital and how it can help them get through the cuts.
  • Tim Berners-Lee and Nigel Shadbolt speak out on web institute axing | Technology | guardian.co.uk – "Web inventor says that open government data will become increasingly important – but that 'immediate decisions had to be made' on spending."
  • Instant messaging: This conversation is terminated – Interesting article on the decrease in use of IM – it's Facebook's fault, it would appear.
  • And The Long Sought Replacement For Email Is . . . | Forrester Blogs – "Enterprise 2.0 enthusiasts (count me in) have argued for several years that Email’s manifest deficiencies could and would be overcome with open, social, and dynamic 2.0-based communication and collaboration tools. However, there’s also long been the recognition that Email – or rather, Email users – would not go down without a fight."
  • The Coalition: what now for digital? at Helpful Technology – "In terms of public sector IT at least, it looks broadly as through the principles and plans outlined by the Conservatives over the last six months are being brought into effect, with added emphasis on civil liberties."
  • Designing the Big (Civil) Society – it’s DIY time – "But in my experience, whether it’s a group of activists, social entrepreneurs or local government officers, you can’t assume people will easily start co-designing new stuff together – particularly if that involves adding technology. People need to get to know and trust each other, tell stories about what’s worked and what hasn’t, filter inspirational ideas against local realities, think about who does what, where the money comes from, and so on. That’s particularly difficult when you are doing that with less funds then before – as will certainly be the case."
  • The Future of Open Data Looks Like…Github? – "the future to me in this area seems clear: we’re going to see transformation of datasets incorporated into the marketplaces. As the demand for public data increases, the market will demand higher quality, easier to work with data."
  • Government needs a SkunkWorks – "What's stopping us spooling up a Skunkworks? Nothing but the momentum which continues to carry us down the old path. It's inertia, but, as I said, we're at the dawn of something new. Personally, I'm confident that all manner of things which would have been difficult before will now become possible."

You can find all my bookmarks on Delicious. There is also even more stuff on my shared Google Reader page.

You can also see all the videos I think are worth watching at my video scrapbook.

Yahoo! Launch Fire Eagle

Yahoo! have launched Fire Eagle, a ‘geo-location platform’. Covering the launch, TechCrunch says:

Fire Eagle allows users to syndicate their positional data to any partner service after updating from a supported device or website. This means that after sending a Pownce message with a geo-tagged photo, I could have Fire Eagle automatically update my current location on my blog and social network profile. Users can opt to disable updates whenever they’d like, and for the especially paranoid, you can even lie about your location.

Sounds interesting, though for me there really are questions around whether I actually want everyone to know where I am all the time. Not that I have anything to hide, of course!

Microsoft/Yahoo! Roundup

Here’s some of the stuff I’ve been reading around the web about the proposed Microsoft purchase of Yahoo! There’s some interesting commentary out there.

Jeff Jarvis at Guardian Unlimited:

This is just as well for Yahoo, which had no strategy, really. They’d gone as far as they could with the old-media model, as exploited by the last CEO, former movie-studio head Terry Semel. Yahoo co-founder Jerry Yang started saying the right things about turning Yahoo into a platform, but it probably would have taken years to turn his culture around. They were too used to operating like a movie studio or publishing house.

Will this be big enough to beat Google? No, because big won’t win in the end. Open will.

The BBC:

If Yahoo agrees to the deal with Microsoft, it will be a shotgun marriage, but it will be Google holding the shotgun.

If Yahoo’s management says “yes, I do”, it will be an admission that its attempts to turn around the company have failed.

Yahoo shareholders, in turn, will not be able to believe their luck. Microsoft was probably the only company with pockets deep enough to bail them out.

For Microsoft, however, this is the deal that could break it.

Making the offer is an admission that Microsoft’s management has been scared by the success of Google.

Scoble:

what makes Yahoo/Microsoft interesting is the email audience. That’s another 300 million people to add to Hotmail’s audience of close to the same. Yahoo has a ton of interesting Web properties that are far more interesting than anything Microsoft has done lately. Groups. Finance. Upcoming. Etc.

This gets Microsoft back into the Web game in a big way and puts a defense around Microsoft’s Office cash-generating-machine. I bet that some of Yahoo’s smartest engineers get moved over to the Office team to help build an online Office that’ll keep Google’s docs and spreadsheets from getting major marketshare inroads.

It’s the fear that Google’s Docs and Spreadsheets might someday take marketshare away from Office that I think was driving this deal.

Read/WriteWeb:

Yahoo! is great at content and online innovation, though. That’s what Microsoft needs right now. Google is posing a threat to Microsoft not just because it is winning in advertising, where Microsoft is a relative beginner, but because Google is shifting the software world to online.

Microsoft is serious about innovation, they just haven’t been doing much of it in house for awhile. The Live.com work and the Microsoft acquisitions in the health space indicate to me the company really is trying to do more than just catch up in search and advertising.

I think that this acquisition is going to mean a whole lot more energy put behind services like Flickr and Del.icio.us and innovative content sites like Yahoo! Sports and Finance. All of that will be good for Microsoft and it will be good for those of us who find those sites and services inspiring.

Paul Kedrosky:

1. It will happen. Neither company can afford for it to not happen, and no-one will outbid Microsoft given its dire need. About the only way Yahoo could keep it from happening would be to cut a quick deal to outsource its search to Google, which would be smart, savvy, and MicroHoo-killing — and almost certainly won’t happen.
2. It won’t (really) matter. Some more scale in search will help Microsoft, no question, but the fundamental problem is that Microsoft is trapped between two worlds and has an absence of vision. That has been holding it back, not engineers and not ownership of Yahoo pageviews. Microsoft isn’t doomed — far from it — but buying a broken asset doesn’t turn it into a BrinPage-killer either.
3. It’s good for Google. Two elephants mating are always good for confusing customers and helping incumbents, not to mention improving margins. You will see Google gain surplus search and advertising share as this deal comes together.

John Battelle:

I’m still not sure this works. I don’t see how the two cultures merge. But perhaps that’s not the point. Perhaps at the end of the day, Yahoo becomes Microsoft’s long misbegotten media arm, and the folks in Redmond can finally stop worrying about what their focus is.

GigaOm:

There’s a six-letter reason this deal was struck and it begins with G and ends with -oogle. The specter of the search giant’s dominance was raised at least four times on the conference call, both as the reason the two firms should combine as well as an assurance as to why Google couldn’t make its own bid for Yahoo.

“All of us see this industry growing through consolidation. Today the market is completely dominated by one player and by combining the asset of Microsoft and Yahoo…the industry will be better served by having more players in search and advertising,” said Kevin Johnson, president of the platforms & services division of Microsoft.

Mini-Microsoft:

My first reaction: “That’s a lot to pay for flickr.”

Dave Winer:

Does Yahoo + Microsoft make sense?

Nahh. It’s like the dead leading the blind.

And there’s tonnes more. Just check out Techmeme.

Microsoft to buy Yahoo!?

Wow, major news breaking on the horizon. Microsoft have offered to buy Yahoo! for $44.6 billion.

Our lives, our businesses, and even our society have been progressively transformed by the Web, and Yahoo! has played a pioneering role by building compelling, high-scale services and infrastructure,” said Ray Ozzie, chief software architect at Microsoft. “The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own.

So what is this? One last attempt to kill Google? Or two companies whose recent online strategies haven’t made an awful lot of sense joining up to make an even bigger mess of things?

Update: TechCrunch reports that it’s all about the ads.