Putting the Yodel Back in Yahoo!

When Marissa Mayer was selected to become the third new CEO at Yahoo in just three years, there was plenty of evidence that she was facing a daunting task to stop the rapid decent of one of America’s most famous companies.  A former engineer with Google, Mayer’s brought well established Silicon Valley credentials with her to Yahoo.  At age 37, she hopes to stem the losses to Google and Facebook Inc., which her high-profile predecessors failed to do.  Her hiring signaled that the Internet Company was likely to renew its focus on Web technology and products rather than beefing up online content.  Her appointment capped a tumultuous year at Yahoo when former CEO Scott Thompson resigned as CEO after less than 6 months on the job as a controversy flared up over his academic credentials.

Anyone who has been in the position of turning around a failing company will readily admit that the weapons of public criticism, pent-up institutional frustration and anger quickly become squarely focused on virtually every decision you make.  And no matter how deep the chasm, progress out of the depths of failure cannot come fast enough to critics and detractors, most of whom could not artfully orchestrate their own turnaround in the driveway.

Most recently, Mayer has been charged with failing to make significant progress in hiring much needed human resource talent that is necessary to bring about institutional changes and discipline to Yahoo.  Some say that her insistence on interviewing every new recruit and instituting high standards and practices in hiring are hampering the effort to fill Yahoo’s 900 vacancies, nearly 8 percent of its 11,500 member workforce.  To make Yahoo a more attractive place to work, Mayer has borrowed from the Google playbook and provides employees with free food and the latest smartphones.

But the recent decision to eliminate the practice of employees working from home for Yahoo employees has spawned the most attention from the media outlets, social engineering pun dents and even other chief executives.  “From the time she got there, she was kind of shocked by the Culture, by the fact that so many people were working from home that you couldn’t even have a Friday staff meeting,” said a person familiar with Mayer’s thinking.   In announcing the decision Mayer commented, “To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side,” the memo said. “That is why it is critical that we are all present in our offices.”  Observers say that the new CEO has more than a dozen ideas to make the organization more efficient and orderly, some of which will be controversial and unpopular.

In this case, Mayer consulted logs from Yahoo!’s Virtual Private Network (VPN), which employees use to remotely access the company’s network.   Since workers weren’t logging in from home often enough…. they will soon do so from the office.

Working from home has its advantages and disadvantages, and under certain circumstances, it might be necessary for organizations to reel in their remote workers.  They may be concerned about communications, team cohesion or personal accountability, or they may need all hands on deck to meet strategic goals in a turnaround situation.

Many business leaders feel organizations should not offer telecommuting as an option simply because it is part of the employee engagement model that has come into fashion in the past 10 or 15 years. Yahoo and other Silicon Valley companies virtually invented this employee engagement model, one that emphasizes employee perks like workday flexibility to attract top talent and encourage creativity. In many cases, it works. However engagement without personal accountability is a recipe for disaster.

The challenge is striking the right balance to make telecommuting work for an organization and its employees.  Working from home may be convenient for some but it represents a huge opportunity cost to a company that’s trying to turn things around.  The effort is about Mayer getting to problems created by Yahoo’s huge, bloated infrastructure and a company that got fat and lazy over the past 15 years. The most immediate step in any rescue attempt is to stop the bleeding. Only after the patient is stabilized can you get to work in repairing the damage.

The first visual change to Yahoo involves a refreshed home page.  Features include bigger photos, a newsfeed with increased personalization and more prominent weather and financial apps along the right rail.  Yahoo’s mobile websites also were modernized.  So what was Ms. Mayer’s role in the process? First, “she challenged the team to expand the breadth of content that we were recommending,” said Yahoo VP Mike Kerns.  “She didn’t want more links, but more diversity of stories both from Yahoo properties and from external media properties that have partnerships with Yahoo.”

The ball is at least moving forward now. While the home page and mobile redesigns won’t “save” Yahoo, it is likely give it some necessary breathing room while it bets big elsewhere.  Mayer has said her top priority is to create a coherent mobile strategy for Yahoo and that she intends for at least half of the company’s technical workforce to be working on mobile products.  Towards meeting this goal, the company acquired mobile app developers, Stamped and OnTheAir, during the quarter, but turning development talent into revenue is the challenge the new CEO must address.

It is largely agreed that six months into her tenure, Marissa Mayer has arrested the decline of the Internet portal and has won favor on Wall Street with stock buybacks, but a longer-term turnaround remains uncertain.  Her promise of a modest revenue uptick in the coming year paled in comparison with the growth of its Internet peers. And Yahoo shares, which have gained roughly 30 percent since Mayer took the reins last July, fell nearly 3 percent to $19.77.  Q4 2012 was Yahoo’s second full quarter with Marissa Mayer at the helm as CEO.  The results Yahoo reported thus far should be some encouragement that things are indeed on the right track.

In a press release accompanying the earnings figures, Mayer had the following to say about Yahoo’s performance:  “I’m proud of Yahoo!’s 2012 and fourth quarter results. In 2012, Yahoo! exhibited revenue growth for the first time in 4 years, with revenue up 2 percent year-over-year. During the quarter we made progress by growing our executive team, signing key partnerships including those with NBC Sports and CBS Television, and launching terrific mobile experiences for Yahoo! Mail and Flickr. At the same time, we achieved tremendous internal transformation in the culture, energy and execution of the Company.”

When a new CEO comes to the rescue, they usually have one or two quarters before they have to start showing something positive, and time is clearly one factor that must be on Marissa Myer’s mind as the CEO of an injured giant.  With each day will come new challenges, opportunities and expectations of greater success, and who doesn’t like a good turn around story?

Leave a Reply