Wednesday, January 30

Yodeling Less: Yahoo! Cut Backs

Yesterday, Yahoo! announced that what was expected to be hundreds of layoffs will be rounded up to more than 1,000 jobs cut. Unfortunately, the writing has been on the wall for some time as several Yahoo! assets were underperforming.

Yahoo Video fell 80 percent while traffic to rival YouTube grew by nine percent. Metacafe grew by 27 percent. Traffic on Yahoo! asset MyBlogLog, a social network for bloggers, has been declining since a poorly communicated move to Yahoo! IDs. Gmail seems to have an edge over Yahoo!
Mail, which is a bit more clunky than it used to be and is largely unusable by Safari (a small, but still viable percentage of accounts).

Not all the news is sour mind you. Yahoo! and AT&T are expanding their alliance. Yahoo! has cornered a big share of the $548 million market for online ad revenues for sports sites, says Forbes. And most people seem to like Flickr. Even their front page news is pretty good, even if you don’t use the search tool. These are just a few of the reasons I suspect people like the Silicon Valley Insider is calling for any ideas that might “help save” Yahoo!

Part of the challenge isn’t technology as much as it is communication, inside and out. Outside, members of various assets call Yahoo! unresponsive. Inside, layoff rumors have been whispered about for some time. Even The New York Times called said the Tuesday conference call droning and jargon filled.

Since the best communication happens from the inside out, it seems to me that how Yahoo! handles its layoffs will largely dictate how long the road of recovery will be. Large-scale layoffs, especially when no one knows which business areas will be hardest hit, can demoralize employees to the point of paralysis.

It’s especially important for Yahoo! to avoid the concept that there is some magical "clean slate" once layoffs are over. Why? As Umesh Ramakrishnan, vice chairman, Corporate Technology Partners, said: "The biggest challenge Yahoo! has is cultural. It's gotten away from the creative company it used to be—that's the difference between it and Google. Yang needs to bring that culture back and bring innovation to the forefront."

I could not agree more. Yahoo! needs to get away from being too myopic and retain some of the color and creativity that seems to escape every time it purchases a company. Instead of telling employees what to do and online members what will be done, invest more time into discovering why the acquisitions were performing so well to begin with, sans the Yahoo! brand.

By almost every account, Yahoo! is not a sinking ship. But it could be, unless someone inside makes a serious push to bring the passion back from the inside out. And that is always much more difficult to do, when almost one in 10 employees won't be there to help.



Anonymous said...

im gettin tons of great Talent out of Y! right now ...wooohoooooooooo

Rich on 1/30/08, 6:12 PM said...

Good point. Some employees will not stay to find out if they are the short straw. Unfortunately, these employees are often the ones that companies want to keep. (But is all depends on perspective. I imagine recruiters will be more than happy to place talent.)

In looking around at the moment, there are so many mixed messages out there, I'm not sure Yahoo! is communicating to anybody.


Anonymous said...

The big G just seems to get it more than Yahoo does. I've used both gmail and Yahoo mail and in my opinion gmail is far superior. All of Google's services just seem so much more streamlined, efficient, and current.

I hope Yahoo can turn things around though. A little competition for google wouldn't hurt anybody!

Rich on 2/1/08, 9:45 AM said...

Hey Blake,

That might happen.

The New York Times is reporting Microsoft made an unsolicited offer to buy Yahoo for about $44.6 billion in a mix of cash and stock. The offer of $31 a share represents a 62 percent premium over Yahoo’s closing stock price of $19.18 on Thursday. It would be Microsoft’s largest acquisition ever.

It is huge. There is no doubt that Yahoo! stockholders will have to take that offer seriously.

Rich on 2/1/08, 10:09 AM said...

Even more words:

"Besides helping to boost its online ad revenue, Microsoft believes it could mine more profit from Yahoo by jettisoning workers and eliminating overlapping operations.

Microsoft said it sees at least $1 billion in cost savings if it buys Yahoo. Microsoft executives deflected questions about how many jobs might be lost, but the company emphasized retention packages will be offered to Yahoo engineers and other key employees, including some executives.

The fate of Yahoo's brand also is unclear if Microsoft takes over. Both Ballmer and Kevin Johnson, president of Microsoft's platforms and services division, hailed Yahoo's strong brand value but didn't commit to keeping the name alive." — Michael Liedtke, AP Business Writer

The significance is that this communication probably doesn't fare well on the internal communication front at Yahoo! It thrusts employees in a position where their job security is even less secure than original cut back suggests.


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