Some Ideas for a New Yahoo CEO Initial Actions
November 18, 2008 |
As we now know, Jerry Yang is stepping down from his job as Yahoo CEO and the company has hired executive research firm Heidrick & Struggles to search for a replacement both internally and externally. One of the obvious candidates is Yahoo’s current president Sue Decker but sources told Kara Swisher Ms. Decker is not a likely candidate. Kara also mentions a few outsiders who are likely to be considered as candidates for the Yahoo CEO role:
- Peter Chernin, COO of News Corp.
- Jon Miller, former AOL head
- Meg Whitman, former eBay CEO
- Tim Armstrong, Google ad executive
- Ross Levinsohn, former Fox Interactive executive
- Dan Rosensweig, former Yahoo COO
- Kevin Johnson, former Microsoft top executive who led the software giant bid to acquire Yahoo
Of course it is understandable that taking on the company will be a huge challenge for anyone and the person who agrees to take the role will have a whole mess of a company to cope with. But at the same time I think it is also possible to suggest that a challenge is still limited as part of the fault for whatever happens with the company will be on Jerry Yang for some more time anyway so a new CEO will always have an excuse of the poor heritage he (or she) received from Yang.
In a memo sent by Jerry Yang to all Yahoo employees to announce his decision Jerry told that “the time is now right to transition to a new ceo who can take the company to the next level.” It is hard to argue that but what can we consider to be the next level for a company like Yahoo and exactly in the position Yahoo now is? I have a few thoughts of my own about what the new Yahoo CEO should do not to disappoint both shareholders and passionate users any longer and I would love to hear your thoughts in the comments as well.
First of all, the new CEO should try not to forget that the first thing the company should to become and remain healthy is generate revenue. For Yahoo revenue comes from advertising same as it does for many internet businesses, Google included. But Yahoo is more vulnerable than Google for one simple reason: it is focused on graphical advertising which is supposed to suffer much more during a recession than various action-based types of advertising (Google Adwords as the first obvious example).
Of course it is understandable that CPM-based advertising is often exactly what publishers mostly want because it is good for us to be paid for whatever number of impressions we generate without relying on our visitors clicking (or not clicking) on ads but now is not exactly the right time to think about publishers as people who are still willing to pay money for ads should be the main focus. So my idea is that the new CEO should reconsider the structure of Yahoo’s advertising business and try to focus more on some action-based patterns that will be more appealing to advertisers during these hard times simply because the advertisers will know that the only pay for what they get.
In addition to modifying the earnings structure to make sure the money is flowing in, it will be a good idea to make further costs cuts – keeping in mind they should be wise and feasible. One thing some people already expect the new CEO to do is finally striking the deal with Microsoft – either for the entire company or at least its search division (and Yahoo’s search business is something that Microsoft still has not completely rejected). The idea is that Yang was one of the obstacles for renewing the Microsoft – Yahoo talks as Steve Ballmer did not want to work with Yang who had already rejected their bid once, even if Yang already pleaded the deal to still happen. So this is where the talks of the new possible deal have already emerged and I really think chances are these rumors will turn into reality pretty soon.
It could also be a good idea to discuss and research all the potential benefits and risks of merging Yahoo with Time Warner’s AOL and finally make a decision to stop these lengthy talks without any results. It is hard to predict that two struggling companies merged could form one that would be strong and healthy but I would not eliminate such a scenario entirely. Om Malik called this possibility “tying together two bricks with a spider web and hoping that they will float” and I think it is difficult to find a better comparison. But putting at least some end to the talks may be a good idea after all for everyone to know what to expect both companies to do.
But of course the major focus for Yahoo should be on the products side of the things as without a great offering to users no business decision (no matter how clever it is) will help the company survive. And here I think we have already seen hints at Yahoo going in the right direction by trying to turn Yahoo into an open platform to integrate all the Yahoo services and give place to third-party applications as well.
I would also recommend the new Yahoo CEO to finally try and notice all the wonderful services that Yahoo has managed to acquire – Flickr, Delicious, MyBlogLog and Upcoming being the obvious leaders in their respective market niches. Yet it has seemed to me for quite a while now that Yahoo has neglected these valuable online properties without making full use of their business potential. For example, even Ma.gnolia has come up with a monetization strategy by charging users for ad-free social bookmarking experience. And knowing that Delicious is way much more popular and leads the game in social bookmarking, it is quite possible that Delicious could come up with a monetization plan of its own that users would not object to. So my opinion is that there must be some opportunities that are still to be explored to better utilize the potential of Yahoo’s existing products – it just takes choosing the right focus.
