Heroic Turnarounds: The US as a Template for Yahoo

Both the US and Yahoo have been fortunate, in a way, to receive a massive slap on the face before they were in danger of complete failure.


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Posted November 18, 2008

Rob Enderle

Rob Enderle

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Both Yahoo and the US are in a world of hurt and both chief executives are under a cloud of failure and soon to be replaced, albeit by different processes. President-elect Obama is starting very strongly and the process he takes will be public, allowing us to learn from what he does and perhaps apply those lessons to Yahoo and others who also need a strong turn around.

The USSR and Netscape are examples of what can happen if the turnaround fails. In contrast, HP's recent stunningly positive financial announcement (the only major firm significantly beating expectations at the moment) is an example of a successful turnaround. Let's explore this.

Doing A US Turnaround

What President-elect Obama will be trying to accomplish will be far more difficult in some ways than any of his predecessors faced. He is dealing with vastly more complexity and the lack of a world war to keep the nation lined up behind the executive office. Yet I believe there is a way to put in place milestones that will indicate if Obama is on track to implement the change the US needs to survive.

It will come down to three things: The quality of the information that the executive team receives, the quality and loyalty of the team, and the strength of the strategy and appropriateness of the goals placed before the team.

I’m taking resources as a given because I believe the US possesses enough of them to complete this task and that victory simply means effectively using those resources to turn the country around in a timely fashion. I’d also like to spend a moment thinking about how much better the country, and Yahoo, could be after this is over and suggest that the pain may be well worth it.

Information Quality

The Iraq war was both started and badly executed as a result of bad information, which led to some really unfortunate decisions. It doesn’t matter how good an executive staff is if they aren’t getting good information. Much like the best driver driving with a bad map, they won’t end up where they intend.

One of the first things to watch for with the incoming administration is whether they fix what has been an endemic problem in most governments and large companies I’ve worked with: bad information.

Often this has to do with a belief, which is unfortunately backed up by a very troubling reality that messengers bearing bad news are shot and those with favorable news rewarded, regardless of the accuracy of the information. This leads people to actively change reports to make the people that receive them more grateful and rewarding. This is institutional corruption and, in my experience, is vastly more common in business than the criminal kind.

To address this there has to be an effort to weed out the information gathering and reporting institutions of people who are largely motivated by personal rewards in favor of those that are driven by the quality of their product. People who have broken rules in order to get the job done and put in place informal cooperative structures between agencies should be sought out and put in critical positions. And those that have aggressively moved to achieve personal credit for work others have done, or actually participated in the corruption of information, should be retired.

I’m talking a thorough, visible, house cleaning and a tight cooperative linking of organizations to ensure the new administration has the best external and internal intelligence available. Yahoo is largely in the position they are in because of bad business and market intelligence, which led to some incredibly stupid decisions, the latest of which was the decline of Microsoft's offer.

For the US I would take the rumored elimination of Obama’s Blackberry as a bad sign; one that indicated the wrong side was winning.

Selecting a Turnaround Team

It doesn’t matter how good the information is if the people getting it are idiots. I don’t think I need to belabor this comment.

A common, though unfortunate practice, is to pick key players for any executive team from friends – important for loyalty but it often puts the wrong skill set in the critical jobs, which are handed out like awards rather than based on skills. A turnaround executive can’t afford to be handing out jobs to people who aren’t qualified to do them.

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Tags: Microsoft, Blackberry, HP, Yahoo, netscape

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