Published July 21, 2016
By: Jim Tompkins
Fifteen years ago Steve Jobs asked the question, “Is Yahoo a technology company or a content company?” Ten years ago Yahoo was unable to answer the technology vs. content question. Four years ago Marissa Mayer joined Yahoo and without answering the question began a journey of acquisitions and a massive overhaul of Yahoo. July 18, 2016 Yahoo shared their latest quarter’s financial statement. Not a good report, as revenues for the second quarter fell 15% and operating profit fell 64%. Based on these results and the last six months of the “Yahoo Yard Sale” many believe the July 18 financial statement was the beginning of the end for Yahoo. Many are offering opinions on various things that were done or were not done to result in the sad demise of a business that at one point was viewed as the “Best of the Best.” The opinions being voiced include: executive turnover, activist shareholders, declining revenues, poor cost control, the prolonged Yahoo yard sale, etc. These are not the cause of the demise of Yahoo, but, rather the symptoms that indicate the demise of Yahoo.
It is important to ponder the loss of Yahoo magic, but it is not surprising. I stated in a presentation last week in New York City, “The demise of Yahoo is not unsurprising, it was predictable.” I went on to explain, to the group of retail executives, that strategy must always come before structure and structure must always come before implementation.
The basis of all successful businesses is Strategy-Structure-Implementation (SSI). The basis, the cause, of the demise of Yahoo is the failure to execute on SSI. For the last ten years at Yahoo we see structure and implementation, but no strategy. At the highest level a strategy must answer the question, “What business are we in?” This goes right back to the Steve Jobs question, “Is Yahoo a technology company or a content company?” This question still has not been answered. Why are people surprised that this great company will soon be selling its assets and becoming a footnote in the history books of content companies or should they be in the history books of technology companies?