Heroic Turnarounds: The US as a Template for Yahoo

Tuesday Nov 18th 2008 by Rob Enderle
Share:

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.

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.

In addition to being qualified these people must be loyal to the chief executive. No matter how talented someone is, they have to be able to take orders, otherwise the combined effort of the team will suffer. There is one CEO of a company or a country, and when there is more than one you tend to have an inability to reach timely decisions or execute them sharply when reached.

We should assess Obama’s and Yahoo's yet to be announced teams on the quality and loyalty of the members. For the given tasks assigned to them, do they have the skills to get the job done, and do they have a personal history that suggests they can follow a strong leader?

There is a saying, keep your friends close and your enemies closer. In a turnaround you want folks around you that are trustworthy otherwise too much time is spent keeping them in line and not enough on correcting the massive number of problems a turnaround team has to deal with. The folks at the top don't have to be close friends, but they do need to be loyal to the same leader.

Strategy

Turnarounds are incredibly complex and if they aren't done in the right order the process can actually reduce the likelihood of success. For the US and Yahoo the primary problems are likely economic and need to be handled first so the organizations have the resources to complete the full set of goals.

The goals, too, need to be well articulated and prioritized so that completing one contributes to the success of the following goals, or at least doesn’t reduce the likelihood for that success.

For instance, the US incentive programs are relatively fast and easy, but if not thought through properly, will only increase the US debt, which forms the basis for what is likely the biggest problem to be solved.

What a successful turnaround executive does is think through the phases and dependencies of the process. For instance, one of the differences between Carly Fiorina's failure and Hurd's success as HP CEOs was Hurd thought through the need to upgrade IT and to create a matrix control organization currently embodied in the office of the CTO. This planning assured HP's success and is one of the primary reasons HP won't be on the list for a bailout this year.

For the US, watch the strategy emerge and think about how it weaves together into a cohesive whole. If it doesn't the Obama presidency will fail; if it does success is more likely. He has been pragmatic in his approach so far and I believe he will do this right but we should take the opportunity to learn from his process regardless.

Wrapping Up: A Bright Future

Often companies and countries run along a path that slowly drops them into obsolescence. And they don’t get a wake-up call, or more accurately doesn't hear it, until it is way too late to do anything about the situation.

Great Britain declined from being the greatest power in the world, and AT&T the most powerful tech company. The original AT&T has been rebuilt almost from scratch and Great Britain is far from their peak.

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. This slap could be enough to motivate both entities into fixing problems that might not have been addressed until they are too late. The end result is a renewed strength and vitality if the efforts are successful.

But, this bright future will depend a lot of the respective turn around teams, the quality of their information, and the execution of a good strategy. It will also depend on the support of all of those connected to the effort and here, in a country or company, disloyalty, even if it is well meaning, can pull defeat from the jaws of victory. Change is a bitch, but to move from where we are to where we need to be we'll have to embrace and drive it. For the folks here in the US and those that work at Yahoo let's hope there are enough heroes driving the needed change to overcome those who will undoubtedly be positioned against it.

You can't avoid the future; it is always up to a few heroes to assure that we will enjoy it. Let's hope the ones we depend on are up to this challenge.

Share:
Home
Mobile Site | Full Site
Copyright 2017 © QuinStreet Inc. All Rights Reserved