The tech industry has something to learn from Jerry Yang’s departure from Yahoo

This photo from 2008 tells it all: Jerry Yang (center) hangs his head while talking with Google's co-founders. He had just turned down a very valuable buy-out offer from Microsoft.

I always find it interesting to follow the development tech companies. More than any other sector, the tech sector is a microcosm of accelerated time; you can witness their growth, assimilation and death within a matter of years, months even. It’s hard to write the case studies because before you think you’re beyond the shadow their success (or even death), there they are again, possibly in free-fall, or resurrected.

As the tech sector matured, developing greater rigour and discipline, we have seen digital companies sprout up from its auspices,  still with the same fervour for innovative approaches to engaging employees, creativity for meeting client demands, and capacity to redefine the rules of business. How much of this can you say for other sectors, like textiles, accounting, food & beverage, or consulting?

I was not surprised to hear about Jerry Yang’s departure from the company he co-founded, Yahoo. I’m all for companies taking bold leaps and chances, but the proof is in the pudding, and Yahoo was compromising its decision-making too often. The disturbing part is how often Yahoo could never get a break, either going against the grain and repeating the same mistakes as other companies (such as rebranding itself as a media company after it failed for AOL-Time Warner, sticking to its guns as a directory of the web after Google got out of that business, creating a portal after they had long passed become passé…) or even executing successful practices from other companies (such as becoming a “walled-garden” social network a decade before Facebook, absorbing GeoCities, refusing buy-outs as Facebook has, a Steve Jobs-like second act for Jerry Yang as CEO…). Despite its meteoric rise during its heyday, it just can’ t seem to get a break. But that presumes luck could win out against poor decision-making.

Not only was Yahoo faltering in the execution of its strategies, internally it’s been smoke and mirrors for a long time. Yahoo was well-placed to capitalize on Internet advertising, when the industry was lacking big enough players with the breadth and scope that only a few companies had: there was Microsoft’s MSN, Google and a handful of niche search engines (then called “web crawlers” or “web portals” like Excite, Alta Vista, GO.Com). It was the tech boom, and big media giants and fellow startups were throwing money to get screen space; they had to spend it to get more of it, or save it and lose it. The best time for Yahoo was when the Internet was getting good: in 1998. The best piece to read about this is from former Yahoo programmer Paul Graham, who wrote very candidly back in 2010 about his time with the company when it was very much like Google before Google was.

What can be learned from this? The vital importance for companies lacking strategy to listen to its most valuable resource: its employees. As the book gets written about the tech industry and digital media companies, the patterns remain strong, the players and familiar faces are surprisingly few, and the pace of change continually accelerating. Internal dissent is the canary in the goldmine. Techies love to work at companies they are proud, with uncharted success. They love to be engaged, and they are intelligent and informed not only for their work, but about the sector. They know their craft intimately, and the tech they work on. No single CEO or executive can know everything all the time about their work, internally and externally to the company. If there’s a memo going around, the writing’s on the wall. If you read it (sent anonymously or not),

We haven’t seen the worst of Yahoo, or its best. But Yang’s departure marks a turning point and bold break from the old.

The next shoe to drop will be Research in Motion (“RIM”, the makers of Blackberry). Already an anonymous memo was circulated,  purportedly from an executive writing very boldly and insightfully about the change that is needed. The memo was foretelling of the worse days ahead for RIM, as it faced a network outage, lacklustre sales of its Bold line, and a delay of its launch of its next operating system and refreshed line of smartphones. The canary chirped a long time ago.  I predict we’ll still see much worse days ahead for RIM. And it will be a story very few of us will likely read on Yahoo.

But again, be sure to read Paul Graham‘s piece about what happened to Yahoo.


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