{"id":2384,"date":"2012-07-16T10:26:34","date_gmt":"2012-07-16T00:26:34","guid":{"rendered":"http:\/\/blogs.unsw.edu.au\/knowledgetoday\/?p=2384"},"modified":"2012-07-16T14:03:25","modified_gmt":"2012-07-16T04:03:25","slug":"yahoo","status":"publish","type":"post","link":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/blog\/2012\/07\/yahoo\/","title":{"rendered":"How Yahoo Can Search for its Growth Engine"},"content":{"rendered":"

From the Knowledge@Wharton today\u00a0blog<\/a>.<\/strong><\/p>\n

Yahoo\u2019s board is on borrowed time to fix its woes \u2014 a situation that was no doubt aggravated by the board\u2019s decision not to name a new CEO at its annual meeting on Thursday. Wharton professors Kartik Hosanagar<\/a>, Eric T. Bradlow<\/a> and Waheed Hussain<\/a> have advice for the board on how to ensure stable leadership and reposition the struggling company for growth.<\/p>\n

Hosanagar, Wharton professor of operations and information management, states that time is running out for the company\u2019s board. \u201cThey need to elect someone \u2026 who can bring back some of the entrepreneurial spark in Yahoo,\u201d he says. \u201cTraditional, seasoned management veterans are not the right candidates for Yahoo given all that it\u2019s going through.\u201d<\/p>\n

Many expected Yahoo\u2019s board to name interim CEO Ross Levinsohn to the top job, but now speculation is growing that the board is considering other candidates, too. Levinsohn, 48, took over as interim CEO in May from Scott Thompson, who quit after being accused of making false claims on his CV. Since then, Levinsohn has scored several victories, including making peace with Facebook<\/a> last week by settling patent disputes. Also, Yahoo and Facebook agreed to form advertising and content-sharing partnerships. Finally, Levinsohn in May guided Yahoo\u2019s decision to sell half its 40% stake in Chinese e-commerce firm Alibaba for $7.1 billion, ending tensions over how much value Yahoo can extract from that investment.<\/p>\n

What should guide the Yahoo board as it picks the firm\u2019s next CEO? \u201cThe last two Yahoo CEOs were outsiders, and it seems that Levinsohn is also essentially an outsider, having been at Yahoo for only two years,\u201d says Hussain, Wharton professor of legal studies and business ethics, whose research areas include corporate governance issues. \u201cYou never know an outsider the way that you know one of your own executives, and you naturally have to take much more on trust.\u201d<\/p>\n

Hussain\u2019s advice for corporate boards in general, including Yahoo, is to build better structures and processes for grooming leaders from within the corporation. \u201cThere is no hard and fast law that says internal leaders have less viable and transformational ideas than outsiders,\u201d he says. \u201cAnd in general, the devil you know is better than the devil you don\u2019t know.\u201d<\/p>\n

Wharton marketing professor Bradlow says the new CEO must develop \u201ca core niche strategy\u201d to restore Yahoo\u2019s fortunes. \u201c[That person] should rebuild from the ground up by owning a segment of customers and branching [out] big from there.\u201d<\/p>\n

Bradlow has a specific to-do list: \u201cBe willing to experiment,\u201d he says, such as offering value-added services like web page layouts. His other suggestions: \u201cTrack much more than visits\/sales to understand performance. Make sure you understand repeat visitation behavior, page depth and [other] things at the individual customer level.\u201d Any company, including Yahoo, that tracks only aggregate behavior will miss out on important diagnostics showing whether a strategy is or is not working, he adds.<\/p>\n

Hussain cautions against placing too much emphasis on just the CEO\u2019s actions. \u201cIn the long run, the choice of a CEO is only one moderate factor among many that figure into making a company successful,\u201d he says. \u201cThese decisions get an enormous amount of attention in the media, so boards tend to feel enormous pressure to do something dramatic. But it\u2019s important to be realistic. You can only do so much to move an ocean liner in a short amount of time. Where it ends up depends a great deal on the seas and the winds.\u201d<\/p>\n

Shaky at the Top<\/strong><\/p>\n

Yahoo has had more than its share of instability at the top. Thompson, who quit after less than six months as CEO<\/a>, had replaced Tim Morse, who had been at the helm for four months. Morse was named interim CEO last September after Yahoo\u2019s chairman fired then-CEO Carol Bartz for what was widely seen as a failure in her efforts to boost the company\u2019s fortunes.<\/p>\n

Bartz, who had been CEO since 2009, had a little more than a year left on her contract when she was fired. Bartz had replaced Yahoo\u2019s co-founder Jerry Yang, who had taken on the CEO role in July 2007. Yang had replaced then-CEO Terry Semel, a six-year veteran at the company, amid worries that Yahoo\u2019s ad revenues were shrinking as business opportunities on the Internet were expanding.<\/p>\n

Concerns over revenues persist to this day. Yahoo\u2019s revenue has fallen steadily from $6.46 billion in 2009 to about $5 billion by 2011, although net income has grown in that period from about $600 million to a little more than $1 billion. \u201cThe major issue is that [its] growth is lagging the industry, especially [that of] Google, Facebook, etc.,\u201d Hosanagar had noted in a Knowledge@Wharton Today report<\/a> after Bartz\u2019s exit.<\/p>\n

Meanwhile, Yahoo\u2019s shareholders seem to be losing patience. \u201cYou are behind the ball and you have been behind the ball, regardless of which CEO has shown up,\u201d a shareholder told Levinsohn and other Yahoo executives at a Q&A session on Thursday, according to The Associated Press<\/a>. \u201cYou don\u2019t execute\u2026. As a consumer, I have given up on this company.\u201d Many still rue Yahoo\u2019s decision not to sell itself to Microsoft four years ago for $47.5 billion. Back then, Yahoo\u2019s share price was $33; Last week, it closed at $15.69.<\/p>\n

This blog was previously posted in Knowledge@Wharton today\u00a0blog<\/a>: How Yahoo Can Search for its Growth Engine<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

From the Knowledge@Wharton today\u00a0blog. Yahoo\u2019s board is on borrowed time to fix its woes \u2014 a situation that was no doubt aggravated by the board\u2019s decision not to name a new CEO at its annual meeting on Thursday. Wharton professors Kartik Hosanagar, Eric T. Bradlow and Waheed Hussain have advice for the board on how […]<\/p>\n","protected":false},"author":336,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12672,64],"tags":[],"class_list":["post-2384","post","type-post","status-publish","format-standard","hentry","category-leadership","category-technology"],"_links":{"self":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/2384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/users\/336"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/comments?post=2384"}],"version-history":[{"count":3,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/2384\/revisions"}],"predecessor-version":[{"id":2386,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/2384\/revisions\/2386"}],"wp:attachment":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/media?parent=2384"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/categories?post=2384"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/tags?post=2384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}