By Oon Yeoh
Last week, I wrote about how Microsoft is revamping its corporate structure and focus to become competitive once again. In a nutshell the revamp entails consolidating departments within the company into fewer divisions and focusing on devices and services.
Another tech company that has been undergoing serious revamp is Yahoo, which at one time was the dominant search portal until Google ate its lunch. To make matters worse, Facebook has also taken a big bite of the display advertising market, leaving less and less of the pie for Yahoo.
There was speculation that Yahoo might be bought up by another company. In fact, at one time Microsoft was looking at buying it although that deal fell through to the dismay of some shareholders. But rather than search for another suitor, the company’s board decided to hire Marissa Mayer as CEO.
Although this meant Yahoo was about to have its sixth CEO in less than five years, Mayer’s appointment was generally seen as a positive move. After all, Mayer was one of the early employees of Google.
Right off the bat, Mayer made headlines for a variety of reasons. That she was six pregnant when she joined was news. Her decision to return to work with a minimal break was even bigger news. When she decided to end the company’s lax policy about telecommuting, she had the tech industry buzzing and tongue wagging. If you can’t do telecommuting in a tech company where can you do it?
In her first year at the helm, which has just passed, she has done many significant things. In terms of services, she revamped Yahoo’s home page, its e-mail service and Flickr, its photo sharing site.
Yahoo’s mobile apps have also been upgraded. In fact, mobile is a key plank in Mayer’s strategy. Like others in the industry, Mayer recognises that smartphones and tablets are the in-thing and Yahoo needs to sink its teeth into the mobile sector.
In adopting a strategy she probably picked up at Google, Mayer has in her first year alone bought up 16 start-ups, all of which were mobile-related in one way or another (content, apps, services).
Interestingly, after acquiring these companies, Yahoo typically shut them down (only three out of the 16 – Tumblr, PlayerScale and Qwiki – have survived intact). It’s obvious that what Mayer was engaging in is what has come to be known as “acqui-hire”, basically buying up a company to gain its technical talent. It’s a strategy used both by Google and Facebook.
As in the case of Microsoft, Yahoo has decided to zero in on a few core growth areas instead of having a hodgepodge of services. This approach was favoured by Apple’s Steve Jobs, who also advised Google to do the same. In Yahoo’s case, there are four clear areas: core business (content, apps and search), social, gaming, and video (chat and conference calling).
The lesson we all can draw from looking at Microsoft’s and Yahoo’s situations are that even the big and mighty can see a reversal in fortunes. The tech sector is one that is in constant flux and it’s not easy to remain dominant for an extended period of time. Constant reinvention and revamping is necessary.
Although Microsoft and Yahoo are very different companies, they are both looking at what their top competitors are doing right and adopting similar strategies (consolidating divisions is a good example). Both also recognize the importance of mobile computing and focusing their energies on that.
Will they succeed? It’s far too early to tell. One very positive sign for Yahoo is the return of many workers who had left the company for greener pastures previously. During the company’s first-quarter earnings call, Mayer announced that 14% of all hires during the quarter were former employees. This is a positive sign of confidence and a morale booster for the rest of the company.