Yahoo CEO Marissa Mayer has been showered with unending praise and criticism since she left Google to save the iconic tech giant. Fortunately for Mayer, Yahoo appears to be growing stronger, at the moment, thanks to its investment in recent success story Alibaba and Mayer’s drive to grow into the mobile app market. Unfortunately for Mayer, activist shareholders are still trying to force Yahoo to merge with AOL and they have some very compelling reasons for doing so. With that in mind, the Yahoo drama offers the world some powerful insights as we struggle with economic realities that are not meeting the needs of more and more people across the globe.
Google is a success story, because it entered a market where there was a clear deficit, i.e. information across the internet needed to better organized, and it happened to come across a revenue generating method that has worked extremely well. There is, however, an important lesson in business that many people never learn: just because someone has been successful does not mean they know how to continue to be successful or make someone else successful. The debacle of Google Glasses boldly exemplifies the shortcomings of a culture, which seeks to make fantasy reality with little regard for cost restraints.
Marissa Mayer was extremely successful in the Google environment, but that had a great deal to do with the success of Google’s products. When oil is up, only the most incompetent of businessmen are going to tank an oil company; when oil is down, only the most competent of businessmen can save an oil company. Looking at the way Ms. Mayer started her tenure at Yahoo by expending copious amounts of cash on acquisitions, it appears her strategy was to throw her whole plate of spaghetti against the wall and hope enough of it stuck to call it done. Clearly, this is a strategy that could have easily failed and may well still fail.
Regrettably, Yahoo’s problems are not just an issue of management, culture, or technical prowess. Even if Yahoo has the best apps and app development software in the world, it does not mean Yahoo can be successful. As Mayer has demonstrated, the technology can always be bought. In fact, the tech business is one where a firm can be on the verge of failure and suddenly see a complete turnaround while a firm at the top one day can easily be out of business the next. The reason is that the tech sector is heavily reliant on user-driven trends and quickly upset by unanticipated innovations.
Yahoo’s problem is that it competes against Google and Bing as a search engine. Both Google and Microsoft have a diversified profile of products and services that allow them to dump cash into their projects without risk of systematic failure. Yahoo also competes against companies like AOL and traditional news media outlets as a content provider. In addition, Yahoo is competing against Google, Microsoft, and Apple, along with others, on the mobile app front as well as Google and Facebook when it comes to mobile ads. Yahoo’s problem is that it is does not have a brand beyond being the alternative to Google, the alternative to AOL, etc; whereas, Yahoo’s competitors are expanding away from their core product lines into the businesses Yahoo seeks to thrive on.
The point is that Yahoo is trying too hard to compete against rivals who are better at what they do and have a firm consumer base instead of producing things that address unmet needs as it originally did. In many respects, this same perpetual pursuit of “market share” is seen across the global economy where competition takes precedence over service. The global economy exists to serve the needs of the Peoples of the world. In theory, capitalist markets are supposed to distribute resources in such a way that they can be consumed in the most efficient means possible. In reality, the global economy is distributing the world’s resources by concentrating them into the hands of the most financially advantaged thanks to overwhelming levels of competition that crush small competitors looking to do things differently.
Like Mayer, the leaders of the world are only buying up innovation then repurposing it to reinvent the old. From small businesses and local governments to transinternational corporations and international governing bodies like the UN or EU, funding is “invested” into projects that try to replicate what has been successful in the past. When it comes to blunting economic collapse, stimulus, quantitative easing, tax cuts, derregulation, government spending, free trade, and bailouts seem to be the only options discussed. Given the continual stream of reoccurring economic crises across the globe, the world needs to move beyond stopgap measures that temporarily alleviate economic issues, yet continue to neglect deeply entrenched economic failures, to find solutions that actually help build the economies of the world and serve the unmet needs of people.
Read old posts