Yahoo CEO has a plan, but does it make sense?

In early January, I started a column with this snarky take:

“New Yahoo CEO Scott Thompson is not a man with a plan.”

And later, I wrote:

“He needs to make clear he has a sense of urgency, which I did not detect. Yahoo’s various stakeholders are not going to sit on their hands waiting for a plan.”

On this much, it turns out I was wrong. Since taking the helm at the start of the year, Thompson has been a whirlwind of activity. He’s announced 2,000 layoffs. He unveiled a major reorganization today. And, of course, he launched a major patent lawsuit against Facebook.

So he has a plan. And he’s moving fast. Fine. But the real question reamains: Is there any reason to believe Thompson has a plan that will turn Yahoo around? If there is, I’m still not seeing it.

On two of his tree major initiatives, layoffs and reorg, we’ve seen those cards played by past CEOs. They’re moves designed to buy time. The patent lawsuit is new, and seems to be Thompson’s own kind of crazy. But at best, even if Yahoo is in the right (which seems doubtful), such lawsuits take years, maybe even a decade, before all is said and done. If I were to bet, Thompson probably won’t even be around when such litigation reaches its end game.

This leaves us looking at today’s re-organization for some clues of a plan. The company is being re-built around three areas: “Media, Connections, and Commerce.” On the latter, Thompson wants to beef up the focus on commerce which he sees as a major opportunity. The connections part, it seems he wants to make Yahoo more social. And media, particularly news, continues to be a relative strength for Yahoo.

Makes sense. But what is harder to see, from here, is what kind of identity this creates for Yahoo. This big question — What is Yahoo? — still seems unanswered. To connect with consumers, and thus advertisers, the company has long needed to articulate a clear answer, and so far, I’m still not hearing one. The memo sent to employees today certainly points to a lot of strengths Y ahoo has (big audience, tools for personalization, lots of user data).

But it still feels like a list of parts. I still don’t quite see how they all fit together into something else, something grander.

It’s like talking about a car by saying it has an engine, and a carburetor, and a steering wheel, and a transmission, and so on. Yes, but it’s really a car that provides a distinct transportation experience. When you put all of Yahoo’s pieces together, it’s still hard to see what the core experience is.

To connect with people, to make them feel excitement and passion and create higher engagement, articulating that experience is essential. If Thompson can do that, I think growth and the business will follow.

If not, well, expect shareholders to try to sell Yahoo for its parts.

 

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