What Should Yahoo Do?

Like a lot of you, I spent some time this past weekend reading Brad Garlinghouse’s “Peanut Butter Manisfesto” to fellow Yahoo executives… also reading all the reactions in and around the blogosphere. Not to make light of a serious situation, but I have to agree with Nick Denton when he dubs Garlinghouse as Silicon Valley’s own “Jerry Maguire”.

While Garlinghouse’s memo was full of common sense and practical suggestions, I didn’t feel that it addressed the root of the problem at Yahoo. In my view, Yahoo’s most significant dilemma is a high-level strategic one… where the question is: Do we need to, and want to, be the king of search? Put another way… is Yahoo in direct competition with Google? The world certainly perceives it as such.

To further analyze this strategic question, let’s zoom out even more. At its core, search is a content aggregation and distribution platform. So to some extent, if your goal is to be the king of search, it is synonymous with wanting to be the king of aggregation and distribution for all the world’s content (hence, Google’s mission statement). But I say “to some extent” because search may not prove to be the optimal platform for all media types. Clearly, search has proven its efficacy with text and documents, but it still has a long way to go when it comes to pictures, videos, and audio.

Given that, one must qualify the desire to be the leading content aggregation and distribution platform with the specific media type/area one wants to dominate. For instance, as video becomes the next wave of media type to conquer, it remains very unclear whether search is the best path to aggregation and distribution. In fact, if YouTube (and most other video-sharing sites) are leading indicators, one can conclude that community is a far more effective filter for precision and recall when it comes to non-text media types. Which would actually prove tremendously beneficial to Yahoo… and therein lies the opportunity (one that doesn’t go head-to-head against Google’s strongest assets).

If you strip away all the layers that make up Yahoo, what you’ll find is the Internet’s largest communications and community company. And being so represents a comparative advantage versus Google… in all the areas where communications and community matter most. The challenge is to turn that comparative advantage into a competitive advantage by developing the vision and strategies that hit Google where they are most vulnerable. Put simply, Yahoo needs to leverage its strengths in communications and community to become the dominant content aggregation and distribution platform for all non-text media.

Ironically, the senior executive in charge of communications and community at Yahoo is none other than Brad Garlinghouse. As such, he is the one who needs to be held accountable for making sure that his operating/business units provide the necessary resources for overall strategic execution. Perhaps that’s what he has been trying to do internally but ended up hitting a wall. Whatever the case may be, it is Garlinghouse’s domain that needs to be opened up and become accessible by all groups/divisions within Yahoo.

And I’m not trying to be a Monday-morning quarterback here… in fact, 14 months ago I wrote a piece about the strategic implications and significance of community, and how companies like Yahoo would increasingly gain their competitive edge from the consumers themselves (now that they are also producers and developers). As such, it’s critical to realize that the priorities of “marketing” have been inversed… whereas the primary function of marketing used to be to broadcast a product’s benefit to consumers, the priority of marketing now should be to be a proxy for consumer control, because it is the consumers who will lead your company to success. Just look at the recent successes of MySpace, YouTube, Facebook, etc. These companies let their users create their competitive advantages… the win did not come from central product planning. That said, I was wrong back then when I stated that Yahoo seems to be doing it right… they failed to execute.

Google injects every initiative it can with its core search DNA. Yahoo must do the same with its communications and community DNA. And on that front, my advice is to first dismantle the ill-conceived Yahoo Media Group and reorganize its interface to traditional media and Hollywood with its core social media assets. They made a very big and expensive mistake by bringing in a traditional broadcast TV executive to run this group… one that AOL seems destined to repeat with their recent executive shuffle. The rules of broadcast media are antithetical to the factors that drive social media, and the thing that I will agree with Brad on is that such insights and visions must be something that is intuitive and native for the leadership at the top.

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