When Giants Fall, Who is to Blame?

By Tracy MacDonald
Aug 2016

In the history of the successes and failures of businesses, size does not matter. The behemoths have just as much risk of failure as any medium to smaller sized company and success is not measured just by profits, nor is it just by growth. Success is agility, retention, and sometimes the result of reinvention which is driven by either marketplace, technology, or competition. But what happens when companies try to reverse stagnant or negative growth, and fail? Did they miss the opportunity to reinvent themselves? Did they try to reinvent, but in the wrong marketplace? Was the leadership looking to make changes only through external sources and not through internal adjustments? Regardless of the why, when giants fall, everyone notices.  The most recent behemoth to fall, or in business-speak suffer acquisition, is Yahoo Inc. Once a part of the triad of internet giants, it’s now an acquisition for Verizon.

In the beginning, the internet realm was ruled by three giants: Microsoft, AOL, and Yahoo. They have now either fallen to lesser entities or have shifted their resources towards other markets. Yahoo stands out the most because it had more than a few opportunities to save itself from its fall out. For example, following the fall out of AOL (also purchased by Verizon), and the arrival and overtaking of the mobile market by Google Inc., Yahoo  could have seen the possible future. Now, it is the last remaining giant of the old era, barely hanging to its ever thinning share of the industry.  Business analysts, market analysts, brokers will each have a different primary factor of Yahoo’s failure, but it takes a keen observer to realize that the leadership may be the primary cause.




An analyst can point out the fact that Yahoo’s revenue was shrinking because of Google’s overtake and that Yahoo did too little too late to challenge it.  Google had an understanding of the shifting market, the fall of desktop and the rise of portables; smartphones and tablets. Google introduced its own mobile operating system, a mobile application market, and various well designed and user friendly apps that came standard with their own phone or other android devices. To increase the hold on the market, Google purchased already established mobile applications and application publishing firms with exceptional developers.

AOL on the other hand was like a ship lost at sea. No way to find home, no true course, and was hoping that the wind would take it to the nearest patch of land. That land never showed up, and its crew died because the nearest Coast Guard could not rescue them. They had reached a pinnacle and had failed to adapt to the changing market very much like the Blockbuster story.

Microsoft has a bit of a different story. After a failed attempt at the mobile market, they shifted their interests completely and now focus mostly on their newly released operating system, Windows 10. To capture the broadest portion of the market share, Microsoft offered the upgrade for free–something previously unheard of in the world of Windows operating systems. Many believe that it was a move to counter Google’s free market of cloud based software with much of the same functionality. Windows 10, although in its infancy, will have a major role in Microsoft’s plan to offer a platform for both console and PC gamers. That said, Microsoft is not completely in the safe zone yet, but it is making the right moves to maintain its value and market share. Complete reinvention, no, but a dramatic change from previous operations in an effort to remain competitive.

All these giants can contribute their failure or success to their leadership. In Yahoo’s case, CEO Marissa Mayer had made all the wrong moves. She indicated that she had a clear understanding of the evolving mobile market and that she had a solid plan to bring Yahoo to the new era, but the manner that she went about doing so did not have the desired effect. While we don’t pretend to know all of the intricacies of Ms. Mayer’s actions, it’s worth asking if she ever looked at Yahoo as it was and asked the questions, “What makes us different? What keeps people here? How do we take what we have, develop our strengths, close off the weaknesses and build for the future trends?” Leaders ask these questions and build success by hiring those who do have the answers to those questions, or are at the very least looking to find out. There were areas where Yahoo would not have been able to beat Google with the mobile platform, but with a core group of customers, how could Yahoo have kept them?

In her defense, Mayer has had a good track record and is considered to be a good leader. What most companies fail to realize is that hiring a great leader is only successful when the leader is a good fit for the company. Mayer had been successful at Google and experience consistent growth.. Yahoo had peaked years before and was in need of a rebuilding. Perhaps portions of Mayer’s successes could have crossed over, but what about areas where she lacked experience? The best leaders will recognize their own strengths and weaknesses and hire top people to fill in those experiential gaps, therefore benefitting the company as a whole.  Leadership is about partnership with those who can help and using the available tools for guidance in an effort to reinvent to build success. Sometimes, the best available tools are in our fellow leaders who have a knowledge base just a bit different from our own.

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