Yahoo and its comeback

Yahoo is good at generating Content. In 90s it was a very good core competence to have but after the onset of social media (esp. blogs), generating content has become a commodity. Anyone can generate content…and thanks to Google and Twitter, this content can be searched/distributed by anyone across the globe. People do not have to go to big brands (like Yahoo) to find good content.

In this context, Yahoo’s core competence became irrelevant. It tried Search..then it tried Digg style ranking, and now a days it is trying to be social (with yahoo connect). My thoughts: For a company that is as big as Yahoo..these strategies will not be helpful. Remember…you can not beat them at their own games. What Yahoo needs to do is…play its own game and let people compete with it on its own turf. In business language: Develop a new core competence.

There is a general notion that “social/connection” is important. No doubt it is…but it is only as important as the content that is shared between the connections. So, in a view, “content” is more important than the “social”. Yahoo has a lot of content (its strength). What it needs to do is to find out a way so that the content can “connect” with the user. A lot of pattern learning, profile learning, and behavior analysis will be required for this. . To cite an example: Let us imagine a scenario where you go to the Yahoo site..and find stories breaking out (just like Twitter) that are very relevant to you. Will you not go to Yahoo again and again to see that? I will. And the best thing is that Yahoo has the resources to do that (another strength)

Yahoo, are you listening? I will love you for ever, if you are able to do that.




Core Competency and the buzz

Every successful company has a “core competency” that gives it the assets to be unique, strong, and ahead of the curve to beat the competition. Top managers know that “Core competencies can not be copied”. But still, sometimes the buzz around CEOs creates such a big pressure that they overlook the basic rules.

Social Media is the buzzword for the past several years. With Facebook taking the Silicon Valley by storm, a lot of people have started believing that every company should either have “Social” in their products or they are out of touch.


Core Competency: “Ability to connect users with each other in an informal way”


Core Competency: “Ability to distribute/broadcast content/information”


Core Competency: “Ability to find the meaning (context) of content/information”


Core Competency: “Ability to generate content/information”

All core competencies are good…but the business cycle makes importance of competencies go up and down with time. No matter what the business cycle is, the fundamental rule still holds: “Core competency can NOT be copied”. In layman’s terms: “You can not beat him in his own game”.

Let us see what these companies are doing now a days:

Facebook is pretty happy because the current buzz is “social”. They have to be careful because, with business cycle, the importance of their competency will change. Twitter also feels good, but somehow is being pulled into being “social”. Google is holding Search to its heart but is a bit disturbed by the “social” . I hope its not trying to copy Facebook’s core competency, else it will fail. Yahoo tried the “search”..and is now trying “social”..with no success.

So, what should the companies do?

Simple answer: Adhere to these 2 principles of Core Competencies:

1. Do not make a mistake and loose your own core competency. Remember, others can not beat you..but you can still loose (if you mess up).

2. Develop other (new) core competencies that are currently non-existent in the industry. Simply said: “Think beyond social”


Banks and M&A

As I stated in my last post, here are some thoughts from Reuters:

Why did banks advise Yahoo to not go down below $37? O well, simple answer: they did not. It was Yahoo’s decision not the bankers’ decision to not go below $37. If it was all for the investment banks, they would sell Yahoo for $20 per share. Afterall, they want their commission. Don’t they?

Microsoft cancelled bid for Yahoo: Why is it good news?

M&A is a tricky business and I am happy for Yahoo! as well as for Microsoft that this transaction did not go through.


1. Investment banks and consulting companies (almost) always overstate the synergies in the transaction. Its a simple reason: They get a large chunk of money in the form of transaction fees if the merger goes through.

2. Had the deal gone through, it would have been an uphill task for Yahoo & Microsoft to merge the work-cultures, maintain the Yahoo brand equity, and integrate the operations.

3. Consolidation in this space is not a good thing for the market. Yahoo and Microsoft both like to acquire small companies and this trend boosts the innovative landscape in the valley. Imagine what would have happened (for smaller companies’ acquisitions) if Yahoo would have ceased to exist and Microsoft would have spent a considerable chunk of its kitty on the acquisition.

Good luck to Yahoo and Microsoft. Yahoo! has to come back and execute on the “statement” that it deserves more valuation. I have no doubt in their ability but am not sure about what their strategic vision is. There should be an internal “cleansing” operation within Yahoo so that it can find its glory days once again!