Last Updated Jul 3, 2008 3:30 PM EDT
Yahoo has picked up discussions with Time Warner Inc. over a combination, say people familiar with the situation. The renewed talks come after a lull following Microsoft's withdrawal in May of its $47.5 billion offer to buy Yahoo. Still, the talks aren't as serious as they were in April, when a combination valued Time Warner's AOL unit at about $10 billion. Yahoo's stock has since declined sharply.So what's going on? Is Yahoo hedging its bets? Trying to diversify its outlook? Is the company coming out of a funk and are we seeing the fruits of long-term strategic planning and effort?
Nothing so colorful. Yahoo is simply exhibiting a problem that is rampant in many high tech companies: Bad management. Because people are smart in some given area, they think they know everything and can outguess everyone. If you know anyone who has worked with many medical doctors, you'll learn that a large percentage of them are certain of their infallibility. The same is often true of lawyers.
But being smart and knowledgeable about one aspect of life or business doesn't mean your experience or way of thinking transfers cleanly into another. People have been running out of Yahoo faster than people land on Google's home page.
The steady stream of high-level departures includes three key executive vice-presidents: data guru Usama Fayyad, search and ad-technology chief Qi Lu, and Jeff Weiner, who headed most of Yahoo's consumer properties. Several departed executives concede they collectively failed to get Yahoo back on track, so some needed to go. A sweeping reorganization on June 26 also removed a layer of management. "There has been dissatisfaction from some of the executives who didn't fit," says Mark Morrissey, senior vice-president for global ad products. "But there are situations where you have to make hard decisions and get focused."Excrement not in evidence, Sherlock. And for a good reason -- these brilliant visionaries don't really understand management. They don't understand corporate strategy, true competitive positioning, and tactical execution. How do I know? Because of the results they're getting, or, rather, not getting. It's like taking a genius sculptor and putting him at the head of Apple because he came up with the physical design of the iPod.
Yet with so many people leaving, does Yahoo have enough of the right people--and can it attract enough new talent? The key problem: Although many employees respect [co-founder Jerry] Yang and Decker, others say they're starting to lose faith. Some are disappointed Yang didn't close the Microsoft buyout, which would have boosted the value of Yahoo's stock--and their options. Instead, Yahoo will let Google place search ads on a number of Yahoo pages, a deal some insiders believe undercuts Yahoo's own efforts. Others think President Susan Decker's reorganization is likely to yield little benefit. "There's a crisis of confidence," says one former executive.
There is no shame in that. Few technologists have been able to stay on top of a company and steer it into real success. Bill Gates comes to mind, or Amar Bose of Bose. Tech companies would never dream of having some MBA with a programming course or two under the belt take charge of a critical product's architecture, so why do people assume that being in top management is any less demanding? Quick, move Yahoo's C-suite and board to Manhattan and dress them in black -â€" I feel a gallery opening coming on.