Yet, there are some -- they call themselves "organizational ecologists" (and, I have to say, they weren't too popular with the MBAs in B-School) who say: no leader in today's large corporations make that much difference. Take anyone else of a minimum ability level and they would do just as good a job. The die is already cast for them, given the company's size, resources, capabilities, and market position. I can hear all the management consultants and recruiters out there shuddering at this notion. And I also believe it's ridiculous. More than belief, there's empirical evidence that the right leaders do matter and can confer significant financial and morale-improving benefits to their companies. By the same token, the wrong leaders can be a drag.
Yet, the ecologists raise an interesting question: If you put leader A in the CEO's chair at time 1, and if you put leader B in that same chair at time 1, what would be the difference in company strategy and performance at time 2? The question is really unanswerable -- yet, it makes for great conversation.
Which brings us to Terry Semel at Yahoo! There's a bit of a pile-on going on now in the wake of GoogTube. Google = fast-moving/innovative/smart; Yahoo! = slow-moving/pedestrian/dumb. Google pounces on an incredible strategic opportunity in buying YouTube. Yahoo can't get a deal done with Facebook and lets it drag on for months. The truth is rarely black and white; there's always more context than what gets printed. Yet, Terry Semel hasn't really helped himself with the Street or in the Valley. After Barron's touted them as ready to break-out of a holding pattern, they've proceeded to whiff on earnings, delay a major ad product, not do a deal with Facebook, MySpace, AOL, or YouTube, and forced their employees to take unpaid sick/vacation time this Christmas.
Who is Terry Semel?
Terry, 66 years old, was born in Brooklyn, NY. He joined Yahoo over 5 years ago, after 24 years as a studio hot-shot heading up Warner Brothers. His hiring was met with surprise and skepticism. Of course, when you hire an outsider, you want something different. The board wanted an anti-Koogle (as in Tim Koogle, Semel's predecessor -- a more Techie Valley guy who had overseen Yahoo's enormous bubble growth -- remember Broadcast.com and GeoCities -- and its post-bubble deflation). And the board got Hollywood: Semel keeps his main residence in LA, got lost the first time driving around the Valley, brought in Lloyd Braun from ABC, and sits on the boards of Revlon and Polo Ralph Lauren. In the early days of Semel's tenure, YHOO's stock dropped. The critics pounced and Semel's hiring was questioned. Then, the stock went up. The critics cheered and said Semel was quite adept in his adopted industry. Now, the critics are out again, as YHOO has remained depressed and they haven't pulled the trigger on some deals. Unfair? Sure. Intelligence does not directly correlate with stock price. But the bottom-line is that there are some things Terry can do differently which would greatly help the overall success of Yahoo.
So, has Terry Semel caused the turnaround of Yahoo in the last 5 years? Or would it have happened anyway, if you'd put any other competent insider (say Jeff Mallett) or outsider in the position? What is he responsible for versus what would any CEO have overseen given the company's resources/positioning/market dynamics which occurred over the last 5 years?
We'll never know what Jeff or anyone else would have done. But here are some practical suggestions on what Terry Semel should change Monday morning:
- Sell your house in Bel Air and move full-time to Atherton or some otherwise acceptable zip code near Yahoo HQ. I know you have a family and friends in LA, but it sends the wrong message.
- Mingle with the "rank-and-file". You don't have to play hacky-sack in parking lot, but a little "management by walking around" and lunching in the cafeteria would be welcomed.
- Tone down the Tom Cruise appearances at the Yahoo campus. Yahoo shouldn't be about the bling, but be about the "!" -- what made Yahoo unique in the first place. Now, to be fair, there are a lot of celeb drop-ins/drive-bys at the Googleplex. But, the point is (and it goes for Google or any other company) that this is not the red carpet. It's a business and it's about destroying the competiton.
- Suck up the sick days. It sends the wrong message to the team. I've never seen a company force use of vacation/sick days and see it work for them in the long-run.
- Expand the brand. Semel's not getting any credit these days for 2 phenomenal deals Yahoo made: Flickr and Del.icio.us. Keep it going. Is Facebook going to revolutionize the world or Yahoo? No. Will it be better than Yahoo 360? Yes. Should you be quick to move on others in the future. Unquestionably.
- State the vision and why Yahoo is unique. Is Yahoo the next multi-channel web platform? Sure looks like it. Why don't you sell it now to Wall Street and others before the Skype guys launch the Venice Project.
- Keep the "talent firewall" in place. GigaOM discussed Yahoo's attempts to keep its top talent ensconced at Yahoo. As mentioned earlier, the best way to do this is not by re-pricing options or giving more, but getting talent jazzed to stay (see here how to do so).
- Keep up the individual goals for the Yahoos. In a 2002 CNET article, David Mandelbrot, a Yahoo VP, said: "To have accountability, you have to have individual goals.... We didn't have that before." It begs the question of what Yahoo employees were discussing with their bosses at annual performance reviews prior to Semel's arrival. But this is certainly a good thing. Kudos for instituting this and keep it up.
Now might be the perfect time to buy YHOO, when expectations are exceedingly low. Can Terry turn it around? Yes, with a few successes, these current nay-sayers will disappear. However, without following some of these 8 suggestions above, Yahoo will continue to hamstring itself.
Disclosure: Author has no position in YHOO