As heads roll at Yahoo! Inc. (YHOO), the only one that might stanch the bleeding sits firmly on Jerry Yang's neck. It's no mystery why.
Yahoo! is making the classic mistake of showing too much deference to its creator, a superb entrepreneur who, as his performance plainly shows, is no CEO. Yahoo!'s board of directors erred in allowing Yang to return as CEO in 2007, compounding the mistake board members made in 2001 of letting him dictate the hiring of his friend Terry Semel as chief executive. Yahoo! stagnated during Semel's six years at the helm and was lapped by Google Inc. (GOOG)
The rot at Yahoo! set in years ago, arguably in the company's formative years during the dot-com boom. Even then, Yahoo!'s boardroom was dysfunctional. A power struggle between former CEO Tim Koogle and former president Jeffrey Mallett contributed to strategic gridlock (both lost). Potential acquisitions came and went--Google, eBay Inc. (EBAY), YouTube Inc.--as Yang dithered.
Behind the management turnover at Yahoo! over the years and the current exodus of top execs lies Yang's passive-aggressive management style, which seems more dedicated to preserving--or at least is unable to disrupt--the status quo. For an Internet company, vision, instinct and charisma are the key qualities for a CEO, not stolidity.
Obviously a key question for Yahoo! is whether Yang will remain as leader or whether someone else, such as president Susan Decker, will be drafted into the slot. With confidence in Yang ebbing and Wall Street, analysts and the press turning against the company, his days appear numbered. If Yang truly believes Yahoo! has a future, as he argued in rebuffing Microsoft, he must already suspect that he can have no part in it.
