Emergent Business Networks

Carol Bartz And The Yahoo Turnaround Story: Is This Like Lou Gerstner And IBM? July 15, 2010

Yahoo does not get a lot of respect these days in the tech blogosphere, at least if you assume that the blogosphere is represented by Mike Arrington.  It is possible that conventional wisdom is wrong. It is possible that we are seeing the early, messy signs of a turnaround. If so, it is a lot like the epic turnaround of IBM in the early 1990s by Lou Gerstner as told in his bestseller – Who Says Elephants Can’t Dance?

IBM had even less respect in 1993 when Gerstner took over – totally blew the PC opportunity, slow-moving bureaucrats etc. So Gerstner got a lot of flak when he dissed the idea that IBM needed a vision saying something like “vision is the last thing IBM needs”. In his own words “fixing IBM was all about execution”. Specifically that meant fixing the culture to a) get more urgency and b) get totally focused on client needs.

Yahoo clearly needed a lot of old-fashioned management discipline. It is hard to tell from the outside, but based on Carol Bartz’s track record and a few news reports, it looks like that is happening.  Two years ago it was obvious that this was needed and that Jerry Yang would have to go (as I wrote here on RWW).

Gerstner was not saying that a vision or defining mission was unnecessary, just that it was not top priority. The same is true for Yahoo. They need a defining strategy. I am going to copy what I wrote on RWW two years ago, as I think that is still correct:

“The second part (disrupting current leaders with a new proposition for developers) should not be unveiled until there is something substantive. Yahoo has an opportunity to take a leaf out of Amazon’s AWS book, but go a lot further. Yahoo can open up all their search, content, communication and community services to developers via well-defined interfaces. If they do this really radically, Yahoo could lead the next wave of the “programmable web” or the “web operating system”. This has to be radical. More “too little, too late” won’t work. Radical means:

1 Simple pricing. This is where Amazon did well. A start-up can understand how to build their costs into a plan.
2 Cost plus pricing. This is again where Amazon did it right. They look at it like a retail “I buy infrastructure at $x and sell it at $x plus y%”. Nothing wrong with that model at scale.
3 Loosely coupled. You can use just the services you want. But you end up using lots of services as it is simply easier to integrate than something else and the price is right.

Yahoo has lots more to offer than Amazon. Nor do Yahoo need to worry about cannibalizing their core e-commerce business (which does constrain what Amazon is willing to offer).

This developer offering has some risks. Theoretically, any start-up can compete with Yahoo’s existing cash cows, using Yahoo’s own assets. In practice a) start-ups will tend to focus on new markets and b) start-ups can compete with Yahoo anyway, with or without their help.

Yahoo can score four ways with a really open suite of services for developers:

1. They make money immediately from fees for the services.

2. They empower start-ups to compete with Google and Facebook.

3. They become exciting again, getting talent back on board.

4. They get a steady flow of acquisitions with zero integration cost.

Yahoo has occasionally done things that excite developers, such as Delicious, Pipes and SearchMonkey. They need to take that to a much higher level and offer everything they have via interfaces and promote that like crazy. That is how Microsoft won the PC era. With the right leader, Yahoo could still do this in the Web era.”

Messaging clarity to win Mindshare: SAVE (Simple, Aha, Visual, Execution) July 7, 2010

Note: I wrote this 10 years ago and remembered it when facing a similar issue today.

Software market leadership starts with mindshare. Winning the mindshare battle requires intense clarity about your message. If you can distill your message into a single word or phrase that defines your market, you have a big competitive advantage.

Of course it is not that easy. Thousands of marketing professionals get paid millions of dollars every day to come up with cringe-inducing phrases and tag lines that last as long as snowballs in hell. What makes it so hard is that messaging clarity has to be based on a very deep understanding of the dynamics of your industry and the position of your company within that industry. If your message does not seem real, it does not stand a chance. In fact it has to seem so real and obvious that when people hear it they assume they have heard it before.

History Lesson – Information Bus

However that final touch of clarity that is enshrined in a single phrase or word, can make all the difference. I learnt this the hard way in the early days of the market for real-time application integration middleware. In case you are thinking 2001, let me set your clock back about a decade to 1991. This was when technology such as Publish & Subscribe, real time messaging bus and Enterprise Application Integration was being adopted on a large scale in the first vertical niche market – financial trading rooms on Wall Street.

My company, Aregon, was an early innovator with solutions dating back to 1984 that were the first implementations in the industry. We were the technical pioneers. However when customers started to ask us whether we had an “Information Bus”, a term invented by a rival company, things started to go wrong.

How To Respond When A Rival Has Mindshare?

None of our responses was very effective.

For example, “no, that is not what we call our technology, let me explain” left people cold. Customers saw the Information Bus concept and automatically “got it”. They did not want to waste time understanding some new concept. Coming up with an alternative message is doomed unless you catch things very early and you are very, very good coming up with an alternative.

Replying that “yes, we have an Information Bus and ours is better for the following reasons” will get you sales but will automatically relegate you to the position of follower. You can build a good business as the number two or three vendor in the market and, if you time it right, you can sell out at the right time for a reasonable valuation. That is what happened to Aregon. However that is a far cry from being the market leader in a large market, which was what happened to Teknekron, which was later renamed TIBCO (as in the The Information Bus Company) and became the leader in the booming enterprise integration market.

Why Was Information Bus Messaging So Powerful?

The payoff from getting it right is huge. However there are very, very few examples of great successes. Why was Information Bus so powerful as a message?

• It was simple and easy to understand for the target audience. This does not mean “dumbing down” for everybody. This was a smart, sophisticated audience and they could count on a certain level of base knowledge.
• It was based on a genuine “aha moment”. As related by Vivek Ranadive, TIBCO’s founder, the moment came when he asked a software expert to describe why so many software projects failed. As a hardware engineer Vivek, could not understand why well-tested components could not simply plug into the system Bus. Why not do the same with software?
• TIBCO created a clear and simple diagram of the Information Bus that anybody could draw on a napkin and understand in a heartbeat.
• The company made sure that everybody stayed on message. Execution consistency is critical to success. The phrase enabled a dialogue that went into increasing levels of details as the company engaged in customer dialogues. Yet at every level they could come back to the simple Information Bus concept and diagram.

Think SAVE – Simple, Aha, Visual, Execution.

Don’t Force It

Hiring external consultants to create your messaging is usually a mistake. At best external consultants can act as facilitators, drawing out what is already known but hidden. Great messages cannot be forced out; they have to emerge. You cannot set a firm deadline and it is better to have no message than a bad one.