Yahoo Leadership an Analysis of Research Paper

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54).

Indeed, the fact that the company's leadership team survived at all during its formative years speaks highly of the founder's vision and perseverance. In fact, Jerry Wang was originally rejected by a venture capital firm for suggesting to use what Hargrove (2001) indicates was "such a ridiculous name as Yahoo" (2001, p. 271). As Ashby and Miles (2002) also emphasize, countless up-and-comers at the time failed to make good on their plans for growing their businesses during the 1990s for a variety of reasons: "The decade departed in a rush of technology-driven euphoria that is not likely to be seen again for a long time; 21-year-olds are not likely to have another opportunity to raise millions of dollars on the strength of simplistic business plans favored simply because they contained the word 'Internet'" (p. xvii).

Despite these early problems with financing and credibility, the company's co-founder Wang and others believed that the time was ripe for their brand of online offerings and made a major management decision to allocate $4 million for a year's worth of media advertising, including television and radios spots, that helped fuel the company's early growth and ultimate success. Although hindsight might be 20-20, this was a lot of money for the upstart company and such an investment in promoting the company must be credited to the company's visionary leadership. According to Angel, "Hungry for more first-mover points, Yahoo plunked down some $4 million (small change compared to the $50-odd million it spends on advertising today) for a year's worth of TV and radio ads aimed at winning consumers' emotional allegiance.... Each of the quirky, entertaining ads closed with the now-famous 'Do you Yahoo! ' tag line and the signature yodel: Ya-hoo-oo-oo!," which are likely familiar to anyone who watched television or listened to the radio in the past decade or so (Angel, p. 55).

The company was also faced with some fierce competition from other Internet service providers, especially AOL, MSN and for a time, Terra Lycos, which by April 1999 had secured more than half of the available Internet users (Angel). In response, Yahoo's leadership team determined that the best way to differentiate its services from its competitors was by adding more and better services than what was available elsewhere. In this regard, Angel reports that, "Yahoo had to be nimble in order to regain its leadership by winning the majority of new Web users -- and keeping the ones it already had from straying to a competitor. The best way to do this at the time was to add the best new services -- thus, the steady stream of exploratory talks with upstarts and even competitors, like Excite" (pp. 150-151).

These initiatives managed to pull Yahoo out of its management and economic doldrums and helped it regain a leadership position in the industry. For example, by October 2001, Yahoo occupied by number three spot among Internet service providers, lagging behind only AOL-Time Warner (following its mega-merger, the largest of its kind up until this point in time) and Microsoft as shown in Table 2 and Figure 2 below.

Table 2.

Comparison of U.S. visitors to ISP providers: Month of October 2001.

Provider

Number of visits (in millions)

AOL Time Warner

Microsoft

Yahoo

Terra Lycos

X10.com

Vivendi-Universal eUniverse Network

Source: Dingle & Hughes, 2002, p. 76.

Figure 2. Comparison of U.S. visitors to ISP providers: Month of October 2001

Source: Based on tabular data in Dingle & Hughes, 2002, at p. 76.

The fact that some of these ISPs have gone the way of the wind and others are scarcely recognizable today is proof positive of the soundness of the management decisions made by the company's leadership team during this turbulent period in its history. From a strictly pragmatic perspective, then, the company's leadership did win that round and went on to form strategic partnerships with a wide range of vendors and telecommunications companies in ways that enhanced its services while also providing it with the clout it needed to stay the course while its competitors fell by the wayside. For example, Angel reports that, "Yahoo's next generation of deals were geared toward getting its expanding cadre of services in front of more new PC users. In early January 1999, Yahoo and Hewlett-Packard (HP) inked a deal for My Yahoo to be the start page on new HP Pavilion PCs. A week later, Yahoo and IBM announced a similar deal for new IBM Aptivas. Distribution deals with Toshiba and Micron followed" (p. 151). The company's leadership philosophy at this pointing time was to concentrate on growing its business through acquisitions and via cross-promotions with content providers (Angel).

As noted in the company overview above, today Yahoo offers both consumer and business services for a vast array of products and services and a growing number of users are turning to Yahoo first instead of trying to search for what they want elsewhere. From this perspective as well, the company's leadership has been highly successful and the company continues to enjoy earnings that, although currently flat, are projected to increase significantly in the future. Some pertinent highlights from the company's most recent Form 10-Q filing as well as previous filings that are reflective of the positive impact of the leadership at Yahoo are provided in Table 3 below.

Table 3.

Excerpts from Form 10-Q (Quarterly Report) and Form 10-K (Annual Report) SEC filings reflective of positive impact of Yahoo leadership.

Date of Filing

Summary/Key Findings

Comments

August 8, 2008 (Form 10-Q)

In the first half of 2007, the company repurchased approximately $1.0 billion of common stock and also entered into a $250 million structured share repurchase transaction. In the first half of 2008, the company also repurchased $79 million of common stock.

August 8, 2008 (Form 10-Q)

The growing audience of users makes Yahoo! Properties more attractive to advertisers and increases their spending on marketing services.

The growth in users on Yahoo! Properties and on the Internet overall reflects the increasing acceptance, importance, and dependence of users on the Internet. As a result, the company believes advertisers are shifting a greater percentage of their spending from traditional media to the Internet to reach this growing online audience.

May 8, 2008 (Form 10-Q)

During the three months ended March 31, 2008, the company implemented a strategic workforce realignment to more appropriately allocate resources to our key strategic initiatives.

May 8, 2008 (Form 10-Q)

The company's increased base of paying users grew across most of our Offerings. Their fee-based services include Internet broadband services, sports, music, games, personals, and premium mail offerings, as well as services for small businesses.

The company has also been working with its broadband Internet access partners to renew and extend their strategic relationships. During this process, the company is seeking to add new opportunities to improve on its historic strengths in portal, search, and mail.

February 27, 2008 (Form 10-K)

The company's revenues for the year ended December 31, 2007 increased 8% year over year to approximately $7.0 billion, with fee paying users up 17% year over year, and Page Views up 11% year over year.

February 27, 2008 (Form 10-K)

In the fourth quarter of 2006, the company launched a new search marketing system, referred to as Project Panama, and Yahoo has completed its migration plan for the company's active advertisers worldwide onto the new system. The new search marketing system, including the new ranking model which was launched in all of the company's major domestic and international markets in 2007, in addition to ongoing enhancements in which it is investing, enables Yahoo to provide a more relevant search experience to users, more valuable customer leads to advertisers, and additional opportunities to its Affiliate and distribution partners.

By providing a platform for users that brings together the company's search technology, content, and community while allowing for personalization and integration across devices, the company will become more essential to, increase its share of, and deepen the engagement of, its users with the company's products and services. This deeper engagement of new and existing users and the company's new search marketing system, coupled with the growth of the Internet as an advertising medium will enable Yahoo to further increase its revenues in the future.

February 27, 2008 (Form 10-K)

For the year ended December 31, 2007 as compared to 2006,-Page Views increased 11% and revenue per Page View increased 7%, and for the year ended December 31, 2006 as compared to 2005,-Page Views increased 15% and revenue per Page View increased 10%.

Sources: As indicated.

All of the foregoing positive leadership impacts, though, do not necessarily mean that Yahoo has been without its problems, the foremost among which is its cozy relationship with the Chinese government which is discussed further below.

Negative Leadership Impacts

While…

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