Discussion PaperStudent Name: Tao Huang Date: 15-09-18IntroductionAbout Yahoo Yahoo! Inc, as the most popular web portal by 1998 (BBC News 1998) , witnessed its stock price rocketing to the peak at $118.
75 a share on January 3, 2000. However, after the bust of the dot-com bubble, Yahoo!’s stock price slumped and kept trading at a low price.About Marissa MayerMarissa Mayer had a successful career with Google. The board of directors of Yahoo! unanimously agreed that her unparalleled track record in technology, design and product execution makes her the right leader for Yahoo! (Forbes 2012).
With her nomination as the new Yahoo! CEO in July 2012, the hope of Yahoo!’s turnaround rose.Mayer’s task was to transform Yahoo! culture and business performance and in turn bring Yahoo! back to its previous glory as one of the most successful and influential Internet and mobile companies.About this Discussion PaperThe purpose of this paper is to adopt the 3-stop Problem-Solving Approach to define the problems with the organization of Yahoo! (Stop 1), identify important causes of the problems(Stop2) and provide some recommendations to solve the problems identified(Stop3).Step 1: Define the Problem Outcomes at Organizational LevelFrom the financial perspective, the ultimate criterion for the success of Yahoo!, a public company listed on NASDAQ, is the market capitalization, or its share price. Looking at the facade of it, the stock price of Yahoo! (ticker: YHOO) nearly doubled one year after Mayer’s arrival as the new CEO, which seemed to be a great success. However, in addition to the investors’ prospects on Mayer’s plan to turn around Yahoo! considering her success with Google, Yahoo!’s 24% stake in the promising Chinese company Alibaba Group Holding that was then expected to go public soon also drew the interest of the investors and thus drove the stock price high (Ray 2013, p.11). At the same time, the revenues of the company in 2013 were flat with a decline in ad revenue which is the most important operational income for Yahoo!.
In this sense, whether the surge in the stock price can be sustainable remains a question.To achieve long-term success, setting a clear vision is of utmost importance for a company so that mid-term and short-term missions can be clarified for the company and all functions and departments can share the vision and work together towards the same goal. However, Yahoo!’s is reported to have been constantly changing their statement of vision (Ray 2018).
Due to this lack of focused and cohesive vision, Yahoo! had a history of scattering its investments in various fields without substantial payoffs. Mayer’s audaciously killed old products, brought new ones and acquired companies in line with her plan in the attempt to grasp the opportunity brought by the coming mobile era. However, it did not touch the core of the problem as Yahoo! still lacked a clearly stated vision that should be centered by the Yahoo! people.Outcomes at Group/Team LevelThe success of a company is the result of the joint efforts from different functions and operational/management teams. In Yahoo!, it has long been difficult to get cross-functional teams to work smoothly with each other, and meetings usually turn into quarrels (Garlinghouse 2006). Mayer came with a hope of changing the disunity within Yahoo! through a series of team building actions. Mayer changed the composition of the management team by removing business-only executives and adding tech- and product-savvy employees, banned telecommuting and promoted communications and transparency all in the aim of helping improve the productivity of Yahoo! (Kinicki ; Fugate 2016, p.515).
Although some improvements at team level are observed as new products are being launched and new acquisitions pulled off, some of her decisions, e.g. the ban on telecommuting, turned out to be controversial and has the potential to lower employee satisfaction and in turn negatively affect the employees’ job performance.Outcomes at Individual LevelBefore Mayer’s take-over, the Yahoo Employee Satisfaction indicated low morale and a lack of confidence in the leadership among its employees (Musil 2011) . Mayer, as the former VP in Google, was expected to bring to Yahoo! the Google-like organizational culture, Clan Culture, which focuses on the employees and value flexibility. Googley Q;A tool at Friday FYI was introduced by Mayer to increase employee engagement, which positively affects job satisfaction. In addition, Mayer purposefully leveraged media exposure of her image with positive emotions and her legendary career in Google to send positive messages to her employees, boosting their confidence in the leadership.
These actions delivered good results as Yahoo! reclaimed its position as an employer of choice and restored its engineers’ optimism on the company’s outlook(Kinicki ; Fugate 2016, p.515). Although the decision on banning telecommuting raised dissatisfaction among the employees, part of it was partially offset by expanding parental leave benefits(Eha 2013).
The elevation in the employees’ morale is prominent, yet no productivity improvement was achieved.Problems FoundMajor problems that require to tackle still exists after the bold actions taken by Mayer as follows:1. stagnant financial performance due to lack of innovation and productivity,2. lack of a unanimous statement of vision for the company,3. internal frictions within team members or within cross-functional teams,4. failing to convert improved employee morale into high productivity.Within the above problems, the lack of unanimous and stable organizational vision is the most important one as the organizational vision provides common purposes for all organization members, the motivation for changes to implement and cohesion within the organization. Organizational vision is a perfect state that the company keeps trying to and can never be reached (Muniz, Lathan Hockin & Williams 2011, p.
42). A good organizational vision, if well communicated, understood and implemented by the members can lead to a revolutionary change that is exactly what the struggling Yahoo! needs.Step 2: Identify CausesPerson FactorsThe pessimism about Yahoo!’s outlook has been plaguing the company long before the arrival of Marissa Mayer. Even after Mayer’s efforts in targeting the one level of organizational culture—observable artifacts, e.g. using legends and stories of herself to encourage the employees and build positive mindset in Yahoo!, skeptical comments from employees can still be found on the Internet. Such negative comments are a form of counterproductive work behavior that has a strong negative relationship with job satisfaction and in turn, negatively affect job satisfaction.
Environmental CharacteristicsSince the bust of the dot-com bubble, Google, the search engine giant, has become the dominant power in the Internet service industry, outplaying Yahoo! in the core business of advertising. With the advantage of abundant research and development funding, Google focused its efforts on launching a series of successful products, especially Android and secured its advantage in the mobile era (Ulanoff 2012) . The competitive landscape is no longer favorable to Yahoo! as 20 years ago. In addition to keeping trailing behind its competitors, Yahoo! has long been known to sway between its identities as a media company or a tech company (Rey and Learmonth 2012, p.0001) .
Thus, without a clear vision, Yahoo! failed to supply any exciting product that suits the trend of the mobile era, keeping lagging behind its competitors.Individual LevelWith the intention of boosting collaboration and innovation of the employees, Mayer terminated the telecommuting policy in Yahoo! (Koster 2012, p.8). Although this decision only affects a small portion of the workforce in Yahoo!, the non-negotiable nature of the order has provoked many. This apparently contradicts the clan culture Mayer tried to bring to Yahoo!.
Those who enjoy the flexible working environment and value trust would percept the indicated distrust from the management behind this decision (Hankel 2013, p.14) and generate cognitive dissonance faced with such arbitrary corporate decision. On the other hand, Yahoo!’s competitors in the Silicon Valley also responded to this decision that they offer their employees the ability to work from home (Swisher 2013) . In this sense, they might draw those well-performing and flexibility-seeking employees from Yahoo!.Although the morale with Yahoo! was cheered up by Mayer, employee satisfaction does not equal job performance. All the wooing employees efforts only ended up building up numbers on the overhead cost account.
There seems to lack a practical and effective performance management process.Group/Team LevelThe lethargic and inefficient atmosphere permeated Yahoo! as a result of poor group/team dynamics. By removing business only executives, Mayer was trying to mitigate loafing within the teams of Yahoo!. However, the accountability/reward system needs a further transformation to build effective teams.Organizational LevelOne of Mayer’s major tasks in reviving Yahoo! is to reestablish the organizational culture. On the one hand, Mayer promoted the engineering culture by adding tech-and product-savvy employees, but on the other hand, her tough decision on changing the telecommuting policy showed not only an inconsistency with her effort in creating a clan culture but also a contradiction with the industry trend. Moreover, there seems to be constantly changing statements of vision for Yahoo! (Ray 2011).
As major drivers of culture, Mayer’s behavior and the lack of a coherent vision both had a negative influence in building desired organizational culture.Step 3: RecommendationsAbout Telecommuting, Productivity and InnovationWhile Butler, Aasheim ; Williams (2007, p.101) reported telecommuting increases productivity sustainably over time, concerns were raised that innovation is reduced with telecommuting (2013), which can be used as the justification for Mayer’s decision of banning telecommuting.
However, according to Tata Consultancy Service, clarity of purpose, creation of a vision, definition of roles and responsibilities within the team and building an atmosphere of trust are the four steps needed to overcome the possible cost of innovation with telecommuting. Thus, A combination of this 4-step solution and the setting of incentives for employees volunteering in coming to office is suggested to change the lethargy and staid culture in Yahoo!.Statement of Vision and Aligned CulturePeters (1993, p.14) points out vision is the very essence of leadership . A good leader should be able to develop a statement of vision that can make the best of the resources available(e.g. great legacy in the tech and media industry and experienced engineers and scientists in the industry) for the organization, leverage the trend of the times(e.
g. the rising of artificial intelligence) and states a focused, ambitious yet realistic goal(e.g. transform the lifestyle with AI) that inspires everyone in the organization to work towards it. Developing a good statement of vision is only the very first step. To convey the statement of vision well to the organization takes a long and slow process so that a culture aligned with the vision can be built. Recommended actions specifically for this case to create such culture change are:1.
Formal statements made by leaders on social media or mass media2. Posters and slogans embedded in the working space3. Training programs on the vision and strategic plan be created and learned by employees4. Organizational structure flattened and simplified with smaller team size5. Organizational procedures simplified to mitigate bureaucracy and facilitate innovation6. Updating the incentive/promotion criteria to encourage more innovation (Kinicki & Fugate 2016, p.495).
Team BuildingThere are three fundamental elements to increase the return on investment for team building (Kinicki & Fugate 2016, p.273) , so that team performance can be substantially elevated without waste of resource and efforts on bringing up the employee morale and satisfaction. In this specific case, for example, when stimulating team innovation is the ultimate goal, the three elements for such team building activities to be effective are1.
Clear objectives. If innovation can be stimulated with more brainstorming meetings, to set a specific and reasonable weekly number of brainstorming meetings for targeted teams will be essential.2. Validation. The link between innovation stimulation and the number of brainstorming activities shall be validated by psychological theory.3.
Performance information. While according to Katzy and Turgut (2010), to quantitatively measure innovation is a difficult task, while Ackermann, Stephan & Penrose (2015, p.399-414) developed a methodology on measuring organizational innovativeness that can be used as the performance indicator. In this way, whether team building aiming at stimulating innovation is effective can be effectively measured.ConclusionBy analyzing Yahoo!’s status one year after Marissa Mayer took over as the new CEO, this discussion paper found the most important problem impeding Yahoo!’s revival is the lack of a consistent vision. Besides establishing a strong statement of vision, this paper suggests aligned organizational culture should be breed by courses of action such as team building and performance management led by the top management.