How the mighty fall... is Yahoo! a case in point?

Lucien Moons passed this interesting article to me “The failure of Yahoo’s Board” written by Maxwell Wessel at the HBS. In this article, Maxwell argues that the choice of the ousted CEO Bratz was wrong in the first place. Bratz was chosen based on her past successes as CEO of software firm Autodesk but, as Maxwell argues, this success was achieved in a completely different environment, and is hence no indication of whether she could have turned Yahoo! successful again.

Fair enough, I’d say. But on the other hand, it’s not a proof that they’d automatically do badly neither. And if ‘success’ is environment-specific , so should failure be as well?

Surely, there must be other forces at play. By coincidence, I just finished reading How The Mighty Fall: And Why Some Companies Never Give Inby Jim Collins (the author of Good to Great: and Built to Last: Successful Habits of Visionary Companies). Through Jim’s research on once-successful companies, he distills 5 stages in the failure of big companies:

In a much summarized version, the 5 stages sound like this:

• Think success is due to them (it rarely is)
• Hunger for (ever) more and bigger
• Discard negative news (denial)
• Gasp for ‘saviors’
• Fall into oblivion

No doubt Yahoo! was already in stage 4 when hiring Bratz, so the road to oblivion was already well paved –its acquisitions throughout 2002-2005 and its pathetic attempts to counter Gmail’s success, its successive rounds of layoffs would fit well in stage 2, for instance). Firing at all directions is seldom a good choice for companies in that falling path, according to Collins.

Nevertheless, there are ways out –as Xerox and (well, yes) Churchill have shown us: get back to the basics, focus on management discipline, etc. ‘Get your act together’, in short. Simple enough, but why is it so rare to see troubled companies act on it? It’s a wise enough lesson for today’s giants (Google, Apple, Facebook) to track early warnings of decline…

Well worth the read: