After Losing Their Mojo, Tech Firms Rarely Recover

Reputation is deeply dependent on performance and public perception. But different cultures bring differing expectations to bear.

Americans have traditionally been supportive of the second chance. The Comeback Kid is a cliche for a reason.

But there has always been a subversive element to tech. Superficial elements like informal clothes, foosball tables in the office, the Friday afternoon beer blasts provide the face. But the underlying reality is deadly serious: it is about overturning the traditional power structure using brains and technology. Revenge of the nerds in real life. The hacker ethos is about taking from the rich and giving to... the more deserving new rich. And, at some level, it about the new being better than the old.

So, the public manifestation is that the new, new thing is always better than the recycled old thing. Because, the thinking seems to go, if the old had any sustainable value it would not have so easily succumbed to the assault of the new.

The betting is that Marissa Mayer will do the best she can but that The Fates have already written the ending to this one. She'll earn some leadership chops which will position her for a second CEO shot at what will hopefully be a subsequent gig with more upside. And Yahoo will become a cautionary tale. A footnote to the ongoing narrative of genius and progress and those proverbial gales of creative destruction. JL

The Economist reports:

After losing their mojo, formerly high-flying tech firms rarely recover it—with a few notable exceptions, such as Apple after Steve Jobs’s second coming as boss in 1997. Often, ailing companies lurch from one leader and rescue plan to another while their fortunes fade. That has been the fate so far of Yahoo!, which is now on to its fifth chief executive, including two interim ones, in three years.
SHORTLY after news broke on July 16th of her appointment as the new chief executive of Yahoo!, Marissa Mayer revealed that she is expecting her first child later this year. Long-suffering shareholders are hoping that Ms Mayer, who left a senior job at Google to take up her new role, will produce a new Yahoo! as well. But that will not be easy.

The size of the challenge facing Ms Mayer was highlighted by the company’s second-quarter results, published on July 17th. Overall revenue, at $1.2 billion, was stuck at last year’s level and net income fell slightly, to $227m. The firm’s share of online-ad revenues in America has also plummeted, falling from 15.7% in 2009 to 9.5% in 2011, according to eMarketer, a research firm.

Can Ms Mayer stop the rot? Her fans in Silicon Valley claim that the 37-year-old has the talent to do so. She brings know-how from Google, where she was the 20th employee and was involved in many areas, from its search engine to gmail and Google Maps. She is also a software engineer by training, which should lend her credibility among Yahoo!’s geeks. Throw in that she is an über-networker whose schmoozing skills can charm ad clients, and she seems a good fit.

But not a perfect one. Although Ms Mayer ran a sizeable team at Google, she has never had to turn round an ailing corporate juggernaut with 700m users. Nor has she overseen a huge ad-sales operation and managed a complex international alliance like the one Yahoo! has with Alibaba, a Chinese e-commerce behemoth. This is in the process of being unwound, but still needs careful handling.

Small wonder, then, that Yahoo!-watchers were stunned by news of Ms Mayer’s recruitment. Many had expected Ross Levinsohn, the firm’s interim boss and global media head, to get the top job. “Yahoo!’s choice is perplexing,” says Brian Wieser of Pivotal Research Group. He thinks Ms Mayer will try hard to keep the talented Mr Levinsohn on board.

To have a hope of pulling off a Jobs-like turnaround, she will need to tackle three vital tasks fast. First, she must clarify what kind of company Yahoo! wants to be. Some of its former bosses, including Mr Levinsohn, emphasised its plentiful content in areas such as sports and finance. Others trumpeted its whizz-bang technology. This flip-flopping has confused customers and employees.

Second, Ms Mayer must show how Yahoo! can conquer promising new areas such as the mobile web. This could involve, say, snapping up firms such as Foursquare, which offer services based on a person’s location, an area that Ms Mayer knows well from her time at Google.

The third task is to restore battered morale while simultaneously boosting productivity. At Google Ms Mayer had a reputation for prickliness, but also for nurturing talent and helping staff to cope with heavy workloads. Earlier this year she even gave several public talks about the risks of burnout, urging people to discover the “rhythm” that helps them work hard for long periods without losing their drive. Yahoo!’s employees will need to find their own rhythms fast.