Focusing on Focus – Saving the tech industry in the bad times.
It’s no secret to anyone that the economy is going downhill fast. In fact, it’s not as much of a downhill slope as it is a cliff. It’s common wisdom that everyone from the biggest companies to the smallest will start to feel the pinch. So how will many of the big tech/web companies out there survive in a climate that is hostile to startups, and possibly even more hostile to the big established companies?
Focus.
What do I mean by focus? Find out after the jump.
Simply, in hard economic times, one has to consolidate and focus with ruthless intensity on the one or two things that they do REALLY well, letting everything else fall to the wayside. Big companies tend to have a lot in the way of hobby projects that don’t do much other than to bleed money. Regardless of how cool a project might be, if it isn’t contributing to your core business, and it isn’t making you money, it HAS TO GO. If you want to survive, you have to stop the bleeding, gather yourself up for the winter, hunker down, and get into survival mode.
The biggest trap that a lot of bigger companies fall into, is that they have to be everything to everyone. Instead of focusing on a few major products, and doing them the best way they can, they have to take a hodgepodge of ideas from all over the web, redo them, and attach them to the main company in an effort to maintain importance. Unfortunately though, most of the time that companies attempt this, they end up tarnishing the thing they became well known for in the first place. Simply put, focusing on your major proficiency instead of going after everyone else. Do what you do well, and then put your energy into doing it even better than you did.
One of the best (or worst) examples of a lack of focus is Yahoo!. This is a company that is bleeding money into hundreds and hundreds of sites that have nothing to do with their core business or making money. As a result, the stock price has tanked, and it continues to tank. Without intervention from someone, the minute the economic situation gets any worse, Yahoo will be one of the first major web companies to go completely and utterly out of business, selling off it’s assets (like Flickr and Yahoo mail) off to the highest bidder.
So how does Yahoo! survive? At this point, I don’t know. Short of being bought by another company, things are looking increasingly bleak for one of the former heavyweights of the web. If they are to do it on their own, they definitely need some sort of serious restructuring. Today’s announcement on layoffs of around 1,000 employees is certainly a good start, but is certainly not a panacea for all of their problems.
The biggest problem Yahoo! faces, is that they don’t even have any focus as far as a business model goes. Yahoo! doesn’t know what it wants to be. Is it a search engine? Is it a portal? Is it a repository of sites that they’ve purchased? Is it a content developer? Is it NOT a content developer? I guarantee you that this is a question that even Jerry Yang can’t answer in a cohesive manner. There is no elevator pitch for yahoo, other than the fact that it’s a recognizable brand.
They have a serious case of what I like to call “Microsoft Syndrome”. They develop a billion things and throw them at the wall to see what sticks. Unfortunately for Yahoo!, they don’t have Microsoft’s near-unlimited caches of money to fund that syndrome.
That’s why it scares me to think about Microsoft BUYING Yahoo. It’s like putting crack addicts in a room together with enough money to fund a binge that will likely KILL both of them.
If Yahoo! wants to survive on it’s own terms, it needs to kill pretty much everything except the search, the portal, the mail, messenger, and Flickr. Then fire everyone who isn’t doing absolutely the BEST work, and consolidate down to one main facility. Once that’s done, funnel the increase in your cash on hand to improving the core competencies.
Do what you do well, and simply do it better than the competition.