Wednesday, August 20, 2014

Yahoo: Efficiency and Possibility

About a year and a half ago, Marissa Mayer was going through the public hazing that accompanied her start at Yahoo and her decision to curtail telecommuting to bring more Yahoo staff under the company roof.  The critics cited, among other things, the impact on fellow working mothers who would not have the option of building an onsite nursery at their own expense.  Others went so far as to argue about the expenses that would be incurred by providing onsite space to all of those employees who had been offsite under telecommuting arrangements.  This bean-counting argument goes through the math on the cost per square foot or unit of productivity per worker that Yahoo would be saddled with by the decision to bring everyone back together rather than dispersed to their respective homes or neighbourhood cafes.

Going by the measure of Yahoo's share price, the progress that has occurred since she joined the company has continued with the share price as of today standing at $37.50, a significant leap from the withering $15 it stood at when she joined.  The advantages of everyone working in proximity to one another is the possibilities that are generated from having people together to accelerate projects and contribute to the types of innovation that can occur when people are working together closely and continuously rather than more disparately.  The company is still facing challenges that need to be addressed but the decision to cultivate or encourage innovation by bringing people together rather than looking to cut costs and strive for apparent improvements to efficiency by cutting costs and consequently contracting the possibilities that are available to the organization.

The alternative to ensuring innovation may be best demonstrated by the cost-cutting decisions that Philips made in the mid to late 1990's that had long-term consequences on Philips' profitability and their ability to compete as well as they would have liked with the Research and Development team reduced in by 37% and less robust than it needed to meet their requirements to renew growth and support the technological development they were pinning their hopes to.

The innovation option may not be the most popular one, but a longer term view that ensures that the organization retains its assets and mission or be is far healthier and motivating than the demoralizing retreat that cuts and layoffs may often signal.

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