On a radio program this morning about the possible Microsoft/Yahoo merger, CNET News.com's Michael Kanellos argued that one of Yahoo's problems has been its inability to kill off unsuccessful properties.
Citing Google as a counter-example, he discussed how Google has been able to pull out of less-than-successful businesses, such as its own social-networking tool and Google Video. (I would throw Froogle onto the list as well.)
To be fair to Yahoo, it recently yanked Yahoo photos in favor of Flickr, and just announced it is dropping its music service and transferring subscribers to Rhapsody.
But it's also fair to say that Yahoo has gone beyond being a "one-stop shop" (1990s portal thinking) to a company that neither employees nor customers really know what it's about. I would tend to agree with Kanellos that an unwillingness to draw boundaries around what's in and what's out has a good deal to do with Yahoo's problems. (Full disclosure: both Yahoo and Microsoft are clients of frog design, where I work, though I have no inside knowledge of the merger at all.)
In the book Code Name Ginger, which chronicled the development of the Segway Transporter, there was a great phrase--"drowning puppies"--that describes the mindset necessary when tackling innovative products and services.
The challenge is this: you'll have lots of great ideas, but you will only be able to expend finite resources to bring a small number of them to market. If you try to spread resources across them all, they will all be starved and unhealthy. So you have to prioritize and not fund some of them. This is very difficult because, just like puppies, these ideas bounce around joyfully and are so shiny and perfect and full of future growth and promise. But the sad fact is you have to drown some of your puppies. It's a harsh phrase, but accurate.
Yahoo has continued adding property on property, service on service, but has not done enough puppy drowning to allow for shifting away from less successful areas. Regardless of whether the merger happens, let's hope Yahoo can regain some of its focus both for employees and customers.