YAHOO or YOO-HOO? Discover what this firm's "effective" communications failed to consider…

From the desk of Miles Everson: Welcome to today’s edition of “Return Driven Strategy (RDS)!” I hope you’re having a great day so far. For those of you who don’t know yet, RDS is a pyramid-shaped framework with 11 tenets and 3 foundations. When applied properly, these principles help businesses achieve their organizational objectives. Today, let's delve deeper into the 11th tenet of RDS (Communicate Holistically) through the lens of a particular aspect of it. Read on below to better understand the crucial role effective communication plays in a business’ success (or failure).

YAHOO or YOO-HOO? Discover what this firm's "effective" communications failed to consider… What comes to your mind when you hear the word, “Yahoo”?  A positive verbal expression?  An old communications platform on the Internet?  An online store?  In the earlier days of Yahoo, it had achieved remarkable status as one of the most viewed websites on the Internet. As an online portal, its reach into the eyes and minds of surfers was phenomenal.  … but there was a problem.  Back then, it was unclear as to how Yahoo would generate revenue outside of advertising.  What’s more?  Investors were wondering and asking for more information on how the firm would be able to monetize the tremendous attention it was receiving.  That’s when Yahoo started doing something else…  The Rise and Fall of Yahoo To “monetize” the attention it was receiving, Yahoo built successful partnerships with small and large businesses that wanted to sell products over the web. This was eventually called the Yahoo Store.  Here, businesses eager to sell their wares through Yahoo’s online network and search engine paid a monthly fee and shared revenue per item sold. The strategy was working very well, with businesses of all kinds and sizes. Then, in April 2001, on an investor relations conference call, Yahoo informed investors of how promising its revenues could be. It specifically called out one area of growth: Yahoo online stores that allowed vendors to sell “adult goods and novelties.” Just a brief context: For years, the Internet had shown itself to be incredibly profitable in this industry, allowing customer discretion in purchase. Yahoo was simply stating that it had tapped into such a high-growth, high-profit market. Then the fallout came…  Public backlash over Yahoo being seen as a purveyor of adult items was so severe that the company was forced to shut down many of these businesses’ online presence on the Yahoo Store.  Yahoo had to go far in appeasing the groups squaring off against the firm’s “unethical conduct.” The company even had to shut down online stores that had been selling products regularly in shopping malls, such as joke or novelty items.  In other words, far from simply red light-district wares, general revenue sources were being shut down on the platform. What can we learn here?  The investor relations call not only failed to induce investors to raise the perceived valuation of Yahoo, but also caused them to notice real reductions in cash flows, and undoubtedly negative valuation impact.  Earlier in Yahoo’s life cycle, such a communication resulted in far higher valuations. However, higher tenets of Professor Joel Litman and Dr. Mark L. Frigo’s “Return Driven Strategy” (RDS) remain umbrella tenets to all the activities that fall below them.  So, as Yahoo’s presence grew among the general public, so too did the ethical standards upon which it was held. No matter how good and clear the communication was, RDS’ Tenet 1 (Ethically Maximize Wealth) still governs. The Importance of Holistic Communication (RDS’ Tenet 11) in Relation to RDS’ Higher Tenets In the digital age, anything worth noticing will often be noticed. Professor Litman and Dr. Frigo say that regardless of how confidential, how private, or how well-encrypted, “leaks” occur in every organization, every day. Examples:  Personal, confidential emails have been forwarded to such a degree that people have been fired over comments made in private to others about personal exploits. Internal company memos have been published with regularity in newspapers, websites, and in court cases. Some of these have led to successful multibillion-dollar lawsuits. People have innocently hit “reply to all” about sensitive employee information. Detailed accounts of interactions and discussions have surfaced when “everyone agreed and signed into confidentiality.” Password-protected spreadsheets complete with salary, bonus, and promotion information of entire firms have been unlocked and widely distributed, sometimes months before people have even received their bonus or promotion. According to Professor Litman and Dr. Frigo, all the attorneys, Internet security consultants, and personal pledges in the world cannot solve the dilemma of “word getting out.”  This forms the foundation of one of the core elements of RDS’ Tenet 11: “Assume that everything you say or type will eventually be heard and read by everyone.” Besides, each RDS tenet falls under an overriding umbrella of the highest tenet, which is about ethically maximizing wealth.  According to Professor Litman and Dr. Frigo, ethics are defined by the communities in which a firm operates. When you look at this through Yahoo’s case…  At its peak, Yahoo had reached the level of impact on society also enjoyed by a few other firms, such as Walmart, Microsoft, and McDonald’s.  … but here’s the thing: For firms of their span and scope, society dictates a HIGHER standard of ethics than it does for smaller businesses.  If that’s not the case, at least the society is far more vocal and active about its standards with these super-size firms than with other smaller ones. Had Yahoo been a smaller player on the Internet, or had been involved more with business to business (B2B) offerings, it might not have received the backlash that it did from its conference call. That’s why Professor Litman and Dr. Frigo’s advice is this:  “Act in accordance with other tenets, particularly Tenet One, Ethically Maximize Wealth.” The bottom line?  With every communication, expect a potential impact from all of your business’ constituents, not simply the ones being spoken to, then communicate ACCORDINGLY. Remember: No communication can be made to one constituent of the firm without being available to another. Every form of communication needs to fall within the parameters of RDS’ higher tenets.  This is not always easy but it is possible.  We hope today’s topic enabled you to learn something new about how the world of business, marketing, and communication operates!  If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo.  Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm. Hope you found this week’s insights interesting and helpful. EXCITING NEWS AHEAD The world of work has shifted, and there’s no going back. The barriers to entry have never been lower for talented professionals to work independently, and today’s massive external workforce is hardly a pandemic-produced fad. 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