Nowhere is the impact of creative destruction more apparent than on the internet. We can be sure that the growth of the internet will continue to spawn new innovations challenging the survivability of current competitors. The process of “creative destruction” in which current businesses give way to new businesses with new ways of doing things will continue to change the competitive landscape for years to come. Moreover, the pace of creative destruction is accelerating due to the quickening pace of technological change. The inescapable conclusion is that factors contributing to a firm’s competitive advantage today may be irrelevant tomorrow causing firms once dominant in their chosen markets to fall by the wayside. This is the story of one such firm, Yahoo, a former internet darling that failed to keep pace with the changing realities of the marketplace.

The internet is currently dominated by three behemoths: Amazon.com, Facebook, and Google.

Each has satisfied a large and growing user need in cyberspace. Amazon.com has become the online retailer of choice in a space whose growth is fueled by the ongoing shift from brick and mortar to online retailing. Facebook dominates the exploding social media space by giving people the power to share whatever they want, with whomever they want, and whenever they want. Finally, internet search is controlled largely by Google’s juggernaut search engine as the demand for more timely and relevant information escalates. Notably, all three firms have rapidly made the shift from offering primarily desktop computer access to their websites to enabling mobile communication to make purchasing, socializing, and searching an anywhere, anytime event. At more than 90%, Facebook and Google make the bulk of their revenue from advertising in news feeds and mobile ads. Amazon.

com generates the majority of its revenue from fees from its partners who sell products through the firm’s websites and from its own branded products and services.16 It is in the shadow of these three powerhouses that Yahoo has struggled to find its place on the internet. Largely locked out of selling products and services on the internet because of its diminutive size, the firm derived the bulk of its revenue and profits from advertising. But with online users flocking to Facebook, Google, and Amazon.com to satisfy their needs, Yahoo became less attractive for advertisers....

Discussion Questions:

1. How would you describe the Yahoo corporate culture prior to Marissa Mayer becoming CEO?
How might this have slowed her ability to transform the company?
2. How did the culture change after Mayer’s appointment as CEO in 2012? Be specific.
3. Do you believe the expectations for Mayer were excessive when she became CEO in 2012?
What would you have done differently if you were the CEO of Yahoo?
4. What corporate governance issues does Yahoo face? How do these issues impact Yahoo’s strategy?
5. Discuss how Yahoo’s “legacy” investments in Alibaba and Yahoo Japan constrained its ability to revitalize its core operating businesses. Be specific.
6. Discuss how the Yahoo brand represented both an asset and a potential liability for the firm in implementing new strategies. Be specific.