CASE

The company might well have been the "poster child" for the new-economy firm. Begun in 1994, Yahoo! is a clever service for searching the World Wide Web. By 1999, it had become one of the best known brand names on the Internet and was used by 185 million people worldwide. The company's market value had rocketed to an eye-popping $134 billion. The implosion of dot.com stocks and the subsequent economic recession hit Yahoo! hard. By the spring of 2001, the stock was down 92 percent from its peak and advertising sales were plunging. The company still had a valuable brand name, easy-to-use and high-quality services, and a record of profitability. Yet the company's most critical problem was now exposed for everyone to see: Yahoo! was too insulated and void of functional conflict. Yahoo! suffered from having managers and staff who were too comfortable with each other. It is a tone that had been directly set at the top by the company's CEO, Tim Koogle. Yahoo!'s corporate mentality was one of nonconfrontation. This kept new ideas from percolating upward and held dissent to a minimum. It began with the company's inbred boardmade up of a small group of insiders and friends of insiders. There was no one on the board with the courage or perspective to challenge company practices. This intense closeness by insiders also made it hard for the company to attract or retain experienced managers. Many left when they were unable to penetrate the company's inner sanctum. Yahoo!'s top European and Asian executives and many middle managers also left, amid complaints that the top team would not delegate authority. The company is "very insular," says a former executive. "They see the world through the Yahoo! lens." This insularity also carries over into an arrogant attitude of "we know better than anyone else." Over the years, its Yahoo!-way-or the-highway approach stifled new ideas and frustrated talented people who were outside the power core. Yahoo! took the first step toward changing its conflict-free climate in March 2001 when it announced it would launch a search for a new chief executive to replace Koogle.

Questions

1. Was the conflict (or lack of it) functional or dysfunctional? Why?

2. What were the values of Yahoo and Koogle in regards to conflict?

3. Would Yahoo have been a place you would want to have worked under those circumstances? Why?

4. What could have been done at Yahoo so that Koogle would not have had to go?

5. What conflicts have you been involved with at work and what were the causes?

6. What could you have done to resolve task conflicts you have experienced?

7. What could you have done to resolve relationship conflict you have experienced?

Please answer the questions according to case......