Yahoo’s Reorganization: Moving deck chairs on the Titanic?

I get worried when a person who grew up in a slower software world (e.g. Autodesk) gets to be CEO of a firm like Yahoo! which sits in the hyper fast moving world of search and social media.  Carol Bartz's blog, promises that the brand will "kick ass" again, but the real thing they need is some innovation. 

For the three months ending in September of 08, Yahoo spent about $323 million on development on a revenue base of $1,786 million - that's 18.1% compared to Google's $705 million on a base of $5,541 million in revenue for the same time period (or 12.7%).  I know there are economies of scale to R&D, but what is Yahoo! doing with all the money?  Heck, isn't Twitter the rightful extension of Yahoo IM, but they have done nothing to respond or partner with Twitter that I can tell, and they have done practically nothing innovative with all the social connections they have had for year on their Yahoo! Instant Message platform which has tens of millions of users.  They must know that the social wave is the next wave of value, but where are their innovations? 

Also, Yahoo! needs to learn to sell more efficiently.  Yahoo's at a 22.2% cost of sales while Google is at 9.1%. 

Ms. Bartz's blog talks about being close to customers and the only thing she says about innovation is: "Who wants innovation for innovation's sake if it doesn't make your life easier, more efficient, more productive?"  Well, I read that as corporate-speak that all innovations will need a short term payoff.  I'd to see the short term business case that the Google guys had when they decided to add the entire ocean to Google Earth. 

If you have not used Google Earth, it is simply mind-blowing.  It has an entire map of the planet that you "fly" around (and you can even use one of two flight simulators a Cessna-like prop plane or an F-16 -- do those folks have style or what).  Google Earth has a mind blowing set of information layers: traffic, weather, "time" where you can go back in time over the same spot; even the New York Times is geo-coded so you can look on the map and see what Times articles are about that location.  It is early, and some layers are just beginning to "fill in" but given how strong the map capabilities are, and how easy and fun to use, it will dominate.  They have also mapped Mars and our night sky - which I think would qualify as "innovation for innovation's sake" at Yahoo.  Also, as I blogged about before, the earth is an entire organizing paradigm for information of all types.  Geo-tagging of information is getting layered into everything from your iPhone to average digital cameras.  The Earth is the best natural index for such geo-coded information and we all can use it as an organizing framework - no matter if we are literate or not, old or young.  My question is, was the recent addition of Google Oceans to Google Earth about being close to customers, or were they simply "kicking ass", instead of talking about "kicking ass"?   

When Yahoo turned down the money from Microsoft - which would have been a lucrative cash-out to another sleepy company, they were making a bet that they could out innovate Google, and a host of new comers in a space which is moving so fast that insta-mega-brands like Twitter and YouTube are birthed in less than a year.  But I don't see Yahoo stepping up to it, and the leader's first blog was less than comforting.  Getting close to their customers is only a small part of the story; sometimes you just have to make some bets and lead!

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