The Curious Case of Yahoo’s (Missing) Identity

A lot has been written about the ‘prolonged demise’ of Yahoo. In short, the internet company has suffered a tumultuous and tiring 22-year identity crisis. This was perhaps most famously crystalized in the leaked “Peanut Butter Manifesto,”an internal memo from 2006 that criticized the company for spreading itself too thin.

“If you’re everything, you’re kind of nothing. The sad reality…is [Yahoo] never solved its core identity crisis.”

– Brad Garlinghouse, former Yahoo executive, author of the “Peanut Butter Manifesto

Most recently, spurred by the proposed Verizon acquisition, the WSJ likened the company to ‘a classic case study in defining a business whose many chief executives struggled to answer: What is Yahoo?’

An important question for sure, but, we would argue, not the most important.

The real question that Yahoo executives should have been trying to answer from the beginning was not “What is Yahoo?,” but rather “Why does Yahoo exist?”.

Yahoo’s downfall was the result of a lack of a clear, consistent and compelling purpose.

Companies driven by purpose outperform the market by a huge margin. This according to a ten-year growth study of more than 50,000 brands around the world, as chronicled in Jim Stengel’s breakout book, Grow. The study found that the 50 highest-performing businesses were the ones driven by brand ideals. Collectively, the “Stengel 50” grew three times faster than their competitors. His explanation? This fundamental truth: people don’t buy what you do, they buy why you do it.

In the case of Yahoo, the company was set up to fail from the beginning; not because it lost its way, but because it never actually defined its way – its underlying purpose – to begin with.

They aren’t alone.

This is an affliction facing many companies, especially those in the rapidly changing world of technology. The common problem in these situations is that the company is too focused on the products and solutions it offers, or the category it falls into, which holds it back from talking (or even thinking) about the higher purpose for why it exists – its vision and the ultimate impact it wants to have on those it serves.

IBM’s “Smarter Planet” is one of our favorite (well-documented) examples of a purpose-driven brand. “Let’s Build a Smarter Planet” is a big idea, an agenda, a call to action. It paints an inspiring vision for the future that both internal and external stakeholders can get behind. Most importantly, while it provides a unique selling platform, it moves IBM way way past the products and services that it actually sells. Though the company has since moved on to ‘Cognitive,’ it still remains a benchmark in the B2B space.

For Yahoo, it seems the ‘survival fight’  as an independent company is over. The AOL-Yahoo merger that almost happened two years ago will likely come to fruition (last year, Verizon acquired AOL), empowering Verizon “to create better, more valuable ads.” At least, that’s the goal. As the traditional telephone and internet landscape becomes increasingly commodified, we can’t help but notice that many companies seem very focused on their what…

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