Yahoo’s Pfizer Problem

What is Yahoo’s Pfizer problem? That may seem a bit of an odd question: Yahoo is, after all, a fallen titan of the Internet age. As companies go, Yahoo is barely old enough to drink. Pfizer, on the other hand, is, well, Pfizer: a 150 year old pharmaceutical giant quite possibly best known for giving the world Viagra. What is a “Pfizer problem” and what does it mean for Yahoo to have one? No, it has nothing to do with pharmaceuticals. Rather, it has everything to do with Hank McKinnell.

Hank McKinnell was the CEO of Pfizer from 2001-2006. This was, in retrospect, perhaps not Pfizer’s finest period: after five extremely disappointing years, Pfizer’s board forced McKinnell into retirement. This was quite the change from 2001 when they couldn’t stop shouting his praises. McKinnell, it seems, looked like a great leader in 2001. While looking like a leader may, in fact, be enough to make someone a leader, it isn’t enough to make them a good leader. That’s a bit more difficult.

Thus we come to Yahoo. From its lofty perch at the pinnacle of the Internet hierarchy in the late 1990s, Yahoo is now something of a has-been. Its search business eaten by Google, its marketplaces by eBay and Amazon.com, Yahoo is struggling. According to the NY Times article, “What Happened When Marissa Mayer Tried to be Steve Jobs,” Mayer, the current CEO, has so far failed to actually do more than make cosmetic changes. That’s not to say that she hasn’t managed to generate a great deal of sound and fury, but her actions have done little to actually turn the company around.

Like Hank McKinnell, Marissa Mayer looks like a great leader. To be clear, she’s brilliant and she was a fantastic engineer at Google. But being a CEO is not an engineering problem; it’s a people problem. A great leader does more than give lip-service to the concept that people are the company’s biggest asset; they live that ideal. Leaders build relationships, they form connections, and they act in ways that cause that web of relationships to spread throughout the company. Marissa Mayer, to much fanfare, eliminated Yahoo’s work-from-home policy, a decision which generated a great deal of smoke but only actually affected maybe 1% of the company. It was a distraction. However, since she also built her infant son a private nursery next to her office, it was a distraction that also served to sever, not build, relationships.

Exemplary leaders create commitment by enabling people to trust one another. Unfortunately, Yahoo adopted an employee rating process similar to Microsoft’s late and unlamented employee stacking method: team members who received high ratings got huge rewards, people at the bottom were fired. As the NY Times reported, top people at Yahoo did their best to never work together: it’s much easier to get a top rating when you surround yourself with weak players. The same thing happened at Microsoft. Furthermore, when the goal is to make sure someone else takes the fall, trust is hard to come by: at Microsoft, engineers sabotaged one another in a variety of subtle ways. Sometimes a leader gets lucky and manages to make an employee stacking system work for a time; that’s unfortunate, because then they often think it really is a good system, even after their luck runs out.

The leader is, rather obviously, the person at the top of the company hierarchy. That’s more than just a figure of speech: the CEO is in the position to see the furthest. The biggest difference between leaders and managers is scope: how far ahead can you look? Well, the CEO is the person whose job it is to look the furthest. Marissa Mayer likes to dive down into the depths of the code base: this may be a great activity for an engineer, but for the CEO of a multi-billion dollar company employing thousands of people? Details matter, and if you spend too much time on them, it’s easy to lose track of the big picture. However, a characteristic of human nature is that we like to do what we’re best at and when we aren’t sure what to do, we do the things we know how to do. In Marissa Mayer’s case, that appears to be focusing on code and data in the areas where she is most comfortable. She’s doing what she’s trained to do.

Hank McKinnell got booted out of the leadership role at Pfizer because he was doing immense damage and the reasons why he only looked like a leader were not particularly amenable to change. Marissa Mayer has a chance to actually become a great leader and make a difference… but only if she takes the time to learn the right skills to actually become a leader instead of merely looking like one.