Call me Ishmael - Beware trying to bloody a Blue Ocean

"...to the last I grapple with thee; from hell's heart I stab at thee; for hate's sake I spit my last breath at thee."
- Captain Ahab, Moby Dick. Herman Melville, 1851.

Using the Blue Ocean metaphor it's impossible to not imagine a certain chief executive of a business in Redmond in the role of Captain Ahab, chasing down legendary Moby Dick in a dangerous effort to bloody the blue ocean. Ahab says he's given up the hunt, but everybody knows Ahab can't quit as long as Moby is alive.

Skipper Steve, his ship unable to navigate the stormy waters of the web, wants nothing more than to harpoon one of the whales that caused this mess; that battered both him personally and the vessel that served him well all these years. As long as Moby's cousins Google and Yahoo! -- the latter admittedly one lame beast after a harpoon took out half its brain -- swim the wild blue ocean our modern Ahab will be called to hunt them.

With more money than most countries Ahab is certain to eventually harpoon our modern-day Moby, but at what cost to himself, his ship, and his crew only history will tell. In any event, I'm symbolically composing this post on my Dell Ubuntu machine. It's not a dual-boot. The only thing worse than having a competitor build a blue-ocean in your sector is polluting your formerly Blue Ocean to the point that its new red hue is unmistakable.

"Give not thyself up, then, to fire, lest it invert thee, deaden thee; as for the time it did me. There is a wisdom that is woe; but there is a woe that is madness." - Moby Dick.

Blue Ocean Strategy: Microsoft & Yahoo -- Build a better search

Writing again about MS and Yahoo. Yahoo came in with essentially flat earnings. Depending upon how one parses the numbers Google's profitability grew 30-40 percent during the same quarter. Google is clearly a Blue Ocean Strategy company (click here for a BOS analysis of Google: "Bloogle: Making Portals Irrelevant"). Based on earnings MS CEO Steve Ballmer says he's ready to walk away from the deal. He's probably just bluffing but walking away would be the best move.

It isn't that MS doesn't need the reach of a world-class search engine: it's just that Yahoo doesn't fit that model. There are some great Yahoo properties -- Flickr, Groups, Messenger -- but the centerpiece of Yahoo is search and Yahoo's search stinks. The problem with Yahoo search is that it's adulterated. Yahoo liberally co-mingles paid search results with organic results: doing so violates the integrity and credibility of the results. Many consumers outright understand this; others just sense that something is "wrong" or "weird" with the results (I've heard both words used).

Yahoo searchers feel like they've walked onto a used-car lot: they put their guard up and many don't return. Yahoo used to have a strategic advantage by human-indexed search results but that fell apart when they switched to paid inclusion; pay Yahoo a few hundred dollars and you'll become relevant, even if you're a third-rate hack in your field.

For those not in the know paid inclusion is like paying for a job interview: the job you stand to receive is junk. Similarly, Yahoo's search results are worthless. Since virtually everybody knows this at some level only the most clueless are left searching on Yahoo, which dilutes the value of the search results to advertisers. These diluted results -- stemming from a lack of credibility -- push Yahoo to do more to monetize results, which typically means more dumb tricks like co-mingled results, which even further dilutes credibility. The resulting death spiral they're in is well documented and will be studied in business and journalism text books for many years.

Microsoft: if you want to build a better search then build a better search. Look at the tiers of non-customers and apply each through the six path framework to find the key factors of a great search engine. Google's clobbered you and Yahoo but you two set them up perfectly: you, Microsoft, focused too much on technology innovation and Yahoo self-destructed. The only way to fight a BOS offering is with another BOS offering. Google redefined the rules once; you can and should do the same back to them.

Without going into a full-scale analysis I'd think the key factors of a Google beating search engine would include Price, Ease of use, Scope of items returned (not just websites), Credibility of results, Comprehensiveness, Relevance of search results, Honesty and integrity of search provider, Objective and subjective descriptions of results, and Reward to business owners for playing fairly. There's probably a few more, and some of these probably need refinement. But buried in there, I'll bet, is the recipe for a genuine Google killer. It won't be cheap to build, but it'll cost a lot less than buying Yahoo and trying to reform its culture, brand, and technology.

Yahoo & Tipping Point Leadership

No matter what one's thoughts on the mideast former Israeli diplomat Abba Eban once famously said "Arabs never miss an opportunity to miss an opportunity." I won't get into whether I agree or disagree, except to say that his insight can be focused on plenty of business organizations. One of my favorites lately comes from perennial red ocean punching bag Yahoo.

I'm quoting from a news.com article here: Google deal gets 'big eye roll' from Yahoo employees.

One source inside Yahoo said it's not uncommon for executives to hold planning meetings for follow-up planning meetings, Dilbert-style. That bureaucracy could cause more Yahoo talent to leave for opportunities elsewhere.

"There's a lot of pent-up creativity," the source said. "Morale is in the sh**ter."

Yahoo has shown the opposite of leadership: they're mired in the red ocean, flaying around and being eaten alive. Recent releases showed their share of the search market continues to shrivel.

Yahoo destroyed their search engine with pay-to-play, but has some other great products like Flickr, Messenger, Groups, and Answers. They had good market timing. They used to have some really good people. But the documentation is overwhelming that this company is falling apart, in a death spiral of red ocean competition that's steadily increasing in strength and velocity like one the hurricanes that occasionally wash up on the shores of my state.

Yahoo has the raw stuff needed to reform itself into a strong Blue Ocean company, but lacks the willpower needed to complete the task. During the first dot-com bust I saw lots of companies fall apart; many were poorly managed, but others just had lousy timing. Yahoo put in place things like pay-for-play in their search engine that they never quite recovered from, and still haven't removed. While it hurts on an individual basis -- the people personally affected -- Yahoo deserves the fate that awaits.