Marissa Mayer, still a rookie CEO.

Yahoo, Marissa Mayer and the Leadership Question

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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At the end of the day, all executives have to be honest with themselves about whether or not they're good leaders.

What are their weaknesses? What don't they understand? Do they trust and empower their deputies and teams? Do their teams trust them? Do they have good judgment? Do they have the right mix of skills and imagination to accomplish their goals and move their organizations forward?

So, I ask you, how many of these questions has Marissa Mayer asked herself since becoming Yahoo's chief executive officer a little over two years ago?

Mayer had never run a business before her arrival at Yahoo (and the company declined to comment on her tenure). She was an early member of Google's leadership team (Employee Number 20) and exercised a lot of influence over the look and feel of the company's monster search engine as well as other products. But she was eventually demoted at Google when the political winds went against her.

Mayer was a star student throughout her life and her faith in academic prowess is a common trait in Silicon Valley, where companies like Google stock the employee pool with elite grads. The New York Times once quoted Mayer as saying, "Good students are good at all things." That faith taken to its logical conclusion sounds tone deaf at best, especially in businesses such as sales, marketing and advertising, where EQ is as important as IQ.

Long features in Business Insider and Vanity Fair have famously portrayed her as something of a Vulcan-esque data queen who doesn't trust anything unless it's been A/B tested; a pedant who can lecture but who hates feedback; and a micromanager who at one point reportedly had more than two dozen direct reports at Yahoo and inserts herself into decision-making at every level.

This stuff matters because they're classic hallmarks of either overconfidence or inexperience (sometimes both) and Yahoo -- a sprawling Web giant that has its hands in many key parts of the Internet -- needs a strong, competent manager at the top of the company. It hasn't had anyone good at the helm in years. And as we've seen amid the tenures of Scott Thompson, Carol Bartz and Jerry Yang, there's no way that Yahoo's fortunes will improve without strong leadership.

The rookie qualities that have become part of the Mayer story are a reflection of some brew of inexperience, arrogance, insecurity and poor judgment. No company can grow big or move fast if the CEO has to control every widget that leaves the factory. Eventually, top talent will leave for companies where they're empowered. The place they're fleeing will, almost always, weaken.

Given the modest quarterly performance gains that Yahoo recently delivered, some investors believe that the stock could trade at $55 to $60 a share, up from the current price of $42. That gap, they say, is in part about skepticism around Mayer's ability to lead, due to the fact that she's an inexperienced leader who's behaved, well, like an inexperienced leader.

During Yahoo's earnings call with analysts on Tuesday, she came armed with a list of accomplishments. Better-than-expected numbers. A decent showing in mobile. More traffic. Revenue at Tumblr. She reiterated the company strategy -- a move away from webpages and banner ads to mobile apps and native ads -- and she emphasized the $7.7 billion in cash that she's returned to investors.

Each achievement was a pointed refutation of one of many criticisms that's dogged Mayer's tenure at Yahoo. The turnaround is a nonstarter. She doesn't have a strategy. Tumblr was a flop. She's a poor financial steward.

Yahoo's stock jumped 4.5 percent the day after the conference call. It was a vindication of sorts for an executive whose appetite for rolling out new apps and making showy acquisitions had drawn some skepticism, as my colleague Brad Stone has noted.

But Mayer, responding to critics of her acquisition strategy, said something strange during Tuesday's conference call:

We consider [acquisitions] carefully with management and our Board. In terms of process we have sophisticated business models, detailed integration plans and work extensively with the other company in preparation for the merger.

As my Bloomberg View colleague Matt Levine points out, if you have to reassure investors that you're doing the stuff that everyone is expected to do before, say, spending millions of dollars on an acquisition, then you might have to give "Good to Great" another read. And this particular rebuttal to her critics spoke directly to a worry that delivering better numbers alone can't allay -- the fear that Mayer isn't a good leader.

Leadership, and it's more stolid cousin management, can be fuzzy, malleable terms, but Corporate America adores them nonetheless.

That's because the history of Corporate America is littered with execs who don't know how to manage. The ones who have run great businesses, more often than not, also understood the big things they couldn't do themselves and the little things they could ignore. Most of them also built great teams.

Blackstone's founder, Steve Schwarzman, for example, was known to be a terrible manager who alternately belittled and terrified employees in his early years. So he eventually brought in a very empowered number two, Tony James, to run day-to-day operations and manage employees. Schwarzman's private equity firm has thrived as a result. Sandy Weil, on the other hand, famously felt threatened by other strong executives at Citigroup, a flaw he never fully addressed. As we now know, the weaker leaders who took over after he left ran the megabank into the ground.

No matter how many board members and how many management coaches work with Mayer, only she can answer the questions about what she does and doesn't know. Only she can bring in top executives, deputies and team leaders who can challenge her and offset her weaknesses.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Timothy L O'Brien at tobrien46@bloomberg.net