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Much has been written about the “prolonged demise” of Yahoo, which is still puttering along. The internet company has suffered a tumultuous and tiring identity crisis since its founding in 1994. 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.”
At one point, after the company announced its third new logo in 10 years, The Verge quipped, “Yahoo redesigns its logo to remind you that Yahoo exists.”
An important question for sure, but—we would argue—not the most important. The real question that Yahoo executives should have been trying to communicate from the beginning was not, “Does Yahoo Exist?,” but rather, “Why does Yahoo exist?”
Yahoo’s downfall was the result of a lack of a clear, consistent and compelling purpose.
The Power of a Defined Corporate Purpose
Companies driven by purpose outperform the market by a huge margin. This according to a 10-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. Stengel’s 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.
It isn’t alone.
Lack of purpose 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: Enduringly Purpose-driven
IBM’s “Smarter Planet” was one of our favorite (well-documented) examples of a purpose-driven brand. It painted an inspiring vision for the future that both internal and external stakeholders could get behind. Most importantly, while it provided a unique selling platform, it moved IBM way past the products and services that it actually sells.
When IBM moved on from Smarter Planet, its brand campaign “Put Smart to Work” marked a smart evolution. It harnessed the same legacy purpose but further operationalized it, aligning with buyers’ evolved expectations that technology could be both intelligent and executable.
Crucially, it succeeded where Yahoo often failed—by issuing a big idea, a “Why” that served as a call to action.
Want to discuss clarifying your company’s purpose? Let’s talk.
Originally published December 16, 2019.
