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Innovation at Yahoo – Where Is the Gemba?

Posted on March 5, 2013 by David

Yahoo Headquarters (Courtesy Wikipedia)

This past week the management news was headlined by Yahoo CEO Marissa Mayer’s decision to ban the firm’s staff from working remotely. Annoyed Yahoo employees quickly leaked the clumsily worded memo from the head of HR. It read in part:

“To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.”

Some pundits leapt upon what they perceived as the irony of an internet giant requiring its people to get together physically. Human resource experts cited evidence that people are more productive when they work from home (although they are less innovative). Others pointed out that Mayer herself came from Google, where it is well understood that face-to-face interaction is critical to innovation. Yet more commentators suggested that the action was an old-fashioned command-and-control move to ensure that everyone was working and not either surfing the net or playing Angry Birds.

Where is the Gemba?

In “leanspeak”, the language of the Toyota Production System (TPS), gemba is the “real” place or “real” thing, the place and time where value is created. Gemba can be thought of the place of maximum potential, the place in space and time where, to use Clayton Christensen’s terminology, one gets the best insight into the “job-to-be-done”. For Toyota this could be on the factory floor, at a supplier, or with a customer, observing how the customer uses and experiences the product. The company tries to position as many of its people as possible in the many different places where they can create value. It then gives them the measurement tools, feedback devices and autonomy to improve the value-creating process.

TPS is mostly about improving an existing value stream, whereas Yahoo’s problem is all about finding new value streams (or perhaps any value stream!). A venerable model for doing this comes from 3M, who have long thought of their organization as an ecosystem and have organized themselves to capitalize on random interactions. Their policy of giving employees 15% of their time to pursue their own interests has been adopted by many other firms. Gore & Associates, the makers of Gore-tex call it “dabble time” and attribute a string of innovations to the policy. Google upped this discretionary time to 20% and also claims that it led to multiple innovations. It has been suggested that this “noncommissioned time” works because it offer employees autonomy and encourages risk-taking while reducing the deadly effects of extrinsic rewards on creativity.

Hunters Not Herders

Finding the time is only one of the components of innovation. Opportunities for radical innovation can occur anywhere and their location is not known in advance – they have to be “hunted” for. In two of my recent blogs I have written about hunting dynamics and innovation. Assuming it has some time, this is what Yahoo now needs – a hunting dynamic with its phases of fission, as the “scouts” spread out over the opportunity space, followed by fusion as they gather with their community around discoveries to understand and exploit them. One would think that for Yahoo a lot of the innovation gemba lie outside the current business in the farther reaches of the Yahoo network and diaspora. Yahoo will have to identify its “hunters” and send them forth to find and link with many different technological communities and contact the key gatekeepers that have access to them. They will have to “think” and act like bees searching for a new home.

Marissa Mayer, CEO of Yahoo

All of this is very far from an organizational diktat issued by HR announcing a new rule on attendance at the office. If it was about innovation it would have to be a “pull” move, an invitation that appealed to “hunters” not a “push” policy designed for “herders”. If it was really central to innovation, one would have expected the change to come in the form of a video call from the CEO herself. She would have used images and stories, so that people could see and feel the passion with which she held her views. It would have been followed by a Q&A session that would have connected the initiative with Yahoo’s mission. People would have been asked, perhaps via an online Open Space process, to sign up with projects – hunting parties – each with its own compelling narrative. And so on.

Instead, at least to this outsider, a memo from HR sounds like a typical top-down management ploy to shake up the organization and shake out a few people. It does not bode well for the future of innovation at Yahoo hence for the company itself.