Apr 6

Do you make emotional decisions?

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Do you make emotional decisions?

Anyone remember Yahoo!? What became of the company that was the most popular search engine in the world in the early 1990’s?

 A familiar start

In the early 1990’s Jerry Yang and David Filo were PhD candidates at Stanford University. At the time search engines were quite primitive and more like directory listings than the solutions we’d recognise today. So Yang and Filo created their own website to keep track of their personal interests on the internet.

As the popularity of their website grew, they decided to rename it and Yahoo! Was born.

This is a story that certainly resonates with some other well known technology providers who started on University campuses at around the same time – Facebook as an example.

Success grows

In late 1994, Yahoo! Had reached a million hits a day and Filo and Yang decided to see if they could turn it into a profitable company. They secured investment from Sequoia Capital in 1995 and went public in 1996.

Yahoo! Continued to enjoy success as the most popular search engine in the world and even expanded into communications, commerce and media. By the late 1990’s the company had 3,000 employees.

Now the trouble starts

By the end of the 1990’s Google had started to offer significant competition for Yahoo! By 2006 Googles revenues exceeded Yahoo!’s by 40%. In 2007 Google posted profits of $1 billion nearly 90% higher than Yahoo!’s.

Yahoo responded by firing their CEO and Yang took over the helm of the company he and Filo had founded. This was a difficult time for the business and as well as attracting the attention of the business press, the company was also attracting interest from potential purchasers.

One of these was Steve Ballmer who was CEO of Microsoft who offered $45 billion for the business. At the time Yahoo! Had a stock market value of $39 billion. Yang decided that the offer for the business was too low.

By 2016, the business had declined to the point that Yahoo! accepted an offer for their core Internet business of $4.83 billion from Verizon Communications. Yahoo! Yes – $4.83 billion for a core business that had been work circa $40 billion not that many years before. Yahoo! still exists as a brand and remains popular amongst internet users, however it is a long way from the pinnacle of search engines that it had been in previous decades.

A wise move?

In hindsight it is apparent that the offer from Microsoft represented a fair price. However an insider told the New York Post (February 2008) that “…the emotional part of Yang would rather do anything but sell to Microsoft”.

Emotions colour decisions

What we learn from this is that emotions can often colour decisions, especially in situations where we have made a significant personal investment. So we need to be very aware that in an emotionally charged decision, we are using logic and not raw emotion to guide our thinking.

Remember a time when you might have had to make an important business or personal decision. They can be overwhelming if they are complex and we frequently use emotion to decide what the most important elements of the decision are. However, as Yang’s example shows us, intense emotion can result in us making misguided or catastrophic decisions.

What might we do?

The challenge is to recognise significant personal investment and the likelihood that you might make an emotional decision that may not be in your best interests or those of your business or organisation, as a consequence. Actively consider where you are emotionally and explore if this is appropriate to the decision at hand. Whilst it may be a genuine feeling that something needs further exploration, is it supported by the logic of the situation? Ask yourself, what am I seeing and also what am I not seeing in the situation. Do I need to find out more information? If so, what and what actions will you take to find out?

You might also ask other people for advice. Their perspective might highlight any disconnect between your emotional thoughts and reality. Often people will identify issues that are in your ‘blind spot’.

In both these actions, perspective is key. It may not help make the decision, but I’ve never encountered a situation where better context didn’t help – provided you avoid analysis paralysis.

Also, when you do seek advice it is always worth bearing in mind an old Chinese proverb that I will paraphrase as:

“Never ask someone for advice on a journey that they have not made before”

CHINese proverb (sort of…!)

When we reflect on the state of the world at the moment, this is quite prescient commentary. Maybe that is another life lesson?

You can always speak to a coach – if you have this challenge, why not give us a call?

Acknowledgements: Gina Francesca – I first came across the full Yahoo! story and emotional decision making in her excellent book – Sidetracked…

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