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'We
Can Deliver Customers on a Global Basis'
The
Internet is reshaping business and communications
around the globe. Now it's up to e-vangelists like
Yahoo!'s Heather Killen to build truly global internet
companies. Her mantra: no more 'international!'
by
Alex Markels
photographs by Catherine Ledner
from
FC issue 40, page 190
Read
more stories from this November 2000 issue
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A fresh batch of recruits just arrived at Yahoo! Inc.'s Santa
Clara, California. Heather Killen wastes no
time in starting the next stage of their Yahoo!-ification.
Gathering the recruits in a sunny conference room named for a
flavor of Ben & Jerry's ice cream, Killen, the company's
de facto globalization evangelist, wants to make sure that
each of those employees sees the world as others at Yahoo! do:
as an Internetopia of limitless marketing possibilities, a
world in which the sort of high-bandwidth/short-pathway
brainiacs that Yahoo! favors carry the company banner to the
ends of the earth. They globalize Yahoo!'s brand like
Coca-Cola's -- and yet they localize Yahoo!'s content in order
to draw would-be members into a universal database that
collects and categorizes every user on the planet into neatly
defined demographics.
"It's Audiences 'R' Us!" Killen tells the
recruits. "What do you want? Male, 18 to 24? Interested
in skiing? Carries a Visa card? Travels on business? You want
a direct-mail campaign that targets people who fit that
profile in a dozen different markets around the globe? Yeah,
we can do that."
The nodding newcomers seem to get the idea. But Killen, a
sprightly 42-year-old Australian with a sharp wit and a tongue
to match, takes nothing for granted. Dressed in a pin-striped
Italian suit, Paul Smith reading glasses, and stiletto-heeled
Gucci sandals that add 3 inches to her petite 5-foot-4-inch
frame, the company's senior VP of international operations
launches into her well-rehearsed stump speech on the
importance of being global.
"Don't think about 'international' as being part of
our business. It is our business!" she says in the
scolding tone of an Aussie schoolmarm. "It's not a
department. It's not a business unit. It's the whole business!
The full schmear!"
Killen then points to a whiteboard where the word "international"
has been listed among a series of bulleted phrases outlining
Yahoo!'s strategy for global expansion. "No more 'international'!"
she says sternly as she eyeballs the word on the board. She
then makes a high-pitched "Er! Er! Er!" sound as she
uses the base of her palm to erase the word entirely. "My
goal is to eradicate this word from our vocabulary. No more 'international'!"
Meet the new face of global business. From the day that she
signed on in 1996 as employee number 121 at Yahoo!, the former
Salomon Brothers investment banker and former Ziff-Davis
executive has been wrestling with the global dimensions of the
Internet economy. She has been loath to build the sort of
separate international fiefdoms that she's seen in other
companies -- dollhouse versions of parent organizations that
replicate every function and department as if they were
entirely discrete companies. Instead, she and Yahoo!'s other
top executives have tried to fashion a tightly integrated
organization that mimics the Web-ified world that Yahoo!
champions.
Killen has drawn a diagram on the board that shows a
Jupiter-like U.S. operation with a collection of international
moons circling it. Then she points to another picture, one
with a flat horizontal bar ( Yahoo!'s big corporate umbrella )
that supports all of the international operations lined up
beneath it. "This is supposed to be the Internet, right?"
she asks the group rhetorically. "Remember how it started?
It was supposed to be a centerless, self-healing network. And
that's what our organization should look like."
These are heady times for global-minded executives like
Killen. In the course of just a few years, Yahoo! has
transformed itself from a basic Internet directory into a
global-marketing powerhouse -- with more than 150 million
users worldwide and burgeoning operations in more than 20
countries. The result is perhaps the first global brand of the
Internet Age, a name that is fast becoming as ubiquitous as
Coca-Cola or McDonald's. To make sure that happens, Killen and
her compatriots have adopted what some have dubbed a "glocalization"
strategy. Their goal: to fashion a global marketing-and-
technology template while democratizing decision making. Yahoo!
offices worldwide could then adapt the model to local markets
but also could share their best ideas across the Yahoo!
network.
"This is the new model for global management,"
says Thomas L. Friedman, New York Times foreign-affairs
columnist, globalization guru, and author of The Lexus and
the Olive Tree ( Farrar, Straus & Giroux, 2000 ).
"In the Cold War era, the motto was 'The Buck Stops Here.'
But nowadays it's more like 'The Buck Starts Here.' Top
management has got to lay down a broad strategy and grease the
wheels -- otherwise, there will be chaos. But with the
physical distances you're dealing with and with the speed at
which you've got to get things done these days, if people down
the line aren't empowered to make and to execute important
decisions, you're in big trouble."
The
Ultimate Global Citizen
If the initial rise of the Internet as a business tool
helped to put the single-minded geeks in charge, the second
phase of its evolution, the globalization phase, plays to the
strengths of more-worldly executives like Heather Killen.
Emblematic of the urbane multiculturalists who now predominate
Yahoo!'s managerial top ranks, Killen is one of five top
officers born outside the United States. The daughter of
former Australian cabinet minister Sir James Killen, she moved
to France in 1980 to study language and communications theory
at the Universite de Paris III, then got an MBA at New York's
Columbia Business School. Add a few years in London and in
Paris with Ziff-Davis, when she started helping launch Yahoo!'s
European operations. Then add several more years at Yahoo!'s
Santa Clara headquarters, as well as a travel schedule that in
two months took her to Argentina, Australia, Brazil, England,
Germany, Japan, Korea, and Thailand -- and you've got the
makings of the quintessential global citizen.
Part manager, part saleswoman, part diplomat, Killen
switches roles as readily as she switches languages ( she's
fluent in English, French, and German ). She peppers her
speech with a colorful Valley-Girl-meets-the-Sorbonne mix of
colloquialisms and pithy expressions that colleagues have come
to call "Heatherisms." She employs them in even the
most formal situations, relentlessly pushing Yahoo!'s open,
more-is-better strategy for delivering content and for forging
partnerships, whether she is indoctrinating new recruits,
dining with Chinese dignitaries in Beijing, or convincing a
Brazilian media billionaire to enter a content partnership.
"She's our ambassador," says Chief Yahoo! Jerry
Yang, 33, the company cofounder who has tag teamed with Killen
on several world tours. "Being a female executive in a
global business can be very intimidating. But Heather is
fearless, and she's found the right mix of showing respect yet
not being a pushover."
That sense of diplomacy was in full evidence at a recent
meeting in Beijing where, typically, Killen was the only woman.
After negotiations with officials from China's ministry of
foreign trade, Yang and Killen were treated to a lavish "emperor's
banquet." A translator detailed the ingredients of each
dish as it arrived. But when the soup course came, a mumbled
exchange in Chinese ensued between Yang and the meal's host.
"It's okay," Yang finally said with a smile. "You
can tell her."
The host's face turned beet red. "The soup," he
explained apologetically, "is from sex organ of male ox."
Unfazed, Killen took a hearty spoonful, then lifted her
head and smiled. "I'm sure it will make us all very
powerful and prosperous," she said as everyone in the
group erupted in giggles of relief.
Bowing to local customs is one thing, but backing down from
Yahoo!'s global principles is another matter entirely. In one
recent case in France, Killen even went so far as to defend
the rights of U.S. Yahoo! members to be able to auction off
such items as Nazi paraphernalia. Because French law bans the
sale of such items, anti-Semitism watchdog groups recently
petitioned French courts to block access by French citizens to
Yahoo!'s U.S. auction site, where those items, illegal in
France, have been available for purchase. A decision is still
pending in the case.
Killen says that such a ban should not be allowed.
"It's not reasonable for one company to simultaneously
obey the laws of every country in the world," she says,
noting that Yahoo.com is governed by U.S. law, not French law.
"I'm sure that there are French sites that the U.S.
government might object to, or U.S. sites that the
Singaporeans might object to. But if we start holding every
site to the highest common standard of legality or
appropriateness, where does it end? There would be no
diversity of expression or culture, which is something that's
very important to this company."
Think
Globally, Act Glocally
Finding the sweet spot between the power of a global
presence and the flexiblity of local empowerment may be Yahoo!'s
toughest challenge. Dictate too strict a recipe for building
new international sites, and you prevent people on the ground
from adding the local flavor that's needed to win over users.
Give people too much latitude to do what they please, though,
and you not only risk diluting the brand, but you risk losing
the advantages that come with standard technology platforms
and marketing strategies. "We're always trying to balance
the Lexus and the olive tree," says Killen, referring to
Friedman's book, which uses the two symbols to represent the
dichotomy between all things global and local. "And we
have to do that in everything, from how we build the
organization to how we build our Web sites."
That becomes clear as you compare the home pages of Yahoo!'s
nearly two-dozen properties. Pull up the mother ship's site
along with, say, Yahoo! Japan's, and the differences ( aside
from language itself ) seem quite subtle at first. "There's
a certain je ne sais quoi about this one," Killen says as
she pulls up Yahoo! Japan on her computer. She then points to
a pink-tinted box containing links to all of the site's
shopping pages. ( The box is white on the U.S. site. )
"In the U.S., we wouldn't put this shopping box in pink
because that's not an appropriate color here. So Yahoo! Japan
is a wee bit different. But overall it still looks like Yahoo!"
The power of that policy becomes evident once you go deeper
into Yahoo!'s international sites. Although the 14 top-line
categories for the Web directories are the same across all of
its sites, subcategories begin to diverge both in name and in
content as cultural differences and interests become more
localized. For example, log on for a political chat at Yahoo!'s
UK & Ireland site, and you can choose to discuss such
topics as the Falkland Islands War or the Irish peace process.
Do the same on Yahoo! Argentina, and you can discuss the same
war, but it goes by an entirely different name. ( Despite
losing the war against England nearly two decades ago,
Argentines still defiantly call the South Atlantic islands
"Islas Malvinas." )
Getting such cultural cues correct doesn't just save
embarrassment, it prevents alienating the very customers you're
trying to woo. "You've got to get the local culture and
the language exactly right," says Don DePalma, 46, vice
president of corporate strategy at global Internet consultancy
Idiom Inc., who points to studies showing that doing so
dramatically increases a site's stickiness, as well as the
likelihood that users will buy something. "If you don't
appeal to people's cultural motivators -- ethnicity, language,
point of view, values -- they'll simply click elsewhere. And
if you inadvertently offend them, they'll do so even faster."
Indeed, global-marketing lore is replete with stories of
botched translations. DePalma cites the Chinese advertisement
for Pepsi that turned its "Come alive with the Pepsi
Generation" slogan into one reading "Pepsi brings
your ancestors back from the grave." He also mentions the
motto for Perdue Farms that changed "It takes a strong
man to make a tender chicken" into a Spanish version that
read "It takes an aroused man to make a chicken
affectionate."
Some minor faux pas can be avoided with the aid of
clever-technology software. For example, because Yahoo!'s
sites in Australia, New Zealand, and the UK and Ireland share
a directory database with Yahoo!'s U.S. site, the company's
software engineers created a "Britspell" script. The
program automatically grooms all pages seen by British-English
speakers, ensuring that words like "colour" are
spelled appropriately and that "football" always
refers to the game played with a round, black-and-white ball.
As a rule, however, Yahoo! largely avoids the use of
translated text. Instead, Web surfers and content producers at
each international site build their directories and content
partnerships from in-language sites and local media sources.
They resort to translation only for information that is common
to all Yahoo! sites, such as instructions for using email,
chatting, or bidding on an auction. "Content has got to
be local," Killen says, "and the only way to do that
is to hire people who know the culture and the language
intimately and to partner with local content and distribution
players."
Given Yahoo!'s predilection for open, nonexclusive content
relationships, that's not always easy. As a portal that
aggregates information, rather than one that creates it, Yahoo!
has long pursued a strategy of including as many sources as
possible. It has even gone so far as to offer links to other
portals when a Yahoo! search comes up empty. And while it may
feature some content providers more prominently than others (
such as Reuters, which was once a Yahoo! investor ), it
instructs its local producers to steer clear of exclusive
partnerships that would otherwise prevent those producers from
featuring content from competing sources.
Overall, the open-access policy serves Yahoo!'s users by
giving them nearly every information source available. But in
some international markets where a few companies control most
of the local news, that policy sometimes has the opposite
effect. Despite Yahoo!'s best efforts to strike up a
partnership with a Brazilian financial-news publisher, that
provider has balked at distributing its news via Yahoo!'s
Brazil-based Web site ( especially on a nonexclusive basis ).
That has proved frustrating to the people behind the portal's
efforts to create a robust financial-news offering. "Our
biggest challenge is dealing with old, old monopolies that
don't understand the openness of the Internet," says
Roberto Alonso, 49, vice president and managing director of
Yahoo! Latin America, who has had similar trouble getting the
region's big banks to sign deals. "They don't see the
value of distribution."
That has left top managers like Killen with the daunting
task of persuading some of the world's biggest monopolists to
all but change their worldviews. "I tell them that it's
not necessarily to their advantage to have exclusive
distribution relationships, that wider distribution ends up
being a cheap form of marketing, as well as a revenue driver,"
explains Killen. "It's a tough sell at first, but we
think that most players will eventually see that more
distribution is better."
For the short term, however, Yahoo!'s insistence on
nonexclusivity has given an upper hand to some of its toughest
competitors: local portals that have little to lose by
entering exclusive deals with companies that dominate their
markets. "There's a finite pool of local partners, and
all the portals are vying for the same resources," says
Victoria Bracewell-Short, 39, a consultant with IXL Inc.,
whose portal clients have had similar trouble inking deals
with Brazil's top media players. "In some cases, you have
no choice but to go with second- or third-tier players until
the bigger ones see the light."
That's very much how Killen had to proceed when she first
arrived at Yahoo! four years ago. Charged with building its
European presence from scratch, she first sought to add news,
weather, and financial information to the sites. But when she
approached some of the continent's biggest wire services, they
balked. "We tried to get a quotes feed from Reuters,"
recalls Killen. "But they wanted to start their own
for-pay service and felt threatened." So she appealed
instead to smaller national wire services, cutting deal terms
that traded news and financial quotes for a small stream of
revenue, along with a chance for those news agencies to gain
first-time exposure on the Internet. Smaller deals soon led to
bigger ones as news groups like Agence France Presse and
Deutsche Press Agenteur signed on.
The start-small strategy has since been replicated around
the world. And while people like Alonso wish that they could
woo the big players more quickly, they're dedicated to working
within the confines of Yahoo!'s global ideals. "I bought
into the open-platform idea when I signed on here," says
Alonso. "It definitely makes it more challenging to
localize the content. But so far we've been able to find the
information that our users want without having to send them to
another site. And with all the technology that Yahoo! brings,
we've got all kinds of advantages in making them stay."
Audiences
"R" Us
Wherever you go, there you are. Log onto any Yahoo! site
around the world, and even if you've registered on another
Yahoo! property, you'll still be greeted with a friendly
"Welcome, Alex!" ( Or whatever name you've
registered under. ) That personalized salutation might not
seem like a big deal, but it's at the core of Yahoo!'s
strategy to leverage every aspect of what is fast becoming the
Internet's most visited commercial network. Regardless of
where you sign up, or which Yahoo! site you log onto, every
registrant around the world becomes part of a massive, unified
database. That not only allows the portal to personalize every
interaction with its users, but it also lets Yahoo!'s global
marketers mine and categorize that user database at will,
giving Yahoo! the ability to deliver on Killen's "Audiences
'R' Us!" promise.
The idea represents a global twist on what media companies
have been doing on a national scale for several decades. From
the establishment of the first coast-to-coast TV network in
the 1950s to the recent merger-and-acquisition frenzy in the
radio-broadcast industry, media bigwigs have long tried to
consolidate their audiences into bigger and bigger chunks. The
larger the audience, the easier it is to sell to the biggest
advertisers, who prefer to buy airtime or ad space in bulk
rather than piecemeal.
Until now, however, there have been few, if any, one-stop
shops for advertisers that want to reach a global audience.
Instead, multinationals such as Coca-Cola, Nestle, and Sony
have been forced to place ads on a country-by-country basis,
hiring advertising agencies in each country, then placing ads
in local media outlets. But thanks to Yahoo!'s expanding list
of international properties, along with a technology platform
that makes it easy to collect and categorize users around the
world, Killen says that the portal is in a unique position to
change all that. "We can deliver customers on a global
basis," she says. "And right now, I don't think
there are many other companies in the world that can do that."
Yahoo! didn't always have such an advantage. When Killen
arrived there in 1996, the company had only three sites: the
mother ship, Yahoo! Canada, and Yahoo! Japan. And although the
company's leaders knew that they wanted to capitalize on the
Internet's global reach, the money and the bodies needed to
build new Yahoo! sites around the world were in short supply.
So they did what many of their competitors have since done:
They negotiated a joint partnership in one country and a
licensing agreement in another, which helped provide both the
money and the resources necessary to establish a presence
quickly in those countries. In a world in which being first to
market is considered vital to success, such moves were
certainly expedient. But those partnerships ultimately did
little to help foster the kind of tight global network that
Killen and her colleagues hoped to create. So as Yahoo!'s
currency began to rise, company officials decided instead to
invest the capital and the resources necessary to own each new
property outright.
That decision has made a huge difference. Not only did it
aid the effort to build a unified technical and commercial
platform, but it also bolstered Killen's attempt to create the
closely integrated organization that she had envisioned.
"Now no one ever thinks twice about how much support to
give that new site in Bulgaria or wherever," she tells
the recruits gathered in the conference room. "That's
because they are us! The whole network is us. So we have a
vested interest in making every one of those operations
successful."
That's true now more than ever. Although Yahoo!'s U.S. site
still accounts for about 60% of its total network audience,
that share is declining as the rest of the world logs onto the
Internet and discovers Yahoo!'s international sites. Revenue
from international operations now makes up about 14% of the
company's total. And because most of Yahoo!'s international
properties are now owned outright, they contribute directly to
the company's income statement. "If you only own half of
an international property, you can't include the revenue from
that operation on your earnings statement," Killen
explains to the newcomers. "So I don't think the
financial analysts would like it if we took 14% off our top
line away. They would be bummed. And so would you!"
Of course, the flip side is that Yahoo! must build and
finance its new properties while it continues its streak of 16
profitable quarters in a row. "That means we have to do a
lot with a little," Killen explains. "We do that by
scaling the technology and by really networking the
organization. That's why we have lots of folks here in Santa
Clara who spend all or some of their time thinking about
global issues and supporting our non-U.S. operations."
That doesn't mean Killen oversees a big staff at Yahoo!
headquarters. On the contrary, she tries to have as few direct
reports in Santa Clara as possible. Instead of building a
staff of managers to oversee international marketing,
engineering, or legal, she is pushing to place people with
those responsibilities in other parts of the organization.
"Our director of international marketing reports to the
vice president of marketing. Our international lawyers report
to our general counsel. And it's the same thing across other
business functions," explains Killen. "I work very
closely with those people, but I'm not their boss."
The upshot is an international outlook that's embedded in
every part of the company. "By building capabilities to
support non-U.S. operations into other people's departments
instead of her own, Heather has turned us into a global
company, not just a U.S. company with international operations,"
says Yang. "So whether it's production or marketing or
whatever, international isn't just an afterthought -- it's
part of the planning from day one."
Alex Markels ( [email protected]
), a former Wall Street Journalstaff writer,
contributes frequently to Fast Company. Contact Heather Killen
by email ( [email protected]
).
Sidebar:
What's Fast
For Heather Killen, senior VP of international operations
at Yahoo! Inc., the whole world is a stage. And it's her role
to keep one of the Internet's best-known companies a leading
player on that stage. Here is Killen's script for building a
global Internet company.
Organize your company like the Internet itself.
That is, maintain a set of tight "technical"
standards, but allow local operations to be distributed,
disaggregated, and democratic. "What I've seen in other
'international' organizations is that they try to create a
department that's a miniversion of the larger company,"
says Killen. "But that's the best way to isolate
yourself. You've tried to build an empire instead of a
culture."
Keep sites simple, and similar, around the world.
Yahoo! uses a company-wide template for its Web sites,
designed to build its brand and leverage its underlying
technology on a global scale. The Yahoo! logo ( with the
relevant country's name beneath it ) sits top and center on
every site. The buttons that link to Yahoo!'s stickiest
applications -- email, Messenger, MyYahoo, and auctions -- are
positioned alongside. The shopping box comes next, followed by
the directories, each one with 14 categories. Sponsors are
always listed on the right. Company information, including
links to other Yahoo! sites, is listed at the bottom. "We
do what we feel looks like Yahoo!, and we don't want our
people doing too much to change that," Killen says.
Work hard to generate local content.
Yahoo! takes great pains to avoid embarrassing gaffes when
it translates news or information from one language to
another. The best way to attract users from outside the United
States is to infuse sites with content that is generated
locally. "We don't squirt English-language news through a
translation engine and then put it up on our China or
Argentina sites," says Killen. "That would never
work."
Even big players have to start small.
You would think that a company as prominent as Yahoo! could
enter any country and strike partnerships with the biggest
local players. Think again. There are lots of big companies
outside the United States with an old-economy perspective on
Internet alliances, and the era of media monopolies remains
alive and well in many markets. That's why Killen and her
Yahoo! colleagues have often struck a first round of deals
with smaller, hungrier partners. Such deals became "key
stepping-stones," says Killen. "Once people saw that
others were doing deals with us, they were like, 'Oh, wow! Why
aren't we doing that?' "
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