Recently it was noted by news outlets that YP Holdings, a private equity-owned company that is the home of the Yellow Pages, was looking into a merger with the core business of Yahoo. Yahoo has had a painful erosion journey in recent years after being an early darling of the Internet Age. The Yellow Pages has declined significantly since the heyday of the printed phone book. And yet, here we are. As we have seen time and again through the years, merging two eroding businesses always produces one larger, still eroding company.
Stories like these are popping up everywhere. Look at newspapers. Their demise has long been heralded as imminent, and indeed many are cutting back or evaporating. For those left, there are private equity firms investing in the purchase of daily and weekly papers and then strangling whatever cash flow can be created from those operations via layoffs and other cost cutting measures. To be sure there is money being made. But even those companies will freely admit they don’t think it will last very long and certainly not forever.
What’s behind all of this? The answer is two-fold. Most obvious is the insatiable need for investors, everywhere, to make money any way they can. Squeezing profit out of eroding businesses is a tried and true tactic on Wall Street. Happened in textiles, it’s happening in “traditional” media and it’s now happening with Internet firms like Yahoo. This is the Erosion Club. Not exactly the same as Augusta National Golf Club.
Less obvious is the huge cultural and consciousness shift underway in the workplace and throughout society across the globe. The Boomer generation is rapidly advancing into retirement and beyond and the largest generation seen yet, GenY (Millennials), is now the largest segment of the American workforce and growing – by 2020 they are forecast to be 75% of the US workforce.
Millennials are a completely different breed from previous generations and they have the clout to be change-makers, irrespective of what Boomers and GenX’ers think. Increasingly, they are being just that. As a result, you see more and more of the type of moves that YP Holding, Yahoo, Newspapers, and many others are forced into. These businesses are no longer relevant, or seen as offering anything of value and the underlying reason, whether leaders care to admit it or not, is the presence of Millennials.
Millennials are the first generation where digital is not only a native environment, it has shaped the way they view the world around them and their expectations of how it should function, and that has caused huge disruption across virtually every business sector and segment. Media, retail, food…you name it, the Millennials are disrupting it and using technology to do it. Those that accept and adapt are benefiting. Those that don’t are joining The Erosion Club.
If you lead a business or a segment of a business, your choices are pretty straightforward: adapt or suffer. You may think you can avoid it or delay it, but kicking the proverbial can down the road is not a viable option. There is no longer time because digital technology has accelerated the speed at which things get done and that results in relatively small delays having long-term catastrophic consequences.
Chris Petersen is Managing Partner at On Brand Management, a diverse problem-solving firm helping clients navigate today’s dynamic market by providing performance-driven solutions to sustain an organization’s stability and growth. Contact Chris at firstname.lastname@example.org. On Brand has offices in Los Angeles, San Francisco, Chicago, Atlanta, New York, Dallas, Washington, DC and Tampa/St. Petersburg, FL.