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This case draws upon the literature on appropriate leadership behaviors that Yahoo’s Founders or CEOs could have adopted. It discusses the process of environmental analysis that would have an impact on Yahoo!’s strategy. It discusses and depicts the levels of environmental analyzes that Yahoo! as a firm ought to have undertaken in mapping its competitive environment. Further, this case discusses transformational leadership factors and those behavioral traits that exemplify each of these factors. Finally, the four elements of aspiration in discussing future firm direction are identified. These include an appropriate vision translated into a clarifying mission reflected in specific objectives grounded in explicit value statements.

This case is based on secondary data sources that include official company records, online reports and commentary, newspaper reports, public interviews and books. All such information has been appropriately referenced.

Yahoo!, in its 22 years of existence, has demonstrated remarkable tumult. It has witnessed a succession of six CEOs, exhibited a roller coaster trajectory in its stock price and, for the most part of its existence, played “catch-up” with its strategic competitors. It has also struggled to define its core purpose, its industry category and its very essence of being. In early 2016, CEO Marissa Mayer announced that Yahoo! would be willing to sell its core internet business and that its board would “engage on qualified strategic proposals.” However, the board also reiterated that turning around Yahoo! to prosperity continued to remain a top priority. What went wrong, so terribly wrong, with Yahoo! in an otherwise lucrative industry? Does Yahoo! suffer from a fundamental, essential malaise which, if addressed, could restore it to wealth and vibrancy? This case focuses on the period 1994, the inception of Yahoo!, to early 2016. The acquisition of Yahoo! by Verizon, completed in 2017, is not to be considered for purposes of this case study.

This case is particularly suited to be taught in a capstone strategic management course for MBA/Master’s level business students, after they have been exposed to core courses in Marketing, Business Law, Accounting, Supply Chain, Corporate Finance. It may also be taught in an advanced strategy course for undergraduate business students, typically in their final year of study. Finally, this case can be used to teach senior management in executive management programs.

Gary Parr, deputy chairman of Lazard Freres & Co. and Kellogg class of 1980, could not believe his ears. “You can't mean that,” he said, reacting to the lowered bid given by Doug Braunstein, JP Morgan head of investment banking, for Parr's client, legendary investment bank Bear Stearns. Less than eighteen months after trading at an all-time high of $172.61 a share, Bear now had little choice but to accept Morgan's humiliating $2-per-share, Federal Reserve-sanctioned bailout offer. “I'll have to get back to you.” Hanging up the phone, Parr leaned back and gave an exhausted sigh. Rumors had swirled around Bear ever since two of its hedge funds imploded as a result of the subprime housing crisis, but time and again, the scrappy Bear appeared to have weathered the storm. Parr's efforts to find a capital infusion for the bank had resulted in lengthy discussions and marathon due diligence sessions, but one after another, potential investors had backed away, scared off in part by Bear's sizable mortgage holdings at a time when every bank on Wall Street was reducing its positions and taking massive write-downs in the asset class. In the past week, those rumors had reached a fever pitch, with financial analysts openly questioning Bear's ability to continue operations and its clients running for the exits. Now Sunday afternoon, it had already been a long weekend, and it would almost certainly be a long night, as the Fed-backed bailout of Bear would require onerous negotiations before Monday's market open. By morning, the eighty-five-year-old investment bank, which had survived the Great Depression, the savings and loan crisis, and the dot-com implosion, would cease to exist as an independent firm. Pausing briefly before calling CEO Alan Schwartz and the rest of Bear's board, Parr allowed himself a moment of reflection. How had it all happened?

An analysis of the fall of Bear Stearns facilitates an understanding of the difficulties affecting the entire investment banking industry: high leverage, overreliance on short-term financing, excessive risk taking on proprietary trading and asset management desks, and myopic senior management all contributed to the massive losses and loss of confidence. The impact on the global economy was of epic proportions.

In early 2014, recent Stanford University graduate Tyler Shultz was in a quandary. He had been working at Theranos, a blood-diagnostic company founded by Elizabeth Holmes, a Stanford-dropout wunderkind, for almost a year. Shultz had learned enough about the company to realize that its practices and the efficacy of its much-touted finger-prick blood-testing technology were questionable and that the company was going to great lengths to hide this fact from the public and from regulators.

Theranos and Holmes were Silicon Valley darlings, enjoying positive press and lavish attention from potential investors and technology titans alike. Just as companies like PayPal had revolutionized the stagnant payments industry and Uber had upended the for-hire transportation sector, Theranos had been positioned as the latest technology firm to substantially disrupt yet another mature sector: the medical laboratory business. By the start of 2014, the company had raised more than $400 million in funding, and had an estimated market valuation of $9 billion.

Shultz's situation was exacerbated by the fact that his grandfather, the highly respected former US Secretary of State George Shultz, was on the Theranos board and was one of Elizabeth Holmes's biggest supporters.

But Tyler Shultz worried about the customers he was convinced were receiving highly unreliable and often inaccurate blood-test results. With so much at stake, Shultz wondered how he should proceed. Should he raise his concerns with the firm's investors? Blow the whistle externally? Report to industry regulators? Go away quietly?

This case and its subsequent four brief follow-up cases are based largely on interviews with Tyler Shultz, and outline the dilemma he faced and the various steps he would take both to extricate himself from his unsavory position and let the public know the full extent of the deception at Theranos.

Five optional handouts are available to instructors to further discussion after the case has been debriefed. The handouts serve as additional decision points for the students if your class time permits.