'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!'

A fresh batch of recruits just arrived at Yahoo! Inc.'s Santa Clara, California headquarters, and 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 Université 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, Nestlé, 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 (alexm@email.com), a former Wall Street Journalstaff writer, contributes frequently to Fast Company. Contact Heather Killen by email (hkillen@yahoo.com).

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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