This wouldn't have been necessary. In this amazing post, Jeremy Zawodny mentions that all the cool features could already be in Yahoo Finance, as ideas for doing them have been around for years. Ticker search sucked, news could have been overlaid on graphs, and so on.
Seems like it isn't the first time this is happening to Yahoo: The release of GMail was also a wake-up call for the competitors.
Why did this happen?
MomentumIt's easy for management to stress that "only the paranoid survive," and that all products should constantly improve. In reality, it's often "good is good enough". Yahoo Finance and Yahoo Mail were both state-of-the-art products until the arrival of their Google counterparts. Heck, Yahoo Finance probably also made a lot of money with all those banner ads.
Keeping such a site running takes a lot of work. It's easy to patch on but if you really want to change something core such as charting, there are lots of forces against it: The "you better don't change it because people like it how it is" fraction and the sheer complexity of replacing something at the center of a product.
This doesn't apply just big products from big companies: Even Basecamp (from the popes of agile development) or Reddit are unlikely to change in their core features or appearance.
Revolution ...There are always going to be young, hungry kids – or still-hungry industry veterans – willing to challenge convention, question authority and re-write everything from scratch. Paul Graham has, in some ways, built a business on his founders' youthful energies.
These guys have two things going in their favor:
Just as the Google Finance people had already seen – or even worked on – Yahoo Finance, they have the last-mover advantage: They've seen your product and can copy the good parts, leave out the bad, and invent cool new features you didn't have time to get around to.
They can also put in more love: They have the luxury of focusing on the user experience, the user experience, and nothing but the user experience. They don't need to worry about links to the conglomerate's Horoscopes product, cannibalizing existing offerings or following the personal tastes of the VP of Product Sameness.
... and how to keep it from happeningSo what could Yahoo and others do to avoid such surprises in the future?
Frankly, I think they're doing the right thing: They're buying young and promising companies, when they can still be had for $20 million. Had David Filo said "Dear Larry, here's $20 million for the your PageRank algorithm", the world would be a different place. Yahoo Photos was a good product, but not the leader. Buying Flickr has propelled Yahoo to the front row.
In the long run, even the world's smartest people and restaurant-quality food won't keep you from falling into complacency. I doubt it's possible to launch renegade products inside the company: Taking a handful of talented and hungry employees, and promising them a big reward for creating a new finance product from scratch may have worked. Still, the internal forces of cubicle envy would have crushed any such attempts.
Significant changes will almost always come from new entrants. Today's new entrant was Google Finance. Who is next?