How is this for honesty from a Yahoo executive’s recently leaked memo. This was reported in the Wall Street journal and has created a real buzz around the internet. From Brad Garlinghouse, Yahoo senior vice president.
The first part deals with what is wrong:
We lack a focused, cohesive vision for our company. We want to do everything and be everything — to everyone. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don’t talk to each other. And when we do talk, it isn’t to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics.
Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like — rather than a leadership team rallying around a single cohesive strategy.
I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.
I hate peanut butter. We all should.
We lack clarity of ownership and accountability. The most painful manifestation of this is the massive redundancy that exists throughout the organization.
We lack decisiveness. Combine a lack of focus with unclear ownership, and the result is that decisions are either not made or are made when it is already too late.
What they need to do to change if they want to succeed in the future:
1. Focus the vision
a) We need to boldly and definitively declare what we are and what we are not.
b) We need to exit (sell?) non core businesses and eliminate duplicative projects and businesses.
2. Restore accountability and clarity of ownership
a) Existing business owners must be held accountable for where we find ourselves today — heads must roll,
b) We must thoughtfully create senior roles that have holistic accountability for a particular line of business (a variant of a GM structure that will work with Yahoo!’s new focus)
c) We must redesign our performance and incentive systems.
3. Execute a radical reorganization
a) The current business unit structure must go away.
b) We must dramatically decentralize and eliminate as much of the matrix as possible.
c) We must reduce our headcount by 15-20%.
Two principles that must be followed:
- Blow up the matrix.
- Kill the redundancies.
This sort of honesty is a sign of strength within Yahoo. And, it still has lots of strengths. As one of the big three on the internet along with Microsoft and Google it will be interestng to see how Yahoo defines itself in the future. The big three appear to be trying to do a lot of the same things a lot of the time and they are not always successful in their attempts.
I think that ultimately the web always is about communication and it will be those groups that can harness the largest voice that will continue to prosper in the future. Arrington in Tech Crunch says that underlying this honesty is the more familiar powerplay scenario among senior management.
Here is a quick take on his more cynical perspective on this honesty:
My guess is that Yahoo senior management has been discussing these types of changes for some time, and this may be a power move by Garlinghouse to get in front of the parade. If changes are made, he looks like a hero. If they arenâ€™t, he can take credit for trying.
Either way, at this point, I donâ€™t see how Semel and Garlinghouse can both remain at Yahoo. From what Iâ€™m hearing, Semel may be the one to lose. The WSJ reports that Yahoo COO Dan Rosensweig has put Garlinghouse in charge of a working group to review how the points in the memo can be put into action. Tech Crunch
It is amazing how quickly we are seeing the cycle of decay occur in businesses today. Yahoo is already having to deal with the realities of a irrelevant management structures and a bloated hierarchial structure that is no longer able to effectively meet the business challenges facing it today. In less than 10 years it has gone from a startup to whizz company to a lumbering behemouth struggling to take the next positive steps forward.