Yahoo’s Internal Alarms Go Off; Loud Wake-up Call From SVP Splashes Onto WSJ Front Page

image If I didn’t already believe a major re-thinking of Yahoo’s kludgy structure to be in place, I’d be sure one was on the way after reading the front page of today’s WSJ — a stark picture of a company that has to reinvent itself. At the heart of Kevin Delaney’s story, the demand for change by Brad Garlinghouse, SVP – Communications, Communities, and Front Doors via a four-page internal memo dubbed the “Peanut Butter Manifesto” that began circulating last month. (Kudos for using the net to publish the whole memo.) Garlinghouse, who joined Yahoo in 2003 as a VP, wrote the call to action after a post-Google-YouTube NYT article that ran in early October; the article lacked accurate details (Yahoo didn’t allow any on-the-record interviews) he wrote, but its conclusions rang true. It was his own wake up call and he pounded out a response demanding wholesale change across the company. The solutions he offered are a blend of dramatic and pragmatic.:
— Stop trying to be all things to all people — exit non-core businesses and eliminate duplication.
“Existing business owners must be held accountable for where we find ourselves today — heads must roll.”
— “We must redesign our performance and incentive systems. I believe there are too many BU (business unit) leaders who have gotten away with unacceptable results and worse — unacceptable leadership.”
— He urges eliminating the current structure and killing the redundancies completely. (From an outside, perspective, the duplication of effort and the ensuing confusion is one of the issues preventing Yahoo from putting all the very good pieces it has together in an effective way. The confusion probably has cost the company deals and some good hires.)
Reduce head count by 15-20 percent.
Why peanut butter? “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.”
In return, Garlinghouse was asked by COO Dan Rosensweig to head a group with a two-month charter to look into the issues he raised. Garlinghouse isn’t the only person at Yahoo with ideas about how to better run the company and involving others makes sense — this is a starting point, not a plan to be rubber stamped and other efforts that haven’t made the press may already be in progress. The two-month timeline sounds long given the sense of urgency that has been creeping up; still, hasty plans usually cause more problems than solutions. Given what we hear about the length of time it takes to make some things happen, that could be short.
One aside: From conversations I’ve had with a variety of people, I had come to believe Yahoo’s current internal woes stemmed from a too-centralized structure with a chokehold at the top. A story I heard this week (details would be too identifying) challenged that notion, suggesting that some of Yahoo’s problems come from senior/mid level execs stalling or rejecting top-down moves — and high-level execs who don’t force the point.
The upshot: Yahoo has a lot going for it — and an internal structure that makes it hard, almost impossible at times, to deal with the external forces that should be the real focus.
— <a href="" title="Susan Decker