Yahoo to *may* Streamline, Reduce Headcount by 15-20% and Focus

Update, Nov 19th: Jeff’s first comment on this post suggests that the memo is a suggestion, he’s correct it’s unknown what the future state of the headcount at Yahoo will be. Although I still stand by my observations below, I’ve updated the title and added *may* into it.

I’m a shareholder of Yahoo, and I’ll be one of the first to say that the company has grown to large and corporate, trying to be too many things while other corporate strategies stay somewhat focused. The Yahoo homepage in the past is a good indicator of the mass confusion and focus on media, have you see how many things there are to click, it’s confusing.

NYTimes reports this internal memo demonstrates that management recognizes that there is a lack of focus, vision, with multiple arms competing with each other in same spaces.

The specific action items suggest Yahoo will undergo the following weight loss exercises:

  • 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%.

Good luck my friends at Yahoo, sounds like this strategy could help obtain an efficient organization.  See the multiple conversations on Techmeme about this.

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  • http://mcmanus.typepad.com/ Jeffrey McManus

    Jeremiah, your headline implies that the company will reduce headcount — that’s not a done deal yet, the memo is only a proposal at this point.

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  • http://www.irwebreport.com/daily/2006/11/19/corporations-are-getting-naked-ok-some-are/ Dominic Jones

    @Jeffrey

    As a shareholder, if Jeremiah says this strategy sounds good to him, then that’s the strategy management will need to pursue.

    Smart move by someone inside Yahoo? We’ll see when the markets open.

  • Bess

    I read the internal memo from Brad Garlinghouse on NT Times link and check out Brad Garlinghouse’s background.

    First I must say I admire Brad’s honesty, passion, openness, keen observation, sharp analysis and rare leadership trait. The fact that Brad graduated from Harvard MBA gives credibility.

    Brad is addressing many business issues just like the case study in Business School. This is a internet version of a case study like other Fortune 500. Brad recognizes there is a chance for Yahoo to win. If Y! can’t pull together, it may slip quickly into quicksand.

    Look at Google. Google is spreading into everything. But Google is very clear on their vision. Their startup buying is their strategy to achieve their BIG Vision. Even YouTube.

    Focus on vision is really important to lead a corporation via muddy water at internet speed.

    Leadership is an art. Leadership is not the same as management. From this internal memo, I can see the leadership quality in Brad. I like to see Yahoo to stand as internet leader. Don’t become a weak player. Play strong!

    I wish Brad the best. I have to work on my own leadership skill. How can I lead an all-volunteer based tech organization? How can I align my volunteer team to work toward the same Vision?

  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Jeff, Thanks I’ve updated the first post. You’re right, we don’t know what the future holds.

    I suspect change is needed to make Yahoo a market leader again. I wish Yahoo the best, I have a personal and financial interest in seeing them succeed.

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  • Bess

    Brad,

    The most valuable asset of Yahoo is your user base. My guess is Yahoo has the most active and engaging user base in this Triplay MGY (Microsoft, Google, and Yahoo).

    Duplicated BUs are usually signs of “incompleted” integration after startup acquisitions. These are signs of “temporarily” mash-up and “incompleted” integration into core business.

    The root problems usually are related to database design and management. I would start with database schema for a more complete data migration before killing any unnecessary users.

    I would gather an independent team of the most talented and brightest business intelligence analysts to systematically research the best way to merge the duplicated BUs, to retain the most value while minimizing the damage during the process.

    Don’t get emotional on evaluation process. Business intelligence will be your light house in the dark for executives to make challenging decisions.

    Once you have a more complete database migration, then you can gather your engineering and marketing team to work on a unified BU with clear vision and mission.

    I hate it when Wall Street get “blindly” excited when they read any line saying “Reduced headcounts by 15-20%”.

    These finanical guys didn’t understand that this is the time you need more people to work. There are so much work involved in complete data migration and unifying BUs.

    Don’t repeat What AOL did on their Mountain View campus. SV is short of skilled talents. Once it is gone it is gone. AOL never recover from its mistakes.

    Yahoo needs skilled talents to work on features on unified BUs. Google founder issued the order on Features, not Products.

    I will be watching Yahoo stock like Jeremiah. I will dump my AOL for Yahoo stock.

    Yahoo Yahoo. Stay in Purple. Paint yourself in Purple again to be the “Purple Cow”. Be “REMARKABLE” and stay “REMARKABLE”.

  • Peter

    yeah – good luck keepin yo jobs, suckas!

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