A senior Yahoo! Inc vice president called for huge layoffs, for some managers to be fired, in an internal memo leaked to the Wall Street Journal over the weekend.
Speaking of company-wide apathy and a lack of focus and leadership, Brad Garlinghouse called for a radical reorganization that would include layoffs of 15% to 20% of Yahoo’s headcount.
Existing business owners must be held accountable for where we find ourselves today – heads must roll, he added. I believe there are too many BU leaders who have gotten away with unacceptable results and worse – unacceptable leadership.
Long the leader of online services, and the only web portal company of note to make it through the dot-com bubble, Yahoo has now found itself struggling against the likes of Google Inc.
While Google continues to blow financial expectations out of the water each quarter, Yahoo has started experiencing a softness in the advertising business where it makes most of its money.
Despite that difference in performance, some of Garlinghouse’s criticisms of Yahoo are precisely the things that Google is worried about. Namely, a lack of focus when it comes to products.
Both companies have been churning out new features for the last few years, either through internal development or acquisition. But unlike Google, Yahoo is still sitting on a handful of legacy services from the Web 1.0 world that in some cases compete with newer products.
Garlinghouse notes, for example, it acquired Flickr, a photo publishing site that continues to compete with Yahoo’s own Yahoo Photos service. It acquired Deli.cio.us, which competes with its own MyWeb service.
We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company, Garlinghouse wrote. Kill the redundancies. Align a set of new BU’s so that they are not competing against each other.
Among the things Garlinghouse believes Yahoo lacks are a focused, cohesive vision… clarity of ownership and accountability… decisiveness.
The direction needs to come decisively from the top, he said. We need to place our bets and not second guess… We need to make the tough decisions, articulate them and stick with them — acknowledging that some people (users / partners / employees) will not like it. Change is hard.
The content of the memo, and the fact of its leaking, is being seen by some as a power-play by Garlinghouse, possibly for the CEO’s job, if Terry Semel winds up falling on his sword as a result of Yahoo’s current performance problems.