Yahoo - disorganisation by acquisition?

The problems with Web 1.0 companies acquiring lots of small Web 2.0 assets are outlined in a Yahoo internal memo - but the solution proposed here seems to be more dangerous than the problem!

Allegedly by Brad Garlinghouse - a Yahoo senior V.P - and reported in the Wall Street Journal yesterday, the complete text plus some interesting comments are on Paul Kedrowsky's blog here and some more comments on it by Liz Gannes et al are here

The article is interesting as it essentially describes a company whose culture is moving towards the same old corporate culture most other big companies have. I would be very surprised if Google did not have many if the same problems, lessened only because they are newer.

There is one bit where he complains about Yahoo's predilection for recruiting in new talent from outside (he has been there a whopping 3.5 years....apres moi.... (I suspect that this is a Good Thing as its a continual influx of people who are up to date that prevents corporate ossification. Yahoo is buying new guys who do stuff well ! )

But the bit that really worries me is this- Yahoo is asked to:

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%.

Massive head hacking in the supposedly high growth Internet space...whats going on here?
Plus a root and branch restructuring of the company?

Reading the comments in the articles referenced, I seem to be a lone contrarian voice, but in my experience although talking tough always sounds good, sorting out positions like this need some subtlety and craft. Being Lean and Agile is not about axe swinging, as the Japanese have taught the US in industry after industry in the Old Economy.

OK, so there is duplication - but that is not life threatening if managed, and uncontrolled decentralisation usually makes it worse.

Undoubtedly some stuff needs to be sold off or closed down in a market as rapidly shifting as this - be astounding if there wasn't. But, do all of the above proposals together, and the whole company would be in complete introspective confusion for months, and this is not the right time for that.

Like Old Time medicine, these sort of approaches can kill or cure - although these cures look good on paper (and in business plans), execution is usually far, far harder if everything is changing at once

Yahoo is still in pretty good shape, throws out a lot of free cash, and is still a leader in many of its fields. This is the time for careful rationalisation and innovation, not slash 'n burn!

Postscript - a certain relief, i am not the only one who thinks this memo did not hit the spot - Robert Young over at GigaOm has also asked some searching questions.

Post Postscript - definitely not just me...this guy is clearly a wealth hazard and has form - see this article in The Street.