As Yahoo Falters,Executive's MemoCalls for Overhaul
'Peanut Butter Manifesto' Seeking Focus and CutsMakes Waves at Web Titan Can It Wring More From Ads?
By KEVIN J. DELANEYWSJ, November 18, 2006; Page A1


The last posting focused on a strategy approach defined by the acronym FAST – Focus, Accelerate, Strengthen, and Tie together. Although I agree with John Hagel that strategy in not sequential and multiple time lines must be managed simultaneously, I disagree with his time frame. Relating this to our discussions of McKinsey’s 3 Horizon model, I believe a better analysis is:
- “Focus” should drive Horizon 3 activities using Options Management as the principle tool – “manage the cost, not the rate of failure”
-“Accelerate” should drive Horizon 2 projects using methodologies such as Discovery Driven Planning (see the Entrepreneurial Mindset from McGrath and MacMillan)
-“Strengthen” dictates Horizon 1 efforts.
-“Tying” it altogether means managing all 3 Horizons

This posting and the one to follow highlight the challenge of “Focusing” longer term efforts from two icons of today’s digital world – Yahoo and Google.

The following are excerpts of the WSJ article discussing Yahoo’s challenge……

It is called "The Peanut Butter Manifesto" -- a four-page call to arms from a senior executive of Yahoo Inc., declaring the Internet company is spreading itself too thin and must define priorities and radically reorganize its management structure………

Yahoo, which consumers use for email, news and a wide menu of other services, is under increasing pressure to hold its top position. One analyst predicts Google will overtake Yahoo in users in 2007. Microsoft Corp. has stepped up its Internet activities, and Time Warner Inc.'s America Online unit increased usage recently by opening up free, unrestricted access for its services. Sites including News Corp.'s MySpace have rapidly gained visitors and attention from advertisers.

This year, Yahoo has suffered from slumping shares, slowing revenue growth, staff defections and a delay in a crucial project aimed at boosting online ad sales. As the memo shows, even some current executives have been fretting that the Internet company's top management isn't prepared to take the strong medicine they feel is needed to right the ship.

Some worry that Yahoo -- whose activities range from online dating to fantasy sports -- has stretched itself thin and lost track of priorities. Recently, the company has been outmatched in key areas such as search advertising and social networking. (See related article.)

Last month Brad Garlinghouse, a Yahoo senior vice president, wrote the memo, titled "The Peanut Butter Manifesto," for top executives. His contention: "Change is needed and it is needed soon."

Mr. Garlinghouse, who once shaved a "Y" in the back of his head, argued in his manifesto that Yahoo is spreading its resources like peanut butter on bread, thinly and evenly across all its activities. "Thus we focus on nothing in particular," he wrote, saying the Sunnyvale, Calif., company needs to pick specific areas to focus on and make bigger bets on them while dropping nonessential activities (TO OUR ALUMNI, SOUND FAMILAR)…………

Headings in the peanut-butter memo, which was reviewed by The Wall Street Journal, include "We lack a focused, cohesive vision for our company," and "We lack decisiveness."………..

The Peanut Butter Manifesto identifies concerns that some current and former executives say are generally on the mark. Among them: the absence of a "focused, cohesive vision" for Yahoo, which means it wants "to do everything and be everything -- to everyone." The result, Mr. Garlinghouse wrote, is a company that is reactive and "scared to be left out." He cited bickering between business units and a proliferation of executive hires from outside as contributing to the problem.

Another issue identified in the Manifesto: a "matrix" corporate structure where responsibility for a product's performance is spread among multiple executives -- in engineering, product, marketing and corporate strategy. The memo cites competing offerings, such as Yahoo's photo sharing site Flickr and Yahoo Photos, as well as Yahoo Media Group's video activities and the search unit's video service.

Mr. Garlinghouse suggested creating manager positions with responsibility for all aspects of a particular business, from marketing to engineering and business development and including its bottom-line results. The memo also suggested "the leaders ultimately live/die by the results." Eliminating redundant activities means Yahoo must reduce staff by 15% to 20%, Mr. Garlinghouse wrote.