BoomTown » Peanut Butter Manifesto

The Yahoo Management Structure: Who Is In and Who Is Out?

Kara Swisher — Mon, 23 Feb 2009 15:30:31 +0000

On Friday, BoomTown first reported that new Yahoo CEO Carol Bartz is likely to be announcing a sweeping new management structure soon, which can only mean the possibility that some existing top execs are likely to be broomed out, even as some new ones are ushered in.

“This is going to be a full-scale peanut butter recall,” joked one exec, referring to the infamous “Peanut Butter Manifesto,” which was sent around the company several years ago by former exec Brad Garlinghouse. It laid bare the problems at Yahoo (YHOO), most especially a decided lack of decision-making and lugubrious levels of managers.

But the reorganization of Yahoo’s top-heavy management structures–I once dubbed it the “attack of the Yahoo vice presidents”–will be a bit sticky, given all the (slow-)moving parts at Yahoo (YHOO).

Nonetheless, Bartz signaled a “big week” ahead in one internal memo I obtained, which was sent out Friday.

So what’s to come?

Here’s a rough primer, based on talking to numerous sources inside and outside of Yahoo:

The Basics:

In order to start to revive Yahoo, Bartz is likely to impose a more top-down management style on the hopelessly confusing “matrix” organization now in place at the company.

She has spent the last six weeks touring Yahoo, getting to see a lot of presentations on its many, many products and conducting a whirlwind of meetings with execs.

Broadly, most expect Bartz to severely roll back a variety of previous reorganizations done by former CEO Jerry Yang and outgoing President Sue Decker, in order to impose more centralized control over the place and focus it more narrowly.

Presumably, lattes–paid for by Yang and co-founder David Filo–will remain free.

Out With the Old:

There’s no question that Yahoo is going to see the departure of several top execs, along with the elevation of others.

Among those who are more likely to be definitely in, though, is CTO Ari Balogh (pictured here), a relatively recent hire who has been a popular exec within Yahoo.

The Wall Street Journal first noted the possible rise of Balogh in a follow-up piece to this column’s story on the overall reorg over the weekend, noting that he would become head of product.

Presumably, Balogh will be one of the point men on what to do about search, in the should-I-stay-or-should-I-sell-now debate that never seems to end at Yahoo.

One interesting idea floating around Yahoo is that he becomes head of all its products, as well as continuing to run its tech arm.

That’s a good idea, since Yahoo has desperately needed an empowered leader under Bartz, who focuses like a laser beam on products.

“It all starts with that,” said one former exec. “One single person has to be the champion of what Yahoo makes.”

But what does that mean for Ash Patel, EVP of Yahoo’s Audience Product Division? Well, the longtime Yahoo veteran could now report to Balogh (he had previously reported to Decker directly) or, presumably, leave.

Patel’s fate, of course, impacts that of many others, such as Front Doors head Tapan Bhat, who is in charge of a major homepage redesign that Bartz just delayed the launch of to make it better.

Venkat Panchapakesan, EVP of the Audience Technology Group, seems safer, given that he reports to Balogh already and is responsible for the company’s overall product technology and platform strategy, such as its open efforts.

Also safer than not is General Counsel Michael Callahan, as well as U.S. EVP Hilary Schneider.

But Schneider’s purview might change a bit if U.S. advertising sales head Joanne Bradford–who now reports to her–is elevated to a higher position or if sales is taken out from under Schneider.

It’s not a stretch to imagine Bartz wanting more control of the part of Yahoo that brings in the bucks.

The fate of Connected Life Division EVP Marco Boerries is dicier–think Yahoo mobile and other devices–as it is for CFO Blake Jorgensen and David Windley, who heads human resources.

Both Jorgensen and Windley were favored by Decker, which does not necessarily make them goners. But both are in jobs on which Bartz will have to rely much more, so she might want her own choices in place.

Boerries (pictured here), a talented but more freewheeling exec under Yang, is another question all together. Already wealthy from selling several companies, the entrepreneurial exec is most often mentioned by sources as someone unlikely to stick around, especially if Bartz tries to rein him in more. (In addition, Boerries has family issues requiring that he spend a lot of time in his native Germany.)

As to the many Yahoo SVPs and VPs? Let’s just say it is likely there will be many fewer of them, as Bartz cuts, consolidates, simplifies and centralizes divisions more.

In With the New:

One hire that is definitely coming is a new chief of marketing to take over Yahoo’s brand, as well as its PR function. Yahoo has not had that kind of powerful exec in a long time, and it is more likely Bartz will go for an outside star here.

One outside name skittering around Yahoo for the role is John Vail (pictured here), director of interactive marketing for Pepsi-Cola North America, who knows Yahoo well.

(An obvious internal candidate for the job would be Yahoo’s Global Brand Marketing SVP, Allen Olivo, who could hit the road if not selected.)

Also a possibility is adding a COO with more Web experience to come in to help Bartz. There are plenty of candidates for that job all over the Internet sector.

But Bartz seems to be the kind of exec who favors flying solo and having key execs report to her to keep a finger on the pulse of a company. She is most definitely not going to have an entourage around her.

In fact, said one person familiar with the situation: “It’s long past time for new plumbing, and [Bartz] seems ready to flush a lot out that has long needed to go.”

The Past Is Prologue: Carol Bartz and Autodesk in 1992=Yahoo Now

Kara Swisher — Wed, 14 Jan 2009 08:30:43 +0000

Here is a story, in full, by the always terrific G. Pascal Zachary, which appeared in The Wall Street Journal in 1992, about the newly hired CEO, Carol Bartz, and the “theocracy of hackers” at then-wacky Autodesk.

Three guesses about who eventually won that battle, and the first two don’t count.

Fast-forward to 2008, with Bartz now taking up the difficult reins of Yahoo (YHOO), which is a little more behaved than Autodesk (ADSK) was then, but still a handful.

Here’s one quote from the story about Autodesk that could read as if it were in former exec Brad Garlinghouse’s infamous “Peanut Butter Manifesto” about Yahoo:

“Over time, Autodesk became almost unmanageable. Why? Autodesk was run very democratically. People met. They discussed things. Many flowers bloomed. But nobody harvested.”

(Although, to be fair, Yahoo co-founder and outgoing CEO Jerry Yang is no where near as odd as Autodesk founder John Walker.)

But my favorite quote from Bartz in the piece, and the most pertinent to Yahoo today, as it still sounds like her motto, after listening to her first outing as Yahoo CEO yesterday:

“I am not coming to Autodesk as a dictator. But I am not a consensus manager in the extreme. I do not believe the best decision is a group grope.”

Oh dear, because that has been Yahoo’s favorite management style–until now.

Here’s the full–and very long–piece:

SAUSALITO, Calif.–When Carol Bartz was named the new chairman and chief executive of Autodesk Inc. last month, the talk focused on her being the first woman outsider ever brought in to run a major high-tech company. But that obscured the larger issue: Whether an unruly clique of programmers at one of America’s most strangely run big companies will make her its latest managerial victim.

Autodesk? If the name barely registers, you’re not alone–even though, remarkably, the London Business School last year calculated that Autodesk was by one measure the most profitable company of the 1980s, based on the school’s survey of 2,000 public companies world-wide.

Though the world’s sixth largest PC software company, Autodesk is hardly a household name for a couple of reasons. One is that it dominates a niche: software that allows relatively inexpensive personal computers to produce powerful models for engineers, architects and other professional designers.

The other reason is Autodesk’s founding genius, John Walker, a reclusive programmer who doesn’t allow the company to distribute his picture or publish it in its annual report. In a rare interview granted for this article, a prickly Mr. Walker insisted that a reporter sit in front of a video camera, declared that Autodesk claimed a copyright on the ensuing discussion and debated the meaning of each question.

Just as Microsoft Corp., the world’s largest software supplier, is an extension of the personality of William Gates III, Autodesk is largely a creature of Mr. Walker. Like Mr. Gates, Mr. Walker is superb at identifying computer trends and spreading his vision to the troops. But unlike Mr. Gates, Mr. Walker, 42, never really wanted to run his company. “I’m an engineer, I’m a programmer, I’m a technologist,” he says. “I have no interest in running a large U.S. public company, and I never have. It was a means to an end to accomplish the technological work I wished to achieve.”

He relinquished the top spot in 1986 to Alvar Green, formerly Autodesk’s chief financial officer, to return to programming. But the real power still rested with Mr. Walker, Autodesk’s biggest shareholder, and an elite group of programmers called “Core,” who had either helped Mr. Walker found the company in 1982 or led its most important projects.

Core members are contentious, eccentric free-thinkers who have had a way of devouring professional managers. They have often attacked each other and company executives, usually by sending “flame mail”–biting electronic letters. The outbursts sometimes have led to changes, and sometimes brought work to a halt. “The whole company is a theocracy of hackers,” says Charles M. Foundyller, president of Daratech Inc., a market research firm in Cambridge, Mass.

A year ago, Mr. Walker issued the ultimate in flame mail, a 44-page letter brutally attacking Mr. Green for allegedly trying to bolster short-term profits by neglecting investment in new products and marketing. Mr. Green later decided to resign, but stayed on until the selection of Ms. Bartz, 43, who formerly ran worldwide field operations for Sun Microsystems Inc.

She is regarded as a canny pick, particularly because she has experience managing rapid growth. She’s also a tough manager who got her first big promotion at Sun when she convinced top management that she could do a better job than her boss, who was on vacation. “I am not coming to Autodesk as a dictator,” she says. “But I am not a consensus manager in the extreme. I do not believe the best decision is a group grope.”

That, however, is largely how Autodesk has been managed until now. It was founded by Mr. Walker and a dozen programmer pals just as International Business Machines Corp. revolutionized the computer industry with its original PC. Mr. Walker saw Autodesk as a diversified supplier of PC software with a can’t-miss future. “We should consider ourselves extremely lucky to be in this business at this time in history,” Mr. Walker wrote in 1982, egging on his co-founders. “I cannot imagine any scenario other than the total collapse of society in which the sales of microcomputer application software will not grow by a factor of 10 in the next five years.”

Actually, Autodesk’s own sales did better than that, jumping nearly tenfold to $9.8 million in the fiscal year ending Jan. 31, 1985, only its second full year of operation. Sales reached $100 million, another factor of 10, four years later; for the year ended Jan. 31, it earned $57.8 million on revenues of $284.9 million.

Mr. Walker didn’t invent the program that drove all this phenomenal success. Instead, Autodesk’s hit product proved to be a computer-aided-design (CAD) program that Mr. Walker purchased from an outside programmer named Michael Riddle. The program, which became AutoCad, did for designers of buildings, interiors and machines what VisiCalc’s spreadsheet did for the accountant: It made the personal computer an essential tool, where once pencil and paper reigned.

Mr. Walker quickly grasped the promise of AutoCad when Mr. Riddle gave him a presentation in 1982. “When I showed him the program, he was quiet for 45 minutes. It was the first time he’s ever been quiet with me,” says Mr. Riddle. Then, “he says, ‘You’ve got a fortune here.’” Before long, Autodesk dropped virtually all of its other work to concentrate on AutoCad. The program, which now sells for about $3,500, was a runaway success, cutting deeply into the sales of computer companies that blended software and hardware into systems that might cost 10 times the price of a PC with AutoCad, and yet afford only somewhat better performance.

While established CAD leaders ignored the threat from the PC, Autodesk began to entrench itself with customers. The company signed up dealers by the hundreds; many were architects and draftsmen themselves who sold it to their colleagues. And Mr. Walker created an AutoCad language so that consultants or customers could take the program and modify it to handle specific tasks. Today, thousands of AutoCad applications exist.

Mr. Walker gave Mr. Riddle an extraordinarily generous royalty agreement that eventually amounted to more than $10 million. The payment may be a record for an outside programmer in the PC business, but Mr. Walker has always operated by a different set of rules. He doesn’t care a whit about office decorum or hierarchy, so Autodesk was always casual and libertarian, even by techie standards.

“I realized this was a different place when at my first staff meeting, I was licked by a dog,” says one manager. But within this unstructured setting, Mr. Walker for the first four years ruled by charisma, relentless memo writing and sheer force of will.

Mr. Walker has unusual interests, which he imposed on Autodesk. When he grew intrigued with outer space, Autodesk invested in a company that salvages used fuel tanks from the Space Shuttle with the idea of sending them back into orbit, carrying the concept of recycling about as far as it can go. When he grew enamored of cellular automata and chaos theory, arcane fields at the intersection of computing, mathematics and biology, the company released a family of products based on those concepts that are essentially video games for brainy adults.

While Mr. Walker is intensely private about his personal life, he has had no qualms about airing Autodesk’s dirty laundry–or effusively describing his technical ideas. He published a book containing scores of confidential Autodesk memos, many written by himself. And he once unsuccessfully tried to interest journalist Hunter Thompson in chronicling the company’s rise. An obsessive writer who often revises a memo dozens of times before releasing it, he also has written a manuscript for a diet book, based on his experience of losing (and keeping off) about 100 pounds.

He is prone to making unexpected pronouncements. In a rare public appearance in March, Mr. Walker interrupted the description of a new product with this observation: “We are living on a small blue sphere in an endless black void.”

Besides programming, Mr. Walker wrote press releases and ad copy and even pitched the product at trade shows in the company’s early years. But wearing so many hats frayed his nerves. He began to show increasing impatience with co-workers. “The only way he knows how to deal with people is to bluster,” says Mr. Riddle, who argued with him about the technical direction of AutoCad.

These fits of impatience dove-tailed with Mr. Walker’s continuing suspicion of professional managers, shared by other members of Core. In early 1986, he forced out John G. Ford Jr., the vice president for marketing and sales, who built the dealer network that many observers say is still Autodesk’s most valuable asset. Neither Mr. Walker nor Mr. Ford will comment.

Despite Mr. Walker’s rough edges, employees were, and still are, drawn to him the way kids admire the baddest boy in class. He “is the cult hero of Autodesk,” says Joe Oakey, who directs the company’s charitable foundation. “He could stand up before a company meeting and say ‘I hate you,’ and everyone would cheer.”

It was also in 1986 that Mr. Walker tired of management and handed daily responsibilities to Mr. Green. Two years later, he resigned as chairman to devote himself fully to writing software from his nearby home. But he still held a huge stake in the company. (He currently owns 869,000 shares–less than 4% of the shares outstanding, but still worth more than $30 million.)

Mr. Green was ill-suited to ride herd on the rambunctious Core. Trained in finance, Mr. Green didn’t even keep a computer on his desk, so he missed the electronic chatter that went on behind his back. When he needed to send an electronic message–the preferred means of discourse at Autodesk–he asked his secretary to do it.

Meanwhile, disputes kept breaking out among programmers and managers, usually about the technical direction of the company. “Over time, Autodesk became almost unmanageable,” says Mr. Foundyller, the analyst. “Why? Autodesk was run very democratically. People met. They discussed things. Many flowers bloomed. But nobody harvested.”

Sometimes, the paralysis was relatively innocuous, as when employees voted to delay the company’s move into a new office complex because they preferred an alternative site opposed by management. Other times, disagreements led to debates over how to lessen the company’s dependence on its AutoCad cash-cow–or even whether the company should try to diversify. The need for consensus led to many organizational quirks. Last year, for instance, the critical AutoCad division was assigned two general managers–one from the business side and one from Core–because neither was believed to have the experience to run it alone. Ms. Bartz has already changed that, appointing a new head of the division to whom the former co-general managers report.

The most bitter disputes arose between programmers and the company’s marketing and sales executives. “A tremendous schism” has existed for years between the two sides, says Mark Macgillivray, who has consulted for Autodesk on marketing issues. Core members and other programmers have simply refused to work on certain new products because they found them boring. Sometimes these are products that customers are clamoring for, such as a more memory-efficient version of AutoCad, which “the techies fought us tooth and nail on,” recalls one marketing executive.

At many software companies, a product manager balances the interests of sales, which wants to satisfy customer demand for certain product features, and the interests of engineers, who push certain features because they are possible. At Autodesk, when products were being conceived “it became very difficult to get features agreed to,” says Tim Cox, who was a product manager for two years until departing last November. “The problem we kept running into–everything needed to be the programming group’s idea.”

Indeed, opposing Core was tantamount to “attempting to butcher the sacred cow,” says Roger Clay, who left Autodesk last year to form a software company.

For a long time, the financial results didn’t reflect the conflict. From 1986 to 1990, net income nearly quintupled and sales jumped more than five-fold. But in the fourth quarter of fiscal 1991 ended Jan. 31, earnings fell about 25 percent below expectations on an unexpected slowdown in growth. The stock fell 22% in a single day. Financial analysts blamed Mr. Green for not keeping them informed, and Mr. Walker blamed him, too–for catering too much to analysts. He asserted that Mr. Green kept profit margins high at the expense of much-needed investments in new products and marketing, which “is how a company dies from making too much money,” he said in his memorable broadside in April 1991, entitled “The Final Days.”

Writing from his new home in Neuchatel, Switzerland, where he had recently moved to find more seclusion, Mr. Walker observed that it pained him “watching Autodesk squander everything I’ve been working 16 hours a day for since 1982.” He accused Mr. Green of “taking his marching orders from the accounting rules rather than the real world” and said he “was so appalled by what I heard at one management meeting that I vowed never to attend another management meeting and I never have.”

The memo was regarded as overwrought by some of Mr. Walker’s own Core associates. “That letter caused me a lot of pain to read,” says Gregory P. Lutz, one of two Core programmers on the board of directors. “He was right about a lot of things and I hadn’t done anything about it. But I thought some of it was unfair and a little exaggerated.”

Moreover, the broadside didn’t mention that Mr. Walker himself had left the company and picked Mr. Green as his successor. “When somebody like Mr. Walker isn’t there, it leaves a vacuum,” observes Microsoft’s chief, Mr. Gates. “People are free to do what they want. It’s just a damn shame that he hasn’t chosen to stay in management or even within the mainstream of software development at the company.”

But Mr. Walker’s pungent analysis (termed “just brilliant” by Mr. Gates) succeeded in getting everyone’s attention at Autodesk. “It was like when you fire a shotgun in an aviary,” recalls Mr. Walker of the letter’s effect. “It caused everybody to say: What is our strategy? What are we doing out there?”

Mr. Green dutifully decided to do most of what Mr. Walker wanted: invest more in marketing and advertising of new products Mr. Walker said were being “abandoned” after introduction; push harder on a new version of AutoCad for Windows, Microsoft’s emerging standard for controlling PC software; and back forays into new areas such as software tools for do-it-yourself designers and scientists. But Mr. Walker’s attack destroyed the credibility of Mr. Green, who in October disclosed plans to resign as chairman and chief executive.

Mr. Green defends his record and downplays Mr. Walker’s memo as a factor in his demise, saying he intended for some time to step down. But he adds that Mr. Walker “perpetually” criticized him. “To a great degree, he was right,” Mr. Green says of Mr. Walker’s memo, adding that “John’s batting average is pretty high” when it comes to picking strategies.

Mr. Green protests that it never was clear to anyone how best to diversify Autodesk’s revenue. He concedes that he approved the company’s issuance of an extraordinary $1.50 a share special dividend because retained profits were mounting so rapidly. “We were asked by people, ‘Don’t you have anything better to do with your cash,’” recalls Mr. Green. “Well, no we didn’t.”

To get a closer look at operations–and to help select a new chief executive–Mr. Walker invited himself back to Autodesk this year for three months as “manager of technology.”

The timing of Ms. Bartz’s ascension to the top job appears auspicious. There are signs that managers and programmers are starting to cooperate better. In March, for instance, Core and other AutoCad development teams for the first time agreed to compile a single to-do list required to complete the next version, which is due out by midyear. The list, which used to be kept in the heads of various developers, consists of 7,000 items. Each is assigned a completion deadline and the name of a person responsible for it.

Moreover, new products are starting to flow. In March, the company removed one monkey from its back by shipping its first Windows version of AutoCad. Autodesk also introduced its first scientific product in March, a program called HyperChem that allows chemists to create molecular models. The scientific market is “the hidden iceberg in software,” says Joel Voelz, the product manager. All together, Autodesk expects to release 25 new products in the fiscal year ending next Jan. 31.

“Very few public companies have been encouraged to report disappointing short-term results to make the investments that are necessary to adapt to a changing market,” Mr. Walker says. “Autodesk had that problem. Autodesk doesn’t have that problem any more.”

Indeed, last week, Autodesk reported that first-quarter profit fell 41%, citing heavy investment in new products. But investors seem willing to give Autodesk some time: The stock, which is trading at about half of its year-ago all-time high, went up on the news.

Another point in Ms. Bartz’s favor: Mr. Walker seems content for the moment. He returned to Switzerland on April 16, but not before pledging his “total and unqualified” support for Ms. Bartz and promising that neither he nor other Core members will “step in and prevent change at the last minute,” as has occurred in the past.

“It seems as if John and I are having a love-in,” says Ms. Bartz. But she also pointedly notes that Mr. Walker is so talented, “he could have many careers,” even one as a writer. “I admire John’s amazing writing skills,” she says.

A Garlinghouse Memorial: BoomTown Decodes the Infamous "Peanut Butter Manifesto"

Kara Swisher — Fri, 27 Jun 2008 13:53:03 +0000

Now that he’s officially–well, Yahoo has not said so, but it is so–leaving the company later this summer, what say we blame Brad Garlinghouse for all the woes of Yahoo!

After all, Garlinghouse’s infamous “Peanut Butter Manifesto” was the key ur-moment that one could point to as the one in which the curtains were pulled back at the troubled Internet company to reveal, well, a very sticky mess.

Garlinghouse (pictured here), who ran communications and communities for Yahoo (YHOO), is set to be replaced in part by Scott Dietzen, who was the president and CTO of Zimbra (and before that CTO of BEA Systems). Yahoo bought the highly innovative open-source email startup last fall for $350 million.

(By the way, Dietzen will get only 50%–communications products and services–of Garlinghouse’s job, while Front Door head Tapan Bhat will get communities.)

But back to Brad and peanut butter: The 2006 internal document, penned by the Yahoo senior vice president, essentially unfairly impugned delicious peanut butter by using it as a metaphor for Yahoo spreading its resources too thinly.

As far as I am concerned, life is all in the spreading–you can go thick with peanut butter, Brad!

In any case, as a memorial to the Garlinghouse era, BoomTown decodes the manifesto:

Brad wrote: Three and half years ago, I enthusiastically joined Yahoo! The magnitude of the opportunity was only matched by the magnitude of the assets. And an amazing team has been responsible for rebuilding Yahoo!

It has been a profound experience. I am fortunate to have been a part of dramatic change for the Company. And our successes speak for themselves. More users than ever, more engaging than ever and more profitable than ever!

I proudly bleed purple and yellow everyday! And like so many people here, I love this company.

Translation: This is the borderline cultish kissing-up part, before I deliver the coup de nut.

Thus: Blah, blah, blah–love it! Blah, blah, double blah–so profound I think I shall weep!

And the nuclear blah, blah, blah–I pull out the bleeding purple and yellow expression, used way too often at Yahoo, which, when you really think about it, is just gross.

Brad wrote: But all is not well. Last Thursday’s NY Times article was a blessing in the disguise of a painful public flogging. While it lacked accurate details, its conclusions rang true, and thus was a much needed wake-up call. But also a call to action. A clear statement with which I, and far too many Yahoos, agreed. And thankfully a reminder. A reminder that the measure of any person is not in how many times he or she falls down–but rather the spirit and resolve used to get back up. The same is now true of our Company.

It’s time for us to get back up.

Translation: Cue ominous music! Drag out the “Rocky I-VI” cliches (except for V, which sucked)! Order those I’ve-Fallen- and-I-Can’t- Get-Up thingies for the entire company. Also, insult the media, even though that’s exactly where all Yahoo employees get the most up-to-date information about what’s what here.

Brad wrote: I believe we must embrace our problems and challenges and that we must take decisive action. We have the opportunity–in fact the invitation–to send a strong, clear and powerful message to our shareholders and Wall Street, to our advertisers and our partners, to our employees (both current and future), and to our users. They are all begging for a signal that we recognize and understand our problems, and that we are charting a course for fundamental change. Our current course and speed simply will not get us there. Short-term band-aids will not get us there.

It’s time for us to get back up and seize this invitation.

Translation: You realize, of course, this was written in 2006! Um, almost two years ago. And nothing has, well, changed all that much.

Strong, clear and powerful message that we understand our problems and are charting a course for fundamental change?

A cow could fall through the crack that task disappeared into!

Brad wrote: I imagine there’s much discussion amongst the Company’s senior most leadership around the challenges we face. At the risk of being redundant, I wanted to share my take on our current situation and offer a recommended path forward, an attempt to be part of the solution rather than part of the problem.

Translation: No one in senior management is listening to me. I’ll show them Tom-Cruise- Jerry-Maguire style!

Show me the money!

Brad wrote: Recognizing Our Problems

Translation: Help me, help you. Help me, help you.

Brad wrote: We lack a focused, cohesive vision for our company. We want to do everything and be everything–to everyone. We’ve known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don’t talk to each other. And when we do talk, it isn’t to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics.

Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like–rather than a leadership team rallying around a single cohesive strategy.

Translation: This, of course, is the description of the basic family setup of “The Sopranos.” Except we have no Bada-Bing.

I so wish we had a Bada-Bing at Yahoo, instead of that not-Google cafeteria.

In fact, I wish we had Tony Soprano running the place, except I personally think he got shot during that annoying “Don’t Stop Believin’” ending (see video below!).

Brad wrote: 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.

Translation: I hate peanut butter. We all should.

That is, those of us whose parents did not know how to make a proper sandwich.

Brad wrote: We lack clarity of ownership and accountability. The most painful manifestation of this is the massive redundancy that exists throughout the organization. We now operate in an organizational structure–admittedly created with the best of intentions–that has become overly bureaucratic. For far too many employees, there is another person with dramatically similar and overlapping responsibilities. This slows us down and burdens the company with unnecessary costs.

Translation: Again, this was two years ago. Plus ca change, plus c’est la meme chose.

That’s French for peanut butter.

Brad wrote: Equally problematic, at what point in the organization does someone really OWN the success of their product or service or feature? Product, marketing, engineering, corporate strategy, financial operations…there are so many people in charge (or believe that they are in charge) that it’s not clear if anyone is in charge. This forces decisions to be pushed up–rather than down. It forces decisions by committee or consensus and discourages the innovators from breaking the mold…thinking outside the box.

There’s a reason why a centerfielder and a left fielder have clear areas of ownership. Pursuing the same ball repeatedly results in either collisions or dropped balls. Knowing that someone else is pursuing the ball and hoping to avoid that collision–we have become timid in our pursuit. Again, the ball drops.

Translation: It is like Al Haig gone wild at Yahoo–I’m in charge here!

And then right onto the business-as-a-baseball game cliche, as we are like “The Bad News Bears” at Yahoo. Except we could use a drunk coach like Walter Matthau right about now.

Brad wrote: We lack decisiveness. Combine a lack of focus with unclear ownership, and the result is that decisions are either not made or are made when it is already too late. Without a clear and focused vision, and without complete clarity of ownership, we lack a macro perspective to guide our decisions and visibility into who should make those decisions. We are repeatedly stymied by challenging and hairy decisions. We are held hostage by our analysis paralysis.

Translation: Yahoo Held Hostage! This is an eerie precursor to CEO Jerry Yang’s 100-day No Sacred Cow Vision Quest, isn’t it?

Brad wrote: We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.

• YME vs. Musicmatch

• Flickr vs. Photos

• YMG video vs. Search video

• Deli.cio.us vs. myweb

• Messenger and plug-ins vs. Sidebar and widgets

• Social media vs. 360 and Groups

• Front page vs. YMG

• Global strategy from BU vs. Global strategy from Int’l

Translation: There can be only one! Although one is the loneliest number, which is why we have two of everything.

Brad wrote: We have lost our passion to win. Far too many employees are “phoning” it in, lacking the passion and commitment to be a part of the solution. We sit idly by while–at all levels–employees are enabled to “hang around.” Where is the accountability? Moreover, our compensation systems don’t align to our overall success. Weak performers that have been around for years are rewarded. And many of our top performers aren’t adequately recognized for their efforts.

As a result, the employees that we really need to stay (leaders, risk-takers, innovators, passionate) become discouraged and leave. Unfortunately many who opt to stay are not the ones who will lead us through the dramatic change that is needed.

Translation: By “phoning” it in, I mean from their cellphones at home. By “hang around,” I mean at the bar near the office.

By employees that we really need to stay (leaders, risk-takers, innovators, passionate) become discouraged and leave, I mean me! Buh-bye, Ash!

Brad wrote: Solving our Problems

Translation: And now I return to Jerry Maguire!–Help me, help you. Help me, help you.

Brad wrote: We have awesome assets. Nearly every media and communications company is painfully jealous of our position. We have the largest audience, they are highly engaged and our brand is synonymous with the Internet.

If we get back up, embrace dramatic change, we will win.

I don’t pretend there is only one path forward available to us. However, at a minimum, I want to be part of the solution and thus have outlined a plan here that I believe can work. It is my strong belief that we need to act very quickly or risk going further down a slippery slope. The plan here is not perfect; it is, however, FAR better than no action at all.

Translation: More Maguire required! I will not rest until I have you holding a Coke, wearing your own shoe, playing a Sega game *featuring you*, while singing your own song in a new commercial, *starring you*, broadcast during the Super Bowl, in a game that you are winning, and I will not *sleep* until that happens. I’ll give you 15 minutes to call me back.

Brad wrote: There are three pillars to my plan:

1. Focus the vision.

2. Restore accountability and clarity of ownership.

3. Execute a radical reorganization.

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.

My belief is that the smoothly spread peanut butter needs to turn into a deliberately sculpted strategy–that is narrowly focused.

We can’t simply ask each BU to figure out what they should stop doing. The result will continue to be a non-cohesive strategy. The direction needs to come decisively from the top. We need to place our bets and not second guess. If we believe Media will maximize our ROI–then let’s not be bashful about reducing our investment in other areas. 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.

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.

I believe there are too many BU leaders who have gotten away with unacceptable results and worse–unacceptable leadership. Too often they (we!) are the worst offenders of the problems outlined here. We must signal to both the employees and to our shareholders that we will hold these leaders (ourselves) accountable and implement change.

By building around a strong and unequivocal GM structure, we will not only empower those leaders, we will eliminate significant overhead throughout our multi-headed matrix. It must be very clear to everyone in the organization who is empowered to make a decision and ownership must be transparent. With that empowerment comes increased accountability–leaders make decisions, the rest of the company supports those decisions, and the leaders ultimately live/die by the results of those decisions.

My view is that far too often our compensation and rewards are just spreading more peanut butter. We need to be much more aggressive about performance-based compensation. This will only help accelerate our ability to weed out our lowest performers and better reward our hungry, motivated and productive employees.

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% to 20%.

I emphatically believe we simply must eliminate the redundancies we have created and the first step in doing this is by restructuring our organization. We can be more efficient with fewer people and we can get more done, more quickly. We need to return more decision-making to a new set of business units and their leadership. But we can’t achieve this with baby-step changes. We need to fundamentally rethink how we organize to win.

Translation: In a peanutshell, let’s be Google (GOOG).

Brad wrote: Independent of specific proposals of what this reorganization should look like, two key principles must be represented:

Blow up the matrix. Empower a new generation and model of General Managers to be true general managers. Product, marketing, user experience and design, engineering, business development and operations all report into a small number of focused General Managers. Leave no doubt as to where accountability lies.

Kill the redundancies. Align a set of new BU’s so that they are not competing against each other. Search focuses on search. Social media aligns with community and communications. No competing owners for Video, Photos, etc. And Front Page becomes Switzerland. This will be a delicate exercise–decentralization can create inefficiencies, but I believe we can find the right balance.

Translation: Or, maybe we could be Facebook.

Brad wrote: I love Yahoo! I’m proud to admit that I bleed purple and yellow. I’m proud to admit that I shaved a Y in the back of my head.

Translation: More yucky purple and yellow bleeding with a cup full of Britney-Spears-crazy hairstyling on top!

Brad wrote: My motivation for this memo is the adamant belief that, as before, we have a tremendous opportunity ahead. I don’t pretend that I have the only available answers, but we need to get the discussion going; change is needed and it is needed soon. We can be a stronger and faster company–a company with a clearer vision and clearer ownership and clearer accountability.

We may have fallen down, but the race is a marathon and not a sprint. I don’t pretend that this will be easy. It will take courage, conviction, insight and tremendous commitment. I very much look forward to the challenge.

So let’s get back up.

Catch the balls.

Translation: My motivation for this memo is the adamant belief that it will drive my bosses nuts and someone will surely leak it to the press.

Thus, I wind up with the marathon-not-a-sprint cliche, sprinkle in the get-up one and round the bases with the baseball cliche.

Brad wrote: And stop eating peanut butter.

Translation: Despite my unfair impugning of the peanut-loving work of George Washington Carver, I secretly love peanut butter.

But it once got in my chocolate. Or did my chocolate get in my peanut butter?

In any case, soon to come: The Jelly Memo. That’ll be sweet!

And here is the last minutes of “The Sopranos,” where Tony–and here is an exhaustive and convincing explanation as to why–got whacked:

More on Yahoo's Reorg: Dietzen Is Garlinghouse Replacement

Kara Swisher — Thu, 26 Jun 2008 16:43:37 +0000

As BoomTown reported last night, the Yahoo (YHOO) reorg will be unveiled later this morning, with the slate of execs that this column outlined last week in its gory–oops, I mean, glorious–detail.

Sources said a more substantial public announcement has been pushed by Yahoo’s board–apparently, an internal email to employees was considered too–to show Yahoo’s new team and that the company still has a strong bench, despite a lot of exec departures of late.

As we already wrote, the structure will pivot on several key execs, reporting to President Sue Decker.

EVP of Yahoo’s Platforms and Infrastructure division Ash Patel as head of a new Audience Products group (its name was changed from Global Products); Global Partner Solutions EVP Hilary Schneider as the head of a new U.S unit; various folks running around the rest of the globe.

There will also be another strategy team group with a new head, who has not yet been chosen.

And Yahoo will name Scott Dietzen (pictured, right) to take over part of the job of SVP Brad Garlinghouse, who running was running all communications properties and products. Dietzen will get the communications portfolio, which includes email and messaging, all under Patel.

(Community properties like Flickr will actually move under Front Door Head Tapan Bhat, who also reports to Patel.)

Dietzen was the president and CTO of Zimbra (and before that CTO of BEA Systems), the highly innovative open-source email startup Yahoo bought last fall for $350 million.

Garlinghouse (pictured, left), as we reported last night, will not be officially leaving until the end of the summer, though. He is currently traveling in Asia, sources said, and has not yet decided on a new gig.

He is, of course, the man who wrote the infamous “Peanut Butter Manifesto,” which first revealed deep tension within Yahoo.

Yahoo is likely to also announce changes in the engineering organization under CTO Ari Balogh, who is also orchestrating some massive and much-needed changes in the arena at Yahoo.

Is Yahoo's Peanut Butter Man Toast?

Kara Swisher — Thu, 19 Jun 2008 23:14:18 +0000

Oh, BoomTown had to say it, didn’t I?

But, as SVP Brad Garlinghouse’s fate is still uncertain at Yahoo (YHOO), his edge-of-your-seat situation is the latest wrenching dramatic shift at a company that can’t seem to stop producing them.

While reports say he has quit, Garlinghouse actually has not done that yet and will not likely make a definitive move to leave for at least a week or longer, unlike fellow Yahoo SVPs Qi Lu and Vish Makhijani, who have tendered their resignations this week.

And, of course, their boss, Network division head Jeff Weiner, who left Yahoo last week.

Garlinghouse’s departure, given all the attention, could move forward quickly, as Weiner’s did, especially given all the tumult at Yahoo. He is Yahoo’s SVP in charge of communications and communities.

So why are he and others leaving?

Sources say Garlinghouse and the other execs are deeply unhappy about the new reorganization being architected largely by President Sue Decker.

Structured now to hand over a lot more power to Yahoo EVP Hilary Schneider, who runs the Global Partner Solutions division, the changes are being made without a lot of input from execs like Garlinghouse.

Instead, Decker–with Yahoo CEO Jerry Yang–is working with a small group of top managers, especially Chief Human Resources Officer David Windley, so a lot of other top managers are largely in the dark about the changes.

This is not a good thing for morale, given that the reorg is likely to take power from the various fiefdoms at Yahoo that execs like Garlinghouse have presided over.

That’s why, unless the balance of power is changed in the new plan, it is unlikely Garlinghouse will stay on, said several sources, much more than a week or two.

If it happens, his departure will be more than ironic.

After all, it was Garlinghouse who got this whole thing started–or at least unveiled Yahoo’s internal problems to the world–with his famous “Peanut Butter Manifesto” in November of 2006.

Taking about Yahoo’s problems, he used peanut butter as a metaphor.

“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.”

After insulting the delicious and nutritious spread beloved by children across the U.S., Garlinghouse also talked about the need for change in the now clearly be-careful-for-what-you-wish-for memo.

“I believe we must embrace our problems and challenges and that we must take decisive action. We have the opportunity–in fact the invitation–to send a strong, clear and powerful message to our shareholders and Wall Street, to our advertisers and our partners, to our employees (both current and future) and to our users,” he wrote.

“They are all begging for a signal that we recognize and understand our problems, and that we are charting a course for fundamental change. Our current course and speed simply will not get us there. Short-term band-aids will not get us there.”

No, indeed, they will not, especially when the wounds are now so dangerously deep throughout Yahoo’s corporate body and the bleeding of talent seemingly unstoppable.

Qi Lu Departure a "Blow" to Yahoo; Makhijani Out Too, Garlinghouse Not Quite Yet

Kara Swisher — Thu, 19 Jun 2008 20:49:59 +0000

As BoomTown reported earlier today, well-regarded top Yahoo techie Qi Lu (pictured here) will be leaving the company, in a move to be announced today or tomorrow by the troubled Internet company.

One Yahoo insider, who characterized Lu as a “rock star” and highly regarded at the company, said the departure was a “blow” that will be devastating to the engineering organization at Yahoo (YHOO).

Our post also alluded to the precarious situation around the top four execs just under Network division head Jeff Weiner, who left last week.

Those execs are: Front Door and Network Services’ Tapan Bhat, Brad Garlinghouse, who heads Yahoo’s communications and communities arenas, Media Group head Scott Moore and Yahoo Search’s Vish Makhijani.

It looks as though the departure of Makhijani (pictured here) will also be announced today or tomorrow.

With Yahoo search just treading water and a deal to outsource some of the search-ad business to Google (GOOG), one has to wonder how Makhijani endured in the center of the storm for this long.

And while there have been reports that Garlinghouse will also leave this week–it was he who started the ball rolling with his infamous “Peanut Butter Manifesto” that called for deep change at Yahoo nearly two years ago–sources tell me he is still sifting through his options, in light of a sweeping reorganization at Yahoo that he is reportedly deeply unhappy about.

That’s why it is more than likely that Garlinghouse (pictured here) will also leave–perhaps by next week–but he has not resigned or told his subordinates of any plans as yet.

But given that power is shifting dramatically to Global Partners Solutions EVP Hilary Schneider in the reorg I wrote about last night, Garlinghouse’s time at Yahoo seems limited.

As I wrote: “Many sources expect that Schneider is likely to amass more power in the new structure–she is close to [Yahoo President Sue] Decker, who must dramatically rejigger Yahoo’s top echelons to better focus the company on its stated objectives of becoming the premier ad network and a consumer ’starting point.’”

More like ending point for a lot of critical Yahoo execs, as repercussions from Yahoo’s botched handling of the Microsoft (MSFT) takeover bid ripple throughout the company.

Memo to Moore and Bhat: If this were a murder mystery, like “Ten Little Indians,” one of you better tread very, very carefully.