Yahoo SVP Tries Firing Up His Company with 'Leaked' Memo

A week after the publication of a scathing New York Times feature last month that borrowed analysts' comments to paint a picture of Yahoo as a fat, bloated, floundering company with a sudden incapability to execute, the company's charismatic senior vice president, Brad Garlinghouse, wrote a company memo calling for a dramatic corporate reorganization. His plan would call for a realignment of Yahoo's business units and the trimming of up to 20% of its current payroll.

There's nothing in the memo for Garlinghouse or anyone else at Yahoo to be personally ashamed about, beyond the acknowledgment that the Times story painted a representative, if not accurate, picture of the company. No names are named, and although he calls for the institution of a system wherein heads that can roll should roll, he does not point out which heads specifically.

However, the relative success of the memo in garnering approval within Yahoo's corporate ranks may be in question today, as a result of its having been "leaked" -- to understate the phrase -- to the Wall Street Journal, to Reuters, and of all places, to Yahoo News itself. WSJ ran the memo in its entirety.

With nothing in the memo that could damage Garlinghouse's reputation (more likely, it could bolster his standing), it seems likelier that whoever leaked the memo is a supporter of the plan it outlines. This raises the possibility that Garlinghouse's plan, while embryonic in this form, may not yet have gained support among his superiors.

It already has a name: "The Peanut Butter Memo," in reference to an analogy Garlinghouse draws about "spreading peanut butter across the myriad opportunities that continue to evolve in the online world." A company can appear to sculpt itself into any form it wants, he describes later, with a thin layer of peanut butter, while masking the fact that at every point in the structure, there's a lack of depth.

"We lack a focused, cohesive vision for our company," Garlinghouse writes. "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."

A simple excising of the mere five instances of the word "Yahoo" in this 1,900-word essay could enable this memo to apply to a great many American companies.

In its portrait of Yahoo as a company already behaving like a lumbering, overgrown giant, the Times frequently compares it to Google, which is perceived to be evolving its advertising engine at a much faster rate (many Yahoo projects are a year behind or more), and which succeeded in acquiring YouTube despite Yahoo's best efforts.

But the article may have jumped to conclusions in presuming that the success of the YouTube acquisition is a certainty for Google, given the complexities of the legal troubles the combined companies could face in copyright and other departments.

A slight downturn in audience measurements for YouTube and other sites in the social networking category (though YouTube concentrates more on videos) during the month of September, is being interpreted as a sign that growth in this segment may be limited, not only by economic factors but also by the whims of the sites' own members. Unstable brand loyalty may be one factor working against major players including YouTube, whose number of clips viewed per session plummeted more than 9% just between July and August, according to figures from comScore Media Metrix.

Rather than declaring Yahoo a failure for not having absorbed YouTube, Garlinghouse instead takes his company to task for not being able to generate its own competitive projects from inside its own ranks. With so much talent on board, you'd think the company would do something with it.

Says Garlinghouse, "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."

It goes on. The memo doesn't insult or ridicule any division or anyone in particular, though it does list pairs of divisions and business units Garlinghouse says have been assigned parallel projects, with authority and objectives and agendas that overlap one another, though without progress being made on either side.

Next: Yahoo competing with itself