Yahoo's Peanut Butter Manifesto: "It is time for us to get back up"

In a wonderful example of how big companies can be changed from within, and not always at the Board level, a Yahoo! SVP has written a "call to arms" to suggest change within the Internet giant. Take note marketing executives--you too could be an agent of change.

At Yahoo, it is called "The Peanut Butter Manifesto" -- a four-page email declaring that the Internet company is spreading itself too thin and must define priorities and radically reorganize its management structure.

Now the manifesto has attracted the attention of Yahoo's top brass as they scramble to boost revenue and protect the company's status as the most popular stopping point on the Web for U.S. users, amid heated competition from Google Inc. and others. (Read the memo at WSJ.com)

From the Wall Street Journal:

Yahoo 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.

The memo doesn't specify any areas to sell or eliminate. Some analysts say activities such as Yahoo's online dating site and services for small businesses such as Web hosting could be possible candidates.

There are signs the Peanut Butter Manifesto has resonated with Yahoo's top executives. Chief Operating Officer Dan Rosensweig has asked Mr. Garlinghouse to head a group of Yahoo staff looking into the issues in the memo over two months, say people familiar with the matter.

In a statement, a Yahoo spokeswoman said the company is sharpening its focus on key areas recently identified by Chief Executive Officer Terry Semel "in order to better exploit its considerable strengths." She cited positive early feedback to a major ad system upgrade, a new mobile ad partnership with Vodafone Group PLC and the acquisition this week of the online contest start-up business Bix.com Inc. as proof of those efforts. "The memo itself highlights that we have an open, collaborative culture and a senior management team that is intensely committed to helping Yahoo fulfill its potential as an Internet leader," the spokeswoman added.

Comments

[Eric Jackson]

This memo suggests that much more clarity is needed from Yahoo's CEO. It appears to be time for Terry Semel to retire and I would suggest that Susan Decker take over.

Jerry Yang and David Filo are critical at this crossroads for Yahoo!:

http://breakoutperformance.blogspot.com/2006/11/open-letter-to-jerry-yang-and-david.html

Cheers,

Eric

[Judy]

Thank you for you insights! We have linked to your blog - www.employeefactor.com