Even if it’s a spectacularly obvious thing for a new CEO to do, Carol Bartz’s reorganization of Yahoo’s management ranks as early as this week will be a pivotal development.
That’s because, contrary to a lot of the analytical blather out there, the embattled company’s fate will be determined more from within than without. More than anything else—more than Microsoft’s fitful deal-making attempts, more than Google’s crushing competition in search, more than the current slowdown in online advertising—the quality and determination of Yahoo’s management from here on out will decide whether the Internet icon will do a slow fade (or a quick sellout) or mount an unlikely comeback. According to Kara Swisher at the blog Memotown—I mean Boomtown—missives sent to Yahoos the past two weeks indicate that Bartz will implement a “more traditional and more accountable structure like the one she employed while rehauling Autodesk.” That means she will have a chief operating officer, chief technology officer, chief marketing officer, and the like report directly to her in a more simplified structure than Yahoo’s longstanding and infamous “matrix management” system.
As I wrote when Bartz was chosen, this is one of the key things the new CEO needed to do, and quickly:
* Nuke the current management structure once and for all. Although former CEO Terry Semel was credited with turning Yahoo around in its youth, he helped create a “matrix” management system that required ideas to be vetted by many managers, slowing new services and making few people truly accountable for particular projects. Despite repeated vows to get rid of the matrix and constant reorganizations of management, that hasn’t happened. “They need one person in charge to coordinate what they do,” says Autodesk CEO Carl Bass.
And Bass and others think that’s precisely what Bartz can do. “She has a forceful ability to make decisions, and that’s a talent Yahoo needs,” says Neil Sims, managing director at the executive search firm Boyden Global Executive Search.
Bartz also is looking at a couple of other crucial moves, according to the memos. That includes slowing down the rollout outside the U.S. of its new display-ad system called APT, which has not wowed many people since its limited launch last fall. But she will need to find a way to revitalize Yahoo’s fading leadership in display ads as the poor economy accelerates some big changes in how those ads are sold. After all, as I also wrote five weeks ago, if anyone can lead the new generation of display ads, “it should be Yahoo, whose considerable experience in search, banner, and video ads—combined with unmatched relationships with advertisers and agencies—gives it a golden opportunity. Bartz must figure out how to seize it.”
Bartz apparently is also looking at remaking Yahoo’s important media unit, according to Swisher, splitting it into three units while also centralizing product development at Yahoo’s Sunnyvale headquarters.
Whatever the specifics, and whenever the changes get underway, all this will be a major change in how Yahoo manages itself. “Get well-rested, because next week’s a biggie,” Bartz advised the troops in a Feb. 20 memo.