Faced with a stock price that is going nowhere, Terry Semel announced a major reorganization of Yahoo yesterday. Known internally as Project Soufflé, Semel broke some eggs in order to simplify Yahoo (YHOO) into three main groups: Audience, Advertisers and Publishers, and Technology. Chief operating officer Dan Rosensweig is out, and so too is media chief Lloyd Braun. Chief financial officer Sue Decker is now in charge of the advertising and publishing group (which includes sales), and chief technology officer Farzad Nazem will head up the technology group. But, inexplicably, no leader has yet been picked to head up the audience group, which is the most visible and important one.
Following on the heels of the leaked Peanut Butter memo—which called for less bureaucracy, more focus on Yahoo's priorities, and clearer lines of ownership and authority—the move to simplify the company's organizational structure comes as no surprise. Even some Yahoo employees couldn't tell you what the former organizational structure was. Killing Lloyd Braun's media fiefdom in Hollywood and subsuming it under Semel's longtime deputy, search chief Jeff Weiner, who now also heads up social media and communications, should help bring more clarity to Yahoo's various media efforts. Don't expect Yahoo to continue Braun's experiments with original Web programming. Channeling media created by consumers and big media companies will more likely be the norm.
And what of Brad Garlinghouse, the Peanut Butter memo author who is in charge of Yahoo Mail, Messenger, the home page, MyYahoo, and (at least until yesterday) the communications products? Will he now be reporting to Weiner? My guess is that
both he and Weiner will report directly to whoever heads up the audience group. (Update: Garlinghouse just confirmed to me that Weiner is in fact his new boss). That may end up being Weiner, but more likely Semel will reach outside for a more seasoned executive.
All of this begs the question: Is Yahoo just reshuffling the deck chairs, or is it really trying to redefine itself? Ask some Yahoo employees what the company's mission is and they draw a blank, even now.
For a long time, the debate was whether Yahoo was trying to be a media company or a technology company. But that distinction is meaningless now. All media companies, by definition, need to be technology companies or risk being left by the wayside. Yahoo, more than any other company, can become the place where you use technology to organize all of your media. Sure, it faces threats from Google on the technology front and MySpace on the audience front, but trying to out-Google Google or out-MySpace MySpace will only lead to disaster. Yahoo needs to find what it does best and stick to it. Otherwise, it won't continue to be the most popular place on Web for long.