When Terry Semel became Chairman and CEO of Yahoo! he faced the daunting task of guiding Yahoo! through yet another restructuring process. Was Semel correct in his assumption that another restructuring was necessary or would Yahoo! have been fine without the restructuring?
Yahoo! began as a small web site in the mid ‘90s geared toward tracking favorite sites visited by users and quickly grew into a widely used and highly popular Web browsing tool and media sensation. With Yahoo!’s initial “business plan modeled on [that of a] traditional broadcast media” company it was inevitable that at some point in the future Yahoo!’s structure would need to be adjusted to better suit the company’s needs (Wheelen & Hunger pg 13-3). Yahoo!’s first restructuring created a bureaucratic organization that was easily overwhelmed by “overlapping responsibilities” which predictably “slowed down the decision-making process” (Wheelen & Hunger pg 13-6). Regardless of this set back in the company’s structure Yahoo! has maintained an extraordinary assortment of accomplished and knowledgeable senior executives. However, because Yahoo! lacked any clear-cut and decisive structure the company lost some of its vital personnel as well as many other employees throughout the corporation.
Yahoo! began as a company focused on “communication, content, and commerce” and was well-known for its abilities in these areas (Wheelen & Hunger 13-8). However, over the years Yahoo! managed to lose both its focus and its identity causing its executives to become overwhelmed by the many different opportunities in the internet industry. Semel arrived on the scene with a clear idea of what needed to be done to refocus Yahoo! on what would make the company profitable in the short-term as well as increase the company’s longevity in the face of fierce competition. Semel was determined to eliminate the “complex matrix organizational structure” and replace it with a leaner, more agile organizational structure, one which was more receptive to its clientele (Wheelen & Hunger 13-6). Semel’s decision was exactly what the company needed to regain its position in the industry.
Semel’s belief that reorganizing Yahoo! into an organization focused on catering its services to three main groups was an accurate assumption necessary for securing Yahoo!’s future profitability and longevity. A company spread too thin across too many areas, as Yahoo! was previously, is literally setting itself up for failure and Yahoo! was well on its way down the road of failure before Semel’s appointment as CEO. In Yahoo!’s operations it was clear that there was an ‘audience,’ a group of persons who use the various services offered by Yahoo! and their...