A Distinct Lack of Focus at Yahoo!

 | Aug 09, 2014 | 10:30 AM EDT
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As many of you know, I have been recently outspoken in my criticism of Yahoo's (YHOO) CEO, Marissa Mayer.

If, two years after taking the job, Mayer were performing well -- and if sales and earnings before interest, taxes, depreciation and amortization were growing -- there are a lot of eccentricities that investors would have been able to accept. If she were growing those numbers, and thus the value of Yahoo's core business, it wouldn't have been hard to go along with her compensation; the $2 billion spent on unknown companies in mergers-and-acquisitions activity; or Mayer's inability or unwillingness to cut headcount.

But Mayer is not growing sales. They are declining. Therefore, investors such as myself are grumpy and more willing to speak openly about our disappointment.

Given these declining numbers, there's one other eccentricity of Mayer's that is irksome to me: She loves direct reports. Earlier this week Yahoo hired a new chief information officer, Mike Kail, from Netflix (NFLX) -- a position that has been open for many months now, since Dave Dibble announced he was leaving.

In the press release announcing the new hire, it was also mentioned that Kail would report directly to Mayer. However, I know from three other sources that Kail will be the 36th direct report of Mayer's.

Yes, that's 36. This is an absurd number.

If you are any manager -- CEO or not -- it's impossible to effectively manage 36 people. You might have to do lots of midyear and full-year performance reviews, in addition to just day-to-day updates and regular formal meetings, such that you'll have no other time to do your regular job. Or, alternatively, you might be a manager of those 36 people in name only, not really giving them enough time that each one requires.

Another possibility is that you're a control freak, or that you have a greater sense of yourself and your abilities than you should have. You've demanded that all of these people must report to you because you basically don't trust that they could have another manager to oversee them. Only you can be their manager.

This is delusional thinking. Everyone is replaceable as a manager. We all learn that sooner or later in our careers.

Whatever the reasons at play here -- and maybe it's some combination of all of them -- from a shareholder perspective there's no good reason for Mayer to have 36 people directly reporting to her. It all augers poorly for things to come. The sheer quantity means decisions now have to run on Mayer's schedule, instead of being handled more quickly by people one level below her.

This kind of goes against the idea that she's been trying to portray -- that she has made a few decisions along the way that have led to the declining sales, but that this was merely because they were moving too quickly.

Which is it?

These 36 direct reports are symptomatic of a larger problem: an inability to focus and cut the vast array of Yahoo properties and countries to something much more manageable. This company needs to put all its efforts behind its best products, and not spend all its time doing triage on the products that will never make money.

Focus, focus, focus -- and it starts at the top.

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