I recently read in the Wall Street Journal an article on how Yahoo! is beginning to consolidate/centralize their different business units. This is an interesting trend where during economic slow downs corporations try to consolidate and centralize for “synergy” and “cost savings.” In economic booms, the corporations reverse course and decentralize (usually though the creation on new business lines/unit, but rarely breaking apart existing groups). Yahoo is doing it, my company is, and I’m sure many others are as well.
A Managing Director at my firm recently commented that it is one big cycle that he’s seen time and time again; we’re in cost savings and consolidation mode right now and eventually we’ll be in spend mode and decentralize mode again (new lines of business).
It makes sense that when money is tight you look to cut the fat and concentrate more on business as usual rather than the new great idea. The shame is that by Yahoo combining business units such as mail and search a lot of creativity will be lost. You know how it goes…the too many cooks in the kitchen concept. Does anybody see a business unit the size of the new Yahoo entity agreeing that it is a good idea to take the risk and revamp Yahoo Mail using unproven Web 2.0 technology? It worked out great (check out Yahoo Mail if you don’t already have an account), but it might not have and that is what large groups are always afraid of.
Google still pumps out the creative ideas because it is decentralized. If we ever read that Google is “centralizing” we’ll know it is all over for them and we should sell, sell, sell!
Financial Journeyman 