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Yahoo and Bain: What’s Really Going On

Kara Swisher throws Yahoo!’s engagement with Bain into the limelight today, with a gleeful, gloating, and ultimately fatuous article. In it, she posits the Office Space scenario - that Bain is Yang’s fall guy who he’s going to ask to justify a bunch of layoffs. Having dealt with similar management consultants personally, I’ve got a little bit of a different slant.

1) They does occasionally recommend things other than lay-offs
2) They are a stalling mechanism for executives that are trying to figure out how to address an issue, but who can’t keep the BOD happy in the meantime
3) Jerry is bringing them in to have a story to sell the board - the story is not whatever the consultants recommend, its that consultants came in, got paid a bunch, and did a lot of analysis
4) That story buys Jerry time
5) Sometimes BOD’s need to hear news from someone other than their company’s executives
6) That story may include layoffs, it may not
7) If it does include layoffs, they may actually happen, or they may not

So - in a nutshell - I’ve seen consultants used as a tool to calm activist boards by ensuring directors that real money is being spent on “real” experts. I’ve seen their recommendations be put into practice - and I’ve seen them go from the board room table to the recycling bin. I’ve seen them be nothing more than a more-credible proxy for executive’s own plans. Swisher seems over-eager to relish in the layoff-induced humbling of Yahoo! before its happened - we’ll see what really goes down.

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