SpectatorBytes

The much expected news of a Yahoo re-organization has gotten me thinking about what the ideal organization is for internet divisions/conglomerates to foster growth and innovation.

Since I believe interactive networks will primarily grow/scale through acquisitions of products and services over the next few years, they would benefit from designing an organizational structure to support this growth thesis. In this world, digital organizations would set up their operations to quickly “plug-in” acquired companies and provide them with the tools needed to continue to scale.

Based on my experience, successful acquisitions in digital media require a specific organizational environment to succeed. The following are some of the key conditions that create this ideal environment for an acquired company to thrive inside a more bureaucratic corporate structure:

- Continued organizational independence/self-containment

- Limited number of “required” integration points with the rest of the organization

- Strong support at/protection by the senior management level

- Ability to retain key talent and preserve culture

- Easy access to key network resources (e.g., monetization, distribution, technology back-end, etc.)

In this M&A-centric view of the world, the optimal digital media organization will seek to foster these conditions through its reporting structure. The following tenets outline the key parameters of this next-generation organizational structure:

1. Specialized, self-contained teams with significant degrees of decision-making authority

2. Few/no layers of authority between product leads and corporate management

3. Technology teams reside within each product unit

4. Marketing activities will be controlled at the product level (particularly when divisions seek to emphasize multiple brands)

5. Limited centralized functions (e.g., network promotion, advertising sales, operations, etc.)

6. Service-oriented, on-demand support/administrative functions (e.g, legal, finance, facilities, etc.)

7. Technology infrastructure built around a Web services architecture (e.g., storage, hosting, etc.)

8. Lean corporate structure (few C-level executives)

This type of organization would more likely be able to foster a culture that emphasizes innovation, consumer-centric focus and fast decision-making, and in doing so, it would promote long-term success.

Setting up an organization like this would likely take several years as many of the key design tenets run counter to traditional organizational principles. However, most things in the digital media world have challenged (and sometimes overwhelmed) traditional approaches. Organizational structure will not be an exception.

I would like to hear what you think.