So, what’s a safe prediction from the business book publishing world over the next couple of years? How about the fact that there will undoubtedly be several (say half a dozen, a dozen…maybe more?) books that breakdown the “Search Wars” between Google, Yahoo!, Microsoft along with some of the bit players like GoTo.com (Overture), AOL and others tossed in for the sake of telling the story from as many angles as possible.
Friday’s WSJ article by Robert A. Guth summarizes a few of Microsoft’s missteps (ah, the beauty of hindsight) in the battle to own what is now a $12 billion advertising market. The article is an entertaining read and and for folks who haven’t followed this story over the past decade, the piece flashes three interesting lessons for managers:
Lesson 1 — Patience is a virtue
As Steve Ballmer is quoted in the piece: “The biggest mistakes I claim I’ve been involved with is where I was impatient — because we didn’t have a business yet in something, we should have stayed patient.” Again, nobody ever has a crystal ball and sure, Google’s only business was trying to figure out how to make money on search while Microsoft was trying to protect huge businesses that needed engineering talent more than a $1 million paid search business.
Let’s face it, that’s a good excuse for Microsoft crashing the search party late, but what’s the lesson?. The lesson here is for the big guys — keep your eyes out for little businesses that are growing fast and organically. Figure out how to shelter them internally and don’t use the “well, it might canibalize our core business” excuse. Cannibalizing your core business is actually a good thing (so long as you are replacing it with a potentially bigger business!).
Lesson 2 — No decision is ever really set in stone
Later in the story there’s a snippet describing how Ballmer supposedly refused to revive the search-ad business within MSN becuase it would mean reversing a decision made by managers “at least three levels below him.” To be fair, Ballmer refused to comment on this piece of the story, so not clear if this is what he really said to the MSFT employee who implored him to rethink the decision.
But for sake a “lesson”, let’s say he did. Well, the lesson from my perspective is pretty simple: the folks at the top have to have the gumption (that’s a nice way to say it) to change decisions that they don’t feel are right. I know that when a manager is new in a role that sometimes they are compelled to not change decisions for fear that it will demoralize their staff. That’s a short term mindset. In the long run your team will be committed to a leader who is willing to change a decision if they feel it is in the best interests of the business in the long-term.
Lesson 3 — When playing from behind, “build” is rarely the right answer
Ok, this may be a bit obvious, but the part of the search story that involves Yahoo!’s acquisition of Overture in 2003 stands out like a sore thumb. As the article recounts, a core team within Microsoft recommended that the company acquire Overture as a way to speed time to market in the paid search business when it was clear that Google was on the fast track. Here we see classic big company — particularly classic big tech company — reaction.
Perhaps the easiest way to think about this lesson is to ask for the top 3 examples of a company trying to come from behind to catch a fast growing leader in a fast growing market who did so by doing it in a “build” approach versus a “buy” approach? How about naming one example?
Small companies have a singular focus: to do one thing better and before anyone else. The big guy is tied to a core business and hitting the quarter. Unless a big company figures out a way to be patient (re-read Lesson #1) and to really invest in new lines of business, they’re better off buying their way in than trying to build from behind.
Originally published on Medium on January 19, 2009. This Substack version is maintained as the canonical archive.