Mergers and Acquisitions

Secrets of Success: You're Not Alone

Today, as I was reading the truly excellent OpEd piece on the Business of Fashion site, I was reminded of what always struck me as the stupidest series of questions I almost invariably got when I was a C-level advisor talking with a new client. Here are the two versions of how it went:

Version 1:
Executive: Have you worked in our industry before?
Me: No.
Executive: Well, we're different.
Version 2:
Executive: Have you worked in our industry before?
Me: Yes.
Executive: Well, we're different.
Do you see a pattern here?

The thing that continued to amaze me - and does until this day - is the provincialism and insularity of each industry or company. Everyone thinks that what they're experiencing is different from what everyone else is experiencing.

They're wrong. And if you think that way, you're wrong, too.

Sure, there are nuances that are industry or company-specific. In fact, they're function-specific, if you want to get down to that level of detail - which, eventually, you do.

But to think that you're living in some sort of vacuum and can't learn from other industries about how to get over and beyond humps and hurdles is not only short-sighted, it's dangerous.

Granted, each industry goes through its own version of a set of problems that the industry has to solve for itself. Those within the industry that learn and grow fastest and best are the winners. The laggards either stay that way, have to work WAY harder than before to catch up or go out of business whether through M&A (if they're lucky) or closure.

What's always worth watching is how each industry is addressing, embracing and integrating the challenges it faces. That arc is your lesson.

That's why the Business of Fashion OpEd was so important. It talks about how the "businessmen" in both fashion and media have taken innovation out of fashion. How, by corporate ownership industrializing design to the point of sameness (for which read blandness), real creativity is either threatened, gone or only coming from the really courageous designers or those outside the mainstream industry.

Innovation is everyone's job in every industry and sector. From small, almost unnoticeable tweaks in how you do business to new product or service launches that change the world (or at least your industry), innovation is key to success.

So why wouldn't you read a piece focusing on the threats to innovation written about the luxe industry and fashion, in particular?

If you're smart, you would. In fact, if you intend to succeed, you will.

Don't be insular. Don't think you're different - at least not at first.

Start by knowing that others - before you and currently, in your industry and out - have and are facing the challenges that you face. Then be open to learning from them.

If you do, eventually they'll be learning from you.
Who Watches the Watchmen? (Business of Fashion)

Wanna Get Hired? Be an Entrepreneur!

Time was that if you had a great work record, were talented, highly regarded and accomplished, you'd get a job for big bucks.

Sorry, not any longer.

Now, at least in the tech space, if you want to get hired for big money, you need to have started up your own firm - and have it bought by one of the Big Boys.

Only what they're buying isn't what they used to buy.  Now they're buying you.

Because in the "time was" category - like a very few years ago - whether it was the companies or the VCs, they were looking for products.  New technologies.  New capabilities.

They're still looking for that - but they've gone to the core and are now looking at where those technologies come from.  And that's talented engineers.

To get that talent, they go direct.  They buy the company - then they dump the product.

There's even a hiring strategy named for it. It's called "acqhiring."

This raises some interesting questions for you - whether you're an entrepreneur or inside an organization and looking for talent.

For the entrepreneurs, the biggest difficulty will be seeing your product jettisoned.  Sure, you have lots of money - and stock options and the potential for more - but the question of how much you believe in your product really comes into play.

If you believe that strongly in your product and its potential, I suggest that you get yourself some seriously great legal support and have, as part of your employment agreement that if the company drops your technology within a specified timeframe, that that intellectual property reverts back to you.

That way, the Big Boy gets you for as long as you want or need to stay - but you still have the option of doing something with the baby you created.

For executives, you've got problems unless you've got seriously big bucks on hand that your company is willing to spend on acquisitions for products they don't want.  Just the people involved.

If you're a Facebook or a Google, it won't be a problem.  It's the way it's being played in the Valley.

If you're anything else, this won't sit comfortably, won't fit with your culture and has far more risks involved than in the technology space.

But it's definitely something to consider.

Because, no matter the industry or size of your organization, innovation is key - and innovation comes from people.  But it also comes from the systems inside your organization that lend themselves to people making those contributions - and someone being willing to listen.

Many of the engineers who were part of the acqhirings are not staying with the Big Boy buyer.  They're not happy there.  So they leave.

Probably to create new start-ups.

Who's leaving your organization?  Moreover, as the global economy improves, who are you worried might leave?

It's time to start looking at how you're using the skills you have - as well as buying what you need - to keep yourself ahead of the competitive curve.

Time Warner/AOL - A Marriage Made in Hell

I'm not the first and I certainly won't be the last to comment on how it is past-time that Time Warner and AOL split up.  In fact, I never wanted them to get married at all.  It was never going to work - and that's because Steve Case, the then Chairman and CEO of AOL, was leading the charge.

I don't have anything against Mr. Case, personally.  I don't know him.  But what I did know was his company - back from the days when it was America Online and pretty much the King of the Hill in internet providers.

The company provided a service which was both timely and necessary.  It created new worlds and new markets.  It did everything that companies which utilize and codify disruptive technologies are supposed to do.  It created a business model.

But what it never did was focus on its customers.  By far, AOL had some of the worst customer service imaginable - and that at a time when its customers were not only near-hostages (the competitive landscape was dire, to say the least) but, for the most part, neophytes.  The internet was so new that those of us using the dial-up service, while not the fabled "first adopters," were certainly trail-blazers in our own way.  We were taking the risk that we could successfully adopt this new technology and integrate it into our lives and businesses.  

Only in order to do so, we had to depend upon the companies who were providing us access into this new world of technology that few of us understood.

But, Steve Case was convinced that AOL was the answer to all questions.  And long before the merger took place, he had created a corporate culture that did not support customers.  It talked a good game, but its execution left far too much to be desired.  In his own way, he opened the door for the success of his competitors as they entered the field.

As for his mishandling of the merger, in the run-up he made clear that he believed that "old media" were dinosaurs just waiting to become extinct.  He and AOL were the wave of the future.  The old guys wouldn't exist much longer - and would only be able to do so if they got on the new technology wagon.

So, in his world, it wasn't a merger of equals.  He always made it clear that he saw it as the little guy (AOL) taking over the big beast (Time Warner).  Because that was the future.

He was right and he was wrong.  Where he was right was that the technology continues to open new doors and challenge old thinking and mechanisms.  But he was wrong in thinking that his way was the only way.  He punched too far and too arrogantly above his weight and, eventually, got knocked down.  And out of the company.

Over the years, there have been multiple exits from the most senior ranks and divestitures of business lines - but, more than anything, on the AOL side, there has been a loss of customers.  Deservedly so.  Because AOL, in all its hubris, didn't see its own weaknesses.  Neither the company nor Case seemed to realize that big beasts become and remain big beasts for a reason.  There was as much to learn from Time Warner as there was to positively change in order to create a successful whole.

In direct contrast and in the same sector, Amazon has taught every industry - whether in the ether or bricks and mortar - what customer-centric looks like.  The reason Amazon has been so successful - and remains so - is because its founder and CEO, Jeff Bezos, never forgets why the company exists.  It's all about the customer.

They've gotten things wrong.  They still do.  But, through it all, their focus is on how to not just correct those mistakes but learn from them.  And, in learning from them, they don't just want to figure out how to avoid that particular mistake again, but the context in which that mistake and its solution exist.  Because then the company can innovate new ways of doing business that create the ongoing "wow" factor for all the problems that Amazon solves before they ever hit the consumer's consciousness.

I've been a fan of Amazon since its inception.  During the same time period that AOL was blowing off the customer experience, when I had a problem with Amazon, they always solved it beyond my satisfaction.  (They even, more than once, solved my AOL problems.)  They gained my trust and the trust of tens of millions of other users worldwide - and they continuously work to maintain it.

AOL, in its new/old guise as a stand-alone has a good chance of succeeding.  The reason is because it has new leadership.  Its recently appointed Chairman and CEO, Tim Armstrong, formerly headed advertising sales for Google.  That augurs well for the company because Google, too, knows that the customer is the thing.

For my part, I wish all the players well.  The reason I do so is because the better and smarter they compete with each other, the better off we - their customers - will be.