Tuesday, July 15, 2008

Mending Fences Between Microsoft and Yahoo

It seems that Microsoft and Yahoo may enter into some type of an agreement if Carl Icahn wins the majority of Yahoo’s shareholders votes on August 1. If that happens Microsoft and Yahoo management will need to mend fences in order to move efficiently forward. There are two ways to mend a broken fence: discard or repair. In this situation, Icahn has stated that he will discard Yahoo’s current board of directors for a different slate of directors willing to seriously consider a business agreement with Microsoft. This is an important, but small piece of fence that is broken between these two companies.

The next layer will be the executive management of Yahoo. Microsoft’s goal would be to identify the members of the executive team that could be repaired vis-à-vis—those that are beyond salvage. A definition of beyond salvage is going to be crucial at this early stage. I assume that those members of executive management beyond salvage are those that are not willing

1. to cooperate with Microsoft’s executive management;
2. to have the flexibility to change Yahoo’s current business strategy; or
3. to take the time to understand Microsoft’s culture and business strategy.

The key ingredient is willingness. Willingness can be explained as a voluntary eagerness or disposition to act without reluctance to accomplish the goal of integrating both cultures while advancing Microsoft’s business objectives. Willingness comes from within an individual, hence it can only the measured through the actions or inaction of a particular individual.

Microsoft management also has the task of mending fences, since most fences can be repaired. This will require small but consistent acts from Microsoft that show business maturity and personal understanding to difficult changes. It reminds me of the story of the young boys that used to play baseball in an alley and the old lady that would never give them the balls that came into her yard. One of those boys started to water her lawn and clean the leaves on her patio for an entire year. He did this voluntarily and without expecting anything in return. He saw a need and he acted according to his conscience. After an entire year of doing this, the old lady called him to her house and gave him all the stray baseballs that she had collected over the years. He realized that more important than the baseballs was that he had her trust. It takes business maturity and transparency to earn trust in this type of situation.

Microsoft and Yahoo management can expect a difficult road ahead. It will not be perfect, but the combination of these two companies should be rewarding and worthwhile.

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