On Leadership: When Patience Runs Out

The boys and girls at Micro-Hoo have been having quite a time of it lately.

First, Steve Ballmer, the bulldog Chief Executive Officer of Microsoft starts a hostile takeover bid for Yahoo! Granted, it was at a premium price over the then (and still) current share price, but hostile is hostile.

In reply, Jerry Yang, Founder and now Chief Executive of Yahoo! (because it wasn’t that long ago that the company decided that its then Chief Executive just wasn’t cutting it anymore – but in much more polite terms than that), began the fight back. It didn’t matter that the offer was 62% over the share price, it still undervalued the company.

During the ‘quiet months’ since, it’s been more of a public relations battle than a battle in the Boardroom.

Microsoft wants Yahoo! - mostly because no matter how much it has spent and how hard its engineers and designers have tried, they can’t get their search engine anywhere close to Google’s power in the marketplace. Yahoo! Is a distant second – but that’s better than Microsoft’s far distant third.

Yahoo! doesn’t want to be owned by Microsoft.

Microsoft promised in a letter written to its employees (which just happened to be printed in full in the Wall Street Journal and other financial papers and websites for everyone, which includes Yahoo!’s shareholders and employees, to see) that by taking on Yahoo! the Microsoft employees who would be most directly affected won’t be affected at all. In fact, in the letter, the president of the platform which would integrate Yahoo! into its operations spends most of the time assuring Yahoo! employees that their work won’t be affected and that their campus in Sunnyvale will remain intact – and the letter isn’t even to them.

Yahoo! doesn’t want to be owned by Microsoft.

So Yahoo!’s great and good do a roadshow to investors telling them their story. That they have a really great brand that has lots more value than the Microsoft offer represents. They also start discussions with everyone from competitors (yes, Google) to TimeWarner (AOL) and NewsCorp (MySpace) to see if there might be a better partner out there. Anyone but Microsoft.

Because Yahoo! doesn’t want to be owned by Microsoft.

Now, the battle has escalated. The newest shot over the bow is Steve Ballmer’s letter delivered to Yahoo!’s Board of Directors that says enough is enough. Microsoft made a good offer that reflects fair – if not generous – value for the company and Yahoo!’s representatives haven’t taken any serious action to discuss the deal. If they didn’t do so in the next three weeks, Microsoft was going to start a proxy fight to get past Yahoo!’s Board and get the shareholders to decide. They might even lower their offer. (Not likely, but a really good threat.)

Within this, of course, are the stories about everything from Yahoo!’s preventive ‘poison pills’ to the Chinese Alibaba’s very public discussions about exercising their right to buy-back their stock from Yahoo! if Yahoo! Is purchased by Microsoft (because the Chinese – including their government – don’t want to be owned by Microsoft either) to the fact that Microsoft’s share value has decreased so much in the ensuing months since the original bid that what started as a $44.6 billion bid has now turned into a $40 billion bid – and that’s without Microsoft lowering their offer.

Jeesh. What’s a company to do? There’s just so much pressure.


The backstory on this is that Microsoft has approached Yahoo! numerous times over the years to do this deal. While this time Ballmer decided on a ‘take no prisoners’ approach, Yahoo! has known all along that this was coming. The only thing that changed was the sense of urgency and immediacy Ballmer brought to the game.

Most executives don’t deal with $40+ billion dollar deals. Most executives never get close to that kind of money. But that doesn’t mean that you shouldn’t operate exactly the same way: with a compelling sense of immediacy and urgency.

Too much time is lost while things are allowed to languish in organizations. Speed is a critical differentiator. Speed to market. Speed in decision-making. Speed in development. Speed in improvement.

You should be devoting excesses of time to analyses of what’s going on in your organization to find out exactly where things are stumbling or halted, altogether. If you’ve recently completed a project – any project – there should be an intense debriefing of everything that went right and wrong. Not just the ever-so-polite “lessons learned” sessions organizations like to organize, but a near-vivisection of every aspect of the project from inception through delivery.

Buried within that information is a veritable treasure trove of riches to help you understand why things don’t work the way you want them to. And that’s just looking at a project. You need to do the same with how you’re running your organization.

Microsoft is in third place in search because Bill Gates didn’t ‘get’ the internet until it was way late in the game. From that moment to this, the company has been playing catch-up.

Ballmer can make a good case for integration and synergy, but the fact is, the only way Microsoft can solve the problem it caused for itself is to buy its way out of its current situation. The good news – at least for Microsoft – is that it is so cash-rich that it can offer up a deal like this in cash and stock that puts every other bidder far behind. (Rupert Murdoch did exactly the same thing when he made an offer that the owners of the Wall Street Journal couldn’t – in any financial conscience at all – refuse.)

But that’s not going to solve Microsoft’s ultimate problem. Granted, it was a latecomer to the party, but the real question is why, with all the brain power and money it has behind it – both within and bought – could it not figure out how to overtake the market that already existed? What made it so entrenched in what it was doing that it lost the power to be nimble in a marketplace that was – and will continue to – demand flexible, creative and, above all, fast.

Now look at Vista. When anyone talks about the program, the first things they talk about are the problems – not least wondering how Microsoft could have released such a bug-infested package. It’s only recently that the talk stopped including how long it took for Microsoft to come out with the product altogether. And that isn’t even touching on how the periods between updates of Microsoft Office seem to be getting longer and longer and longer – and that’s with nothing to get really excited about when it does finally arrive.

Those are internal problems and they are unforgivable – particularly when a company not only has the money and power of Microsoft but has built its reputation on being the best. If it wasn’t best in a particular area and it couldn’t buy the guys who were creating a stir, it would simply take down or create near-impenetrable barriers around any competitors who had the guts to try taking them on. Or at least it used to. It can’t quite pull that off anymore – which is all for the good.

One company should not be the answer to all questions. In fact, that should never be the case at all. The more, better and smarter competition you have, the better off you are. If you’re not good enough at keeping yourself at the top of your game, a really excellent competitor will force you to do so.

And that’s where the folks at Yahoo! went wrong. For too many years, they lost their way. In the beginning, they were the driving force behind everything that was good about search. They were the first, most comprehensive portal that anyone had seen. They set the tone, in many ways, for what the internet could look, feel and act like. Friendly. Interesting. Profitable.

But those were the good days. The days when the Dot-Com Bubble was alive and well. When the Dow was going to hit 36,000 – and keep climbing. When there was no end to the upside of the up cycle.

That was never going to be the case.

Whether it was being so quickly overshadowed by Google and their incredible algorithms that simply took the market by storm, or that Yahoo! had become too many things to too many people all in one place (as compared to Google which, while always making clear that lots of other resources are available from and through them, keep them separate from their basic search), or because the Yahoo! founders took less active, direct roles as the company grew larger – or any number of other possibilities – Yahoo! started behaving like a dyed in the wool, old fashioned, bricks and mortar company. And it lost its way.

That opened the door for Microsoft to come crashing through.

And what it all comes down to at both companies – and at yours as well – is management. It’s where you’re putting your attention. It’s what you’re willing to accept.

Patience can definitely be a virtue – and when it comes to functions like R&D, it’s a necessity. But when you are patient with what you know is patently wrong in your organization – because it’s not working as you want and as you know it could – then it’s on you. You can’t blame it on the marketplace, your competitors, ‘disloyal’ customers or recalcitrant employees. You’re the executive, which means you own all of that – and more.

It’s time to get impatient. It’s time to recognize that a truly well run company that demands high performance in all aspects of its operations is one that generates more than higher profits and better results. It generates higher morale, better customer relations and an ever growing sense of endless possibilities. If you do it right, it is also the most collaborative and cooperative process imaginable – none of which can be undervalued in a global economic climate like the one we’re in now. Because all of that will give you the profits and results you’re looking for – and more.

Stop accepting second (or third) best. Not only is there no time, there’s no excuse.

Be the executive you always thought you could be. Now. If you wait, it will be too late.

About the Author:

Leslie L. Kossoff, internationally renowned executive advisor specializing in strategy and corporate turnaround, was cited by About.com as “one of the most intelligent and perceptive voices on executive and managerial leadership today.” For over 20 years, she has assisted clients in the public and private sectors in the U.S., U.K., Europe and Japan. Her clients, ranging from start-ups to multi-nationals, include Sony, Kraft Foods, the UK National Health Service, Fidelity Investments, Seiko/Epson, 3M and others.

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Posted on 06/03/2009 by

On Leadership: When Patience Runs Out author sourabhhajela



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