Don Jones

Tech | Career | Musings

This article is a fascinating illustration of a powerful business maxim. Businesses should build for themselves whatever makes them special and competitive, and buy or rent everything else. This isn’t meant as an Apple dig, and if you’re an Apple hater, please just settle down. I can give you examples from nearly any company.

Microsoft’s purchase of Opalis to create System Center Orchestrator, for example. Terrible idea that many in the company still wince over. If Microsoft can’t build systems management software, then WTF is the company for?

Google’s acquisition of Nest all but killed Nest. Google was making a play for the smart home market, and in this case they were buying what was essentially a boutique, high-design player and expecting them to suddenly become a mass-market commodity vendor. Didn’t happen. Cultures clashed. One has to imagine Google would have its own “HomeKit” platform already if they’d just gone that way to begin with.

The Siri example shows what often happens with this kind of acquisition. Big Company sees opportunity in a space where they have no base. They think, “we need to be in this space, and fast, and this acquisition will do it for us.” They buy the other company or technology for $$$$$$. They quickly realize that while the other company had great ideas, their actual code is fragile and doesn’t scale to Big Company size. Big Company looks bad, and spends just as much $$$$$$$ building a knowledge base in the topic and rebuilding everything almost from scratch. Net result, Big Company didn’t really “get there” any quicker, and made themselves look stupid or incompetent in the process.

This happens so often that I’m starting to think human brains are somehow wired to not be able to remember that this happens. I’ve lived through it in a few companies myself, and every time, it’s like, “um… we just did that. Are we really doing it again?”

You should take note of these lessons. See, as I have this kind of discussion with people, they automatically leap to “oh, that’s [Big Company Name] for you, [disparaging follow-on comment],” which isn’t the point at all. The point, the lesson to be learned, is that businesses who plan to do something which sets them apart should build it themselves. You can very rarely acquire a competitive advantage.

It does happen sometimes. Hotmail was a good example for Microsoft. YouTube was a great example for Google. But it’s rare. And arguably, neither Hotmail nor YouTube made their new parent companies any better; they just landed them into a new market and remained run as essentially standalone properties. If Google didn’t own YouTube today, for example, the site would probably still do quite well.

One thought on “If it Makes You Special, Don’t Buy it

  1. martylichtel says:

    This immediately reminded me of some key points Jeffrey Snover raised during his talks in the last year or so discussing digital transformation. Mainly, using technology to enable competitive advantage. And this is why you don’t do things like hire people and buy food for your own cafeteria services. You find a food service contractor and write a check for that. Same for a shuttle service. Same goes for some of the technology we admins have implemented and maintained for years: Is there any competitive advantage in having the best domain controllers? The most awesome DHCP service? The slickest automation for building a machine from bare metal? No. Do we need all these services? Yes. But are they the secret sauce to the business that generates revenue? No. This is the existential threat to IT pros in the ‘old way’ of doing things. If you can get across the chasm and leave these things behind (rent it, write a check, move it to the cloud, whatever), it seems to me that you’re left with the opportunity to really enable the business with technology.

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