Fred Wilson, whose blog I read daily, just appeared on Yahoo Tech Ticker talking about Microsoft-Yahoo-deal – a subject (too) much blogged about. However, he had good ideas about what has been wrong with Yahoo and how web businesses – and especially acquisitions – should be carried out. Check out the video yourself.

The main points he makes, are these:

  • On the web, small is beautiful
  • When big companies are aqcuiring smaller ones, they should either intergrate the acquired companies completely – or not integrate at all.
  • The latter (not integrating) is usually much better, as it enables the acquired companies to keep their decision making fast and efficient. Usually they also remain much more innovative this way – while enjoying the financing a bigger company can provide them.

He also would recommend Yahoo to split the company into several smaller businesses, bringing “new focus and passion to the services”, as he wrote also in an earlier blog post.

I am currently working in a media company, which has based its digital growth largely on acquisitions. Acquiring companies doesn’t seem to be difficult, it is everyday work to an army of corporate professionals. What is challenging, however, is integrating the acquired company into the acquiring company. This requires such understanding and knowhow which very often is not available. In many cases integration just wouldn’t make sense, but it can still be required as it is supposed to create synergy.

I’ve seen many of these acquisitions (not only in my current company), and while integrating business support functions may be trivial, the real difficulty comes when trying to integrate the business and IT development and the actual IT. Anyone who has tried to do online business in a company which requires you to use corporate IT services, knows what kind of curseword “corporate IT” can be.

The problem with corporate IT is that usually it is built with an idea that one solution fits all, while online businesses may differ widely with their needs – and needs of offline businesses can be something completely different.

In last year’s Web 2.0 expo in Berlin I wrote down these words, unfortunately I have forgotten who spoke them:”IT is going through the biggest change since email or even pc. IT departments need to change and not all want to change. Put IT into hands of those who use it, not to hands of those who produce it (or manage it).” The same maybe applies also to business decisions, as also they can be best made by those who really are involved and interested with the outcomes – thus, those actually running the businesses. And this can be done most efficiently by keeping the actual businesses small.