The Yahoo Deal Pushes Microsoft Further Toward The Big Rut

Jul 31, 2009

When an organization is in Treadmill, the one thing it needs above all else to stop the slide into The Big Rut is an intravenous injection of entrepreneurial zeal: innovation, creativity and risk-taking. For Microsoft – an organization deep in Treadmill – this week’s deal with Yahoo was the exact opposite.Instead, partnering with another Treadmill organization like Yahoo will only amplify Microsoft’s bureaucracy and over-dependence on process. Steve Ballmer’s pronouncements yesterday that ‘nobody understands this deal‘ during an interview in which he ‘mocked Apple and laughed off Google’ may have given him the opportunity for a few testosterone-driven high-fives later with his entourage, but it only provides more evidence that the organization is atrophying from the top down.

Yahoo doesn’t do much better out of the deal, either. Carol Bartz may get revenue, but revenue isn’t her problem – her problem is loss of focus in the organization. And the way the Microsoft deal is structured there are plenty of open loops (as David Allen would put it) that will continue to suck resources and energy away from Yahoo’s main mission (whatever that is today). A complete divestiture of search would have been a much better outcome for Yahoo, but I sense the invested egos of some of the behind-the-scenes players wouldn’t allow it.