the kronos effect, exemplified

Tim Wu points out that in mythology, Kronos has a dream that his heir destroy him and accede to the throne. And so Kronos kills and eats every child that is born to the couple. Hence the name for the effect: notably when an incumbent chooses to eat any potential rival, no matter how small. 

This clip is a point made by Scott Berkun about acquisitions, on an unusually open examination of factors that may have lead Yahoo! astray over while acquiring a portfolio of technology darlings. 

Very few acquisitions in the history of the tech sector, overall or even simply the last 5 years, work out well. I can’t recall seeing data, but as a veteran I bet it’s in the 60% range of complete failures: product shuts down and all the key people leave when they vest on the deal. This doesn’t justify mismanagement, but the optimism isn’t justified either.

Often large companies are attracted to ideas and ways of thinking that don’t exist inside the company, they acquire them, and are surprised to discover the larger company has natural, powerful and well rewarded anti-bodies that resist everything about the ideas and people acquired. There is a premium irony at work in all this. What companies want through the acquisition is impossible to actually get. They often whitewash the failure and repeat.

Acquisitions can still be good strategy in spite of all this.

via Yahoo Acquisitions: Why did the web services group at Yahoo fail after acquiring Flickr, Delicious, Upcoming, MyBlogLog and others? – Quora.

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s