Neal Freeland

Engineering/marketing manager, family guy. My personal blog with a few work thoughts mixed in.

Caught in the Middle

with one comment

Early in the summer of 2005 MSN faced a major strategic decision that I boiled down to this question: should we chase Yahoo or Google? Yahoo had the world’s largest and most engaged audience, generating incredible revenue through display ads on its content offerings in such areas as news, sports, and autos. On the other hand, Google had a similarly large audience and revenue, but generated Microsoft-like profit margins by focusing solely on search. If Yahoo’s success came from lower-margin, hit-or-miss content created by fickle media types, Google’s came from a high-margin, software based math problem that could be solved by an army of researchers and developers. Our DNA told us to chase Google.
The problem was that our search business was shrinking while our display ad business was growing, so we couldn’t walk away from our Yahoo-like media content assets and focus solely on search. We needed the money. Caught between two powerful competitors and desperately needing to make a strategic choice, we decided to do both: we kept the MSN brand for our content assets in order to compete with Yahoo, and to take on Google we launched a new brand – Windows Live – for search and our other service assets like Messenger, Mail, Spaces, and OneCare.
Unfortunately, as any basic strategy book or course will tell you, deciding to do both is really deciding to do neither. Strategy is less about what you decide to do, and more about what you decide not to do. It is, in a word, about focus, and focus is what gets companies out of their strategic jams in the middle of the market. I can’t tell you how much time I spend trying to explain to people what the two brand strategy means, or dealing with the new internal politics between the two groups, when I’d rather just be thinking about how to make things better for customers.
I also look at this through the lens of my military experience. There’s the old Roman saying: divide and conquer. Somehow, though, it feels like we got this backwards. Rather than dividing our opponents, we’ve divided ourselves. Hopefully, we’ll avoid the fate of those who tried to oppose the Roman legions.

Written by nealfreeland

October 23, 2006 at 8:39 pm

Posted in Uncategorized

One Response

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  1. very well said neal … in violent agreement.


    October 27, 2006 at 12:19 am

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