Microsoft vs. Google: Unwinnable Wars and the Importance of Clear Goals

Rob Enderle

Last week I wrote about Microsoft's Financial Analyst Meeting. A parallel bit of more important news came out, having to do with documents leaked to and from Wikileaks that showcased the war in Afghanistan unfavorably (I used it as a springboard to talk about the dangers of beliefs over facts).

 

Since a similar war where the U.S. was on the other side broke the USSR's back, there are concerns that this could do the same to the U.S. And since the cause of the problems surrounding Microsoft's battle with Google and the USSR/or U.S. battle with Afghanistan appear to come from the same source, a source I've struggled with much of my own life, I thought it might be interesting to blend them under the heading "why strong goals are important," in a discussion on why we should set them despite the false but evident personal benefits of avoiding strong goals.

 

We'll start by talking about why we don't set better goals, look at the war in Afghanistan, compare it to the Microsoft battle with Google (any similarity to the players is in your own mind), and conclude with some personal recommendations I hope I can learn to follow myself.

 

The Danger and Benefit of Strong Goals

 

One of my first mentors (and far from one of my best) at IBM took a shine to me and gave me the following advice, which I've watched successful executives use to destroy their own companies over a number of years. That advice was to avoid goals whenever possible and, if forced, set them set them below where you currently are operating. In other words, only set goals you know you not only can achieve but, as often as possible, set them after you have achieved them.


 

If you ever wonder how top executives in money-losing companies justify huge bonuses, it is generally the result of applying that simple rule. They are being measured in a way that assures the bonus, not the success of the company. No wonder they are conflicted and why so many get caught doing unfortunate and illegal things.

 

Strong goals create the risk of failure. It is interesting to note that of the companies I follow, Apple's Steve Jobs sets the strongest goals for his people and he drives himself relatively hard as well. As a result, the risk of failure is dramatically higher for Apple, but the rewards it has achieved put it at the top of the corporate list in every industry last year, showcasing the benefits of strong goals as well.

 

Typically, when a company is young, and its employees are young, they are willing to take risks because they have yet to have large fixed costs (like families and mortgages) to worry about, and they have little time in their careers. As they age, their needs shift to protecting what they have acquired in terms of benefits and stature. The way they play the game becomes vastly more conservative as a result. If there isn't constant pressure to set aggressive goals and measure people against them, the financial benefits and company progress will decouple and the firm will begin to stall. However, a bigger problem is that the firm may also take on tasks that it can't win.

 

Let's use the war in Afghanistan as an example.

 

U.S. vs. Afghanistan: The Unwinnable War

 

The stated goal in Afghanistan is to "win the war." The apparent goal is to get out of the area with the minimum cost and the minimum casualties. The two goals are in conflict. More important, what has not been defined is what "winning" in this case means. Typically, this would mean the unconditional surrender of the opposing government. However, the opposing force is fragmented and there is no central government to surrender. Even if you found someone that could do this, the surrender would likely be disregarded by most of the existing opposing combatants. This makes the actual goal killing or imprisoning all of the combatants in an area where they are blending in with the general population. In short, it isn't a war at all but a massive policing and capital punishment effort.

 

Such an effort, properly defined, would not likely be supported by those paying for it. The stated goal of "winning" is unachievable, in fact, even though it carries the perception of being achievable with those that support it. And this is why the secondary goal of exiting with the least cost has taken hold. The conflict between the two is causing the cost of the effort to spiral out of control and creating the likelihood that both goals will fail. Vietnam had similar conflicted goals.

 

If we go back to the start of this war, it originated from one of the groups in Afghanistan taking a preemptive strike against the U.S. by blowing up the twin towers. This resulted in a war that neither country was prepared to fight,, that has been massively costly to both and that neither side is currently able to win. Both sides appear to be applying much of their creativity to redefining what "win" means instead.

 

Microsoft vs. Google: The Unwinnable War

 

Now let's look at Microsoft vs. Google. The apparent goal is to wipe out the other company but, like the example above, the actual goal is far less clear. Beating a company means taking its revenue, not buying part of its market unprofitably, yet both firms appear to be focused on the latter, Microsoft with search and Google with Apps and platforms. Because search is provided as a free service, and Apps, Android, and the ChromeOS are provided near free, the two goals are unaligned. This lack of alignment is resulting in massive costs to both companies without any balancing benefits.

 

Even if Microsoft's goal to put Google under was a good one, the money Microsoft is spending on search would likely be better spent on anti-trust efforts against Google and a strategic effort to break it up (much like Oracle did when shifting from building an Office clone to supporting the anti-Microsoft efforts domestically and in the EU). For instance, Google was hit far harder by being kicked out of China than it was by Microsoft gaining several search share points.

 

Even if Google's goal to put Microsoft down was a good one, a better path would be allying with Microsoft's natural competitors and working on making them more successful (propping up Linux/UNIX) or creating more Palm-like companies; these companies could buy to displace Microsoft rather than running against the firm head on. Or simply leaving it alone, as unfocused large companies have a tendency to self-destruct. Google is giving Microsoft focus.

 

Because Microsoft's internal goal is set to a metric against search and search isn't directly tied to the primary goal of eliminating the Google threat, the result has been more cost than benefit and is likely to eventually fail. Conversely, Google's goal of removing "evil Microsoft" by focusing on Office and Windows, while better aligned, is far from Google's strengths. Since it triggered the war in the first place, it has proven to be massively counter-strategic and stalled Google's own growth.

 

In short, Google, which was chasing advertising revenue and Microsoft, which initially had no interest in advertising revenue, weren't natural competitors and only started competing after Google declared war against Microsoft. In other words, at the core of all of this is a war that neither Google nor Microsoft was prepared to fight and one that has been excessively costly to both firms. Collateral damage has been Google's relationship with Apple and what had been a stronger relationship with Yahoo. Collateral damage to Microsoft is a lack of focus at Microsoft on more important things like smartphones and next-generation PC platforms (iPad).

 

Tying It Together: Why Strong, Appropriate Goals Are Important

 

If the goal is sharp and clear, the ability to build a plan to achieve it is vastly easier. As a goal becomes conflicted, its success becomes far more unlikely. Look at the war in Iraq. Against a much stronger foe militarily than Afghanistan, the U.S. in a few weeks beat them not once but twice with the same logistic difficulties that the war in Afghanistan enjoys. But in Iraq, there was a strong central government to remove. Granted, the goals after the war was won were poorly formed the second time, resulting in a bigger problem, but the initial goal was sharply defined. With Afghanistan vs. the U.S. and USSR, and Google vs. Microsoft, the goals are conflicted, not aligned with the long-term success of the entities (both the U.S.'s and Afghanistan's problem go well beyond each other, as with Google and Microsoft). The results remain counter-strategic to all of the players.

 

Wrapping Up: Making a Life Goal

 

Let's close this by making in personal. Our personal goal should be to have a long and happy life. Our businesses goal is to have the corporate equivalent, but in both cases we instead focus on avoidable battles that are likely to make our lives shorter and less happy. If we are going to fight, the goals have to be clear; otherwise, we will lose and there is no long-term advantage to losing wars, particularly if you're the one starting them.

 

I spent a good deal of last month reviewing the life of my grandfather (if you search on him, this is what you'll find), one of the most successful people in my family (founder and CEO of Collier Carbon and Chemical), a guy with a natural sense of humor and a tendency for fun, yet he had one of the unhappiest lives I've ever studied and died badly largely because he lost track of this most important goal. His wife, son and his daughter (my mother) also died badly for similar reasons. I have a great uncle the same age group as my grandfather, still living, who was also successful but even though he was a judge, avoided unnecessary conflict and had a life most would envy (including me).

 

So my end thought is that we all need to constantly reevaluate our goals, work to eliminate unnecessary conflicts, and not lose track of the fact that it likely is far better to enjoy a long life than be part of a large group of folks that wished it would be shorter. I believe that if we do that, both our companies and our lives will be envied for the right reasons and, more importantly, we'll enjoy them ourselves far more. I'm writing this last as a reminder to myself, because I too forget what is important from time to time and was reminded of that last month several times.



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