Microsoft and Sendit

1. Which integration approach should Microsoft use to integrate Sendit: Absorption,

Symbiosis or Preservation? (use Haspeslagh and Jemison's reading from last session)

Conclusion : As we reviewed aspects which this acquisition had, we concluded that MS should choose Symbiosis approach rather than Absorption. It is based on analysis of the purpose of acquisition, the level of strategic interdependence need and the level of organizational autonomy need.

1) Analysis 1. Through the view point of purpose of Acquisition :

We analyzed the purpose of this acquisition as "Domain Extension". Since the main reasons why MS attempted this acquisition were extension of product line which MS had been criticized that too much PC oriented and geographical market extension which MS could not penetrate successfully such as European customers. The acquisition type of domain extension usually could have characteristics of both "Simbiotic" and "Absoption".

2) Analysis 2. Strategic interdependence Need and Autonomy need :

To confirm the type of this acquisition as a Simbiotic, we initially analyzed detail of the required interdependence level through two major key capabilities which MS wanted to transfer.

Firstly, we found this acquisition targeted "Resource sharing". MS wanted to get Sendit's Customer base. Secondly, MS also hoped to be able to transfer Sendit's "Functional skills" which had been implemented to several R&D researchers or group of R&D people.

Both strategic capabilities needed high interdependence level for several reasons. For current Sendit's customer base, MS could make them as supporters to lead standard battle of protocol. And MS also could use the customer base as a marketing channel. Therefore strong interdependence seems inevitable. For Sendit's technology as a functional skills, it is also required certain level of interdependence such as meta-architecture.

Based on these characteristics, we analyzed organizational autonomy need.

Firstly, we tried figure out if it is essential for this case to provide autonomy and we found several aspect which could support the need of autonomy. For examples, Long physical distance between MS HQ and Sendit's and different corporate culture which had been customized for each organizations. Since those aspects actually create severe problems, we assumed it was essential to provide autonomy to acquired company.

Secondly, we analyzed the area which the autonomy needed. Normally, R&D department required certain level of autonomy and functional department such as marketing or sales could be the target of integration. However in this case, the situation was little bit different. If we considering that MS didn't have enough understanding about Sendit's business and the difficulties from cultural difference and geographical distance, Marketing department should be allowed much higher level of autonomy. On the contrary, although there might be some need of autonomy for R&D, the benefit from integration seems much higher than that. For examples, the members of Sendit's R&D were not mainly suffered from disruption of MS colleagues but from unbalanced power between the company's marketing and R&D department. And it was quiet clear that there were lots of synergy from co-operation between R&D side of both companies.

Finally, we assumed that how much level of autonomy should provide to the marketing department, Since the risk of losing chances of new opportunity is quiet high, and the difficulty to change current MS culture, we would recommend highest level of autonomy for them.

2. What went wrong in the integration process? Explain.

As you can see on the Exhibit1, first wrong part was the frustration and disillusionment from the Sendit employees. They felt like from top to middle pushed down and impotent. It is undeniable that the physical distance was the major factor of the sense of isolation. Casual conversation, Microsoft's unique communication style, was not possible because of this distance gap. However, it's more than true that people from Microsoft such as Ledsome did not play a role of the bridge between Microsoft and Sendit.

Second wrong part was the organizational structure. Unlike the Sendit entrepreneurial environment, Microsoft's intrapreneur's structure deeply hurt the Sendit mid-level employees' motivation, disappointing that they were merely component suppliers to a huge and unresponsive company that was following its own, outdated concepts. They totally failed to build the robust organization structure to maximize the M&A effect.

Third wrong part was employee retention. 20% of the Sendit member already decided to leave. Many of them expected to get some bounce in the stock market, but the Microsoft anti-trust case made the stock-option useless. Their longstanding competitor, Phone.com, already try to get the best people form Sendit.

Fourth wrong part was slow Research and Development progress. The problem was that each team pursued its own narrow research no one felt any overall responsibility for how it would all fit together. Not only the problem of responsibility but also the balance between R&D and sales and marketing was unhealthy. R&D felt subordinate to them in spite of tis independence. Despite above problems, it is fortunate that the R&D group remained more or less intact.

Fifth wrong part was about linking with Microsoft. There was not enough chance to experience the Microsoft's corporate culture. They failed to keep the promise that all the Sendit staff's trip to Microsoft headquarters and this was really good opportunity to learn about Microsoft's way to work for Sendit staff.

3. What should be done now to stop the hemorrhage?

As we suggested above on Question 1, organizational structure should be changed to stop the hemorrhage. Before this acquisition, Microsoft was focused on software