Michael Mace with an astute analysis of why large companies tend to fail when purchasing small, hip startups:
But in the meantime, this announcement by Cisco looks like a classic case of an enterprise company that thought it knew how to make consumer products, and turned out to be utterly wrong.
That’s not an unusual story. It’s almost impossible for any enterprise company to be successful in consumer, just as successful consumer companies usually fail in enterprise. The habits and business practices that make them a winner in one market doom them in the other.
The lesson in all of this: If you’re at an enterprise company that wants to enter the consumer market, or vice-versa, you need to wall off the new business completely from your existing company. Different management, different financial model, different HR and legal.
You might ask, if the businesses need to be separated so thoroughly, why even try to mix them? Which is the real point.
Notice how startup acquisitions that remain walled off, like say Zappos with Amazon, or even YouTube and Android at Google tend to remain successful. You’d be hard pressed to find startups that were acquired and successfully integrated into a large company’s culture, much less a large enterprise-focused company.