28 May, 2012 - 12:25 By Tony Quested

Technology lesson: don’t mate a whale with a greyhound

HP’s bungled handling of Cambridge-based technology superstar Autonomy Corporation has raised two critical issues about UK-US acquisitions.


And in the process, a skeleton has been ripped out of a cupboard that everyone hoped had long since been removed and given a respectful burial.

Lesson 1 – respect the culture of the company you are acquiring. Most of the Cambridge technology companies acquired by our transatlantic cousins have attained world class because they were relatively small, lithe and fast in decision making so able to pounce on market opportunities. The choice appears to be: Sting like a bee or bumble along like a behemoth.

Lesson 2 – When you’re emptying the bath, hold on to the baby. If HP is serious in changing its paradigm to an R & D company then brilliant software brains like Mike Lynch and his team tend to come in handy.

And the skeleton? In the bad old days, US companies had a bad habit of ripping Cambridge IP out of its roots and heading back to Uncle Sam, leaving corporate carnage in their wake.

Motorola made a pig’s ear of TTPCom, scattering talent to all four corners after grabbing the single tiny piece of the business it wanted.

What WorldCom was going to do in Cambridge after snapping up UUNET a year after UUNET had gobbled internet service provider, Unipalm, was nobody’s business. The axe claimed all the Cambridge headcount and having ripped the heart out of the Science Park enterprise, the soul was moved to Thames Valley.

Takeovers by US companies in recent years have thankfully followed a less predatory model. The acquirers have generally seen the sense of staying close to the technology talent in the Cambridge cluster and the brains of the university, choosing to play a long-term game.

One would have thought that by now the lesson of colliding cultures would have been well and truly absorbed. Tudor Brown, a co-founder of ARM, said recently that the spectre almost spoiled the feast for the Cambridge superchip design company.

ARM recruited CEO Warren East from Texas Instruments and in the first real scale-up of ARM staff from Cambridge – taking the workforce to around 800 from 300 or so – Brown recalls the key issue.

“I remember when we took on a lot of people from Texas Instruments and there were fears that their culture was taking over. You have to strike a balance when you are recruiting – especially when that is being done globally and across a number of bases.” Arm brought its own culture to bear on the TI newcomers.

Technology companies tasked with growing their business or their capabilities are increasingly choosing acquisition as the way to boost headcount without having to step back onto the gruelling recruitment treadmill.

Senior managers who left Autonomy were sick of HP’s bureaucracy. I’m told that over 50 staff were tied up in one particular conference call!

Mike Lynch had assembled a smart team – creating great technology, identifying routes to widespread markets and moving in fast and aggressively on opportunities. HP’s approach to integration was tantamount to trying to mate a greyhound with a whale.

On reflection there may be a third lesson to learn from the episode: Some mammoths of the technology industry collect huge workforces simply by rolling along year after year on a risk-averse pathway. Scale in this form creates unsustainable headcounts and when the axe falls, whole forests of humanity are laid low – 27,000 people in HP’s case.

Cambridge entrepreneurs have often been criticised for lacking ambition and failing to grow their companies to the kind of scale they could achieve.

Not only are the same number of ex-TTPCom people employed in several spin-outs following the Motorola debacle – each has grown headcount in a sustainable manner since breaking away.

So which is preferable – 300,000 people employed in one technology company with their jobs permanently endangered or 300 people employed in 1,000 savvy, agile businesses that play to their strengths, know their limitations and are likely to continue to innovative across a whole range of tech segments?

Mike Lynch can build another couple of Autonomys almost with his eyes shut  – but it remains questionable whether HP can rebuild one.

In a cash and credit-crippled economy it’s the risk takers in technology who will create the new jobs of the future, backed by angel investors and serial entrepreneurs who know the ropes. It won’t be the plodders so cherished the High Street banks.

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