Adobe Omniture Acquistion: Innovation is Key

So I have had some time to think about the Adobe acquisition of Omniture and wanted to relay some of my thoughts on the merger. I, like most, was extremely surprised at the move. This definitely feels like a good partnership, but an acquisition? It was a little hard for me to swallow. When I left Omniture almost one year ago I was asked to drop everything and work on integrating metrics tracking into flash communication server. I had scoped the work, but at the last moment decided I was ready to move on. Halloween was my last day and I got to see the execs rent “little people” as Munchkins for their Wizard of Oz theme. Every year the execs rented midgets and it made me snicker (4 years total).

Like I said in previous posts, I was sad to leave, but Omniture wasn’t feeling as innovative as they had been (at least the department I was in). Omniture does have a strong culture, but that was morphing into more organized and clanish. For most at Omniture it didn’t matter because at some point we were “destined to make it big”.

So, let’s speculate on what happened at Omniture. The one thing that gave me comfort at Omniture was that Josh James was shooting for the moon. He was looking to do 1 Billion in Revenue. I still remember at an Omniture Summit when he announced his vision and Eric Petersen, while explaining the importance of a vision, said soon afterward “I don’t think that will happen, but at least Josh has a vision”. I don’t think Eric was invited again then after. Well, looks like Eric is right, at least in part. The Omniture business unit may still achieve the billion mark, just not on its own now. Josh’s high expectations were comforting because it meant the company was going all the way. We were looking to be the next IBM or Oracle and it was part of our vision. I was on board 100 percent.

If they were shooting for the moon like this why did they sell? Someone was feeling the pressure and I don’t think it was the executive team. Those guys were hyper focused on building the company to be the next Salesforce. I think the execs had confidence that the stock would rebound. Or, I have to question, did they? With Google and others putting extreme pressure on clients to switch and creeping costs they may have been feeling the pressure.

My guess is that the executive team still had the same vision. But with clients leaving for Google and Unica (maybe even Tealeaf) and with the difficulty in keeping costs low, the Omniture board voted to take a bird in the hand. My guess is there was an offer to enhance Adobe’s own position and the Omniture board took the bait. At this point the executive team is just making the best of the decision. That’s what I think happened, but I’ve been wrong before, sometimes very wrong.

I tend to agree with Omni_man Adam Greco about Omniture’s ability to integrate products. They did have a hard time focusing, but I think that comes from the change in their culture. Innovators became gun shy because failure was getting high visibility from an organized-clanish culture. The old innovative culture just plowed through the failures to create some great products. Now there is a lot of finger pointing and power plays. I was very sad to see the change, but I do feel it was the fault of execs who hired management from large companies who were very good at being “organized”. The product and the digital marketing industry are not ready for that type of management. Innovation should have been the focus; it still should be the focus. Rather than hiring externally, Omniture could have hired internal innovators and paid for them to get their MBA. Innovators like Richard Zinn, Josh Ezro, Chris Error and Catherine Wong should have been given that opportunity. Catherine is now a VP over integrations which is good, but who let Richard Zinn walk away? Richard’s combination of innovative spirit and ambition would have spelled super innovative leader with an MBA. If there was someone that fought for him to stay, that’s the person who knows the importance of these types of people. Chris Error would have been an innovative rock star with a few organizational behavior and project management classes.

I recently finished my MBA and after taking a class on mergers and acquisitions I was surprised at some of the mistakes that Omniture made, specifically with Touch Clarity. It was a technology acquisition and all the metrics that would indicate a successful technology acquisition were not ideal. Take a look at linkedin and the talent exodus is definitely not a good sign. a Technology acquisition is all about the people. Keeping the people and allowing them to innovate is the big key. Omniture learned from this acquisition that due diligence could have been better and pre-acquisition integration work would have helped or at least given some warning signs. After the Touch Clarity and Instadia acquisitions, Omniture created task forces to work on the organization and cultural integration of acquisitions (i.e. websidestory). But when it comes to even more horizontal acquisitions like Offermatica, product integrations are a little more difficult. It would have been a breeze 3-5 years ago, but the culture change from innovative to organized-clanish made the innovators gun shy and the bureaucracy was tiring. This is only the fault of management and not the fault of the innovators themselves. Offermatica is a technology acquisition where hopefully the technical innovators stay. As for Adobe, Omniture is also a technology acquisition, don’t forget the innovators.

As far as the product synergies, I think most everyone in other blogs have touched on them. One of the value propositions I was working on when I left was automatic tracking of videos served by flash communication server. Obviously with the convergence of traditional media and the web, this is a great move. They could easily unseat Nielsen for media tracking and push flash as a standard for media delivery. The other tracking pieces are important, but the shot at standardized media delivery and tracking for top media companies is huge.

Overall, I wasn’t surprised to see this move by Adobe, but I was surprised by Omniture’s acceptance. The exec team was focused on making the company into the next Oracle. But with pressures from competitors, the economy, and cost structures my guess is the board voted to sell. I have heard that Adobe is even more business focused (organized) than Omniture. My only suggestion to Adobe is to find those innovators at Omniture and treat them VERY VERY well. Empower them and let them try things that may fail, because when there are failures, that is when they are at their best! (See my article on innovation and failures).