Managing External Relations: Corporations Have to Be Careful Who They Get in Bed With

You already know that you need to vet your suppliers so you don't start to engage with vendors relying on one of many potentially lethal practices:

  • Abusive work environments (aka sweatshops) – when "Just Do It" shouldn't mean throwing shoes at employees or kicking them
  • Child labor – even if youngsters make such wonderful Afghan rugs (/sarcasm)
  • Strong arm procurement – the "fair" trade movement against extortionist buying practices
  • Dubious chain of custody or provenance – "conflict" metals, forestry products

No wonder Codes of Conduct these days can get quite lengthy for vendors to wade through.

To the above list of depressing activities to stay away from, it looks like you should now add political impact on your business to the list of risk factors. In case you hadn't noticed this already, Microsoft has just decided to end their part of the MSNBC joint venture. As of July 16, MSNBC is no more. Rumor has it that Microsoft will get $300M for their 50 percent stake. Microsoft put $321M into the venture back in 1996 when it was formed.

Reasons are stated as freeing Microsoft to create their own online news service, as well as business repercussions from the politically slanted content on MSNBC. According to this article, Microsoft was exasperated by "the MSNBC cable channel's strategy to counter Fox News Channel's appeal to conservative viewers by tailoring its programming for an audience with a liberal viewpoint," which presumably is not the best marketing approach when you want to reach corporate decision makers managing IT spend.

It becomes clear that the MSNBC message was slanted against Microsoft's interests in a quote from Bob Visse, general manager of Microsoft's MSN portal. He says, "Being limited to content was problematic to us because we couldn't have the multiple news sources and the multiple perspectives that our users were telling us that they wanted." Other areas of the article reference Fox as the main opponent. So in other words, MSNBC was too liberal for Microsoft.

Other than agreeing that Spend Matters has most excellent procurement and supply chain content (!), we probably all have different opinions on whether MSNBC was too liberal -- or not. Regardless, when a company like Microsoft goes to the trouble of starting and then dissolving a large joint venture, for political reasons, this calls for analysis. Ideally, companies try to look at the broader picture and carefully form business relationships that are mutually beneficial, especially before shelling out hundreds of millions on JVs. If anything, the MSNBC dissolution signals a continued trend toward a broadened risk definition within corporations. At Spend Matters, we would not be surprised to see some form of political scorecarding being applied to vendor selections in the future.

- Thomas Kase

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