By contrast, GE did not embark on the quixotic search for synergistic revenue growth when it acquired NBC in the mid-’80s. Rather, NBC became another business unit run just like the other dozen. GE brought in a management team of disciplined leaders and imposed its focused set of execution-related disciplines: planning sessions, reviews, informal dialogue, formal evaluation and development of people, and rigorous analytics. The result: NBC under GE has consistently outperformed competitors in terms of television ratings, return on capital, and revenues.
Every manager wants growth, but each should ask whether such growth is possible, let alone sustainable. Sustainable growth is both profitable and capital-efficient.
If those two conditions can’t be met, and there is no room to grow in the market segment, then an M&A strategy is just a house of cards. And when it comes tumbling down, like WorldCom’s bankruptcy under $32 billion of debt, it’s not an act of God; it’s the deal maker’s hubris.
Ram Charan, email@example.com
Ram Charan is an advisor to boards and CEOs of Fortune 500 companies. He is coauthor, with Larry Bossidy, of the best-selling book Execution: The Discipline of Getting Things Done (Crown Business, 2002).