I recommend a very interesting article at Fortune about the decline of General Electric, under Jack Welch’s tenure the most admired company in the world. I don’t think you can come away from the article without concluding that Jeffrey Immelt was a lousy CEO.
Still, it’s hard to see precisely where he went wrong. Was he just unlucky? I can only express my uninformed opinion. Management time and attention are finite resources. Tackling too many new initiatives, making more acquisitions than you have the time or attention to manage are not winning formulae.
If by uninformed you mean the inside the boardroom details and thinking, ok. Otherwise IMHO you hit the nail on the head.
People not familiar with the activity have no clue how difficult and time consuming acquisitions can be. They can bring an organizations other activities to a grinding halt. If things don’t go well, multiply by 10.
I’m making a broader comment there, too, directed at the likes of Amazon, Facebook, and Google. Amazon acquired 11 companies in 2017; Apple 9; Google 11. Many of these, like the Amazon acquisition of Whole Foods, were far outside their core business.
That isn’t like Microsoft. Microsoft acquired a huge number of businesses but most of them weren’t far outside their core business, in many cases they did so to acquire or suppress the technology, while in others they were just buying customer base.
Does Amazon really have the management resources to manage a company as large and complex as Whole Foods? Stay tuned.
Well, of course my sarcastic quip is “what’s a tin bender doing buying a chain of pancake houses.â€
I don’t pay much attention to those companies, so I’m on thin ice, but perhaps they bought two types of companies, those bringing technology, and those bringing channel. Say, Amazon thinks their logistics acumen is applicable to retail food delivery.
In our experience, developing channel is the hardest thing to do, and we will almost always attempt to acquire rather than develop de novo.
The company I am aware of that does the best job of simply acting like a holding company is good old ITW. Of course they get the key right: leave management in place and don’t mess with them much.