Common sense suggests that growth is simply about getting bigger — having more customers, more markets, more products and more revenues. In reality, a successful growth strategy should help you become increasingly focused and effective. Of course you want to increase your profits, but higher earnings don’t automatically flow from supersizing your company.
In fact, the opposite can be true.
I prefer to see an acquisition strategy as a way to recalibrate the company, bringing it into closer alignment with its inherent purpose and current market conditions. Recalibration is an endless necessity today, because economic and technological changes are remapping the business environment at such an extraordinary rate. We could rewrite the familiar maxim “Grow or Die” as “Recalibrate or Die”.
Another way to put this is that “growth” can sometimes mean doing less of something. It can mean shedding customers. It can even mean divesting whole divisions of your business. In my seminars on M&A, I often refer to General Electric, an avaricious acquirer of other companies. I point out that in recent years GE has tended to sell as many companies as it has bought. A continuous process of selling and buying allows management to define and redefine what this great corporation is really about.
Naturally any idea of contraction is counter-intuitive to the entrepreneurial owner whose eyes are fixed on a horizon of endless expansion. At Capstone, when we introduce the re-calibration concept to clients, we often meet initial resistance, but those who are willing to stay with the program see remarkable results.