Growth and Innovation
Growth and Innovation
Weekend 1
Growth Imperative
Gross Sales - $100 Desk
John gets commission - $20
Net Sales - $80
All anyone cares about in growth is NET – Don’t site gross sales (shark tank! Hates this ) * Evidence that once a company’s core business has matured, new platforms are hard to come by * Roughly 1-in-10 companies are able to sustain growth for shareholder value * Attempt to Growth causes corporation to crash * Equity markets demand that companies grow but it’s hard to know how to grow. * Corporations are under hug pressure to grow * Corporations that used to use monthly financial reports, use quarterly now to spread out issues and have less pressure monthly.
CASE – AT&T * Government controlled telephone system * Once divested they could find ways to grow * Bought NCR for $7.4 billion * Lost $2 billion on aquistion * Sold NCR for $3.4 billion * Enormous pressure to grow * Bought McCaw Cellular for $11.6 billion and spent another $15 billion * Spun off wireless and it was valued at $10.6 billion * Wall street devalued them because they couldn’t figure out which was wireless, which wasn’t * The bought TCI and MediaOne for $112 billion * Integration difficulties were insurmountable * Sold to Comcast for 72 billion * In a little over 10 years, AT&T had wasted $50 billion and destroyed even more in shareholder value * ** no idea how to merge and transition companies after acquisition
CASE: CABOT CORP * Gives tires its black color through carbon * Core market hadn’t grown rapidly * Launches several aggressive growth initiatives in advanced materials by acquiring specialty metals and high-tech businesses * Share price tripled * However, they quickly went from one item to things they didn’t know about * Losses from these businesses had drag on earnings and stock * Board brought in new managers to refocus core * New
Weekend 1
Growth Imperative
Gross Sales - $100 Desk
John gets commission - $20
Net Sales - $80
All anyone cares about in growth is NET – Don’t site gross sales (shark tank! Hates this ) * Evidence that once a company’s core business has matured, new platforms are hard to come by * Roughly 1-in-10 companies are able to sustain growth for shareholder value * Attempt to Growth causes corporation to crash * Equity markets demand that companies grow but it’s hard to know how to grow. * Corporations are under hug pressure to grow * Corporations that used to use monthly financial reports, use quarterly now to spread out issues and have less pressure monthly.
CASE – AT&T * Government controlled telephone system * Once divested they could find ways to grow * Bought NCR for $7.4 billion * Lost $2 billion on aquistion * Sold NCR for $3.4 billion * Enormous pressure to grow * Bought McCaw Cellular for $11.6 billion and spent another $15 billion * Spun off wireless and it was valued at $10.6 billion * Wall street devalued them because they couldn’t figure out which was wireless, which wasn’t * The bought TCI and MediaOne for $112 billion * Integration difficulties were insurmountable * Sold to Comcast for 72 billion * In a little over 10 years, AT&T had wasted $50 billion and destroyed even more in shareholder value * ** no idea how to merge and transition companies after acquisition
CASE: CABOT CORP * Gives tires its black color through carbon * Core market hadn’t grown rapidly * Launches several aggressive growth initiatives in advanced materials by acquiring specialty metals and high-tech businesses * Share price tripled * However, they quickly went from one item to things they didn’t know about * Losses from these businesses had drag on earnings and stock * Board brought in new managers to refocus core * New