Growth

Growth for the sake of growth is the ideology of the cancer cell.

Edward Abbey

Perhaps it is my natural temperament to do things deliberately and with purpose (after all, it is the tortoise who wins the race). Maybe it is my persistent skepticism. Quite possibly it is an outgrowth of my intuitive personality type (INTJ). Whatever the reason, I have always been resistant to Wall Street’s incessant demand for growth from public companies.

I have an MBA. I know that investors demand growth because growth drives the stock price up. And investors want the stock price to go up. Q.E.D. But at what price? And over what time horizon?

Yesterday’s announcement of the Pfizer / Wyeth merger reminded me of the long odds such marriages have at success. Depending on who you read, anywhere from 50 – 80 % of mergers fail – destroying vast amounts of shareholder value in the process. Why pursue such a risky strategy?

I am in the process of launching a web-based career management site and if my nascent little company ever reaches the size that we have shareholders, we will continue to drive growth organically and sustainably. We will pay dividends to share the wealth. We will stop growing when doing so means preserving the long term viability of our enterprise.

I have my suspicions as to why “growth at all costs” is so prevalent. Wall street and the board rooms of corporate America seemed to be fueled by transaction fees and bonuses. Filtering the behavior of corporate executives through these simple lenses reveals that short-term vision can be blinded to long-term implications. In any case, they would do well to behave less like a cancer cell and more like a redwood tree.

Similar Posts

  • Steinbeck on Writing

    I think there is only one book to a man. It is true that a man may change or be so warped that he becomes another man and has another book but I do not think that it is so with me.

    — John Steinbeck, Journals of a Novel: The East of Eden Letters

    East of Eden was the first book that I read by Steinbeck. It was moving and well written and rich with characters. Then I discovered Journals of a Novel: The East of Eden Letters and suddenly I felt I had been given a back stage pass to the mind of a writer.

    Steinbeck had already written Of Mice and Men (1937) and The Grapes of Wrath (1939) when he set out to write East of Eden (1951). In the intervening years he lived through two divorces and served as a war correspondent. Despite the critical success of his earlier works, his standing as a major novelist had faded. As today’s quote reveals, Steinbeck also felt that he had not yet told the one story that was within him. His editor, Pascal Covici, did all that he could to encourage Steinbeck. Covici sent Steinbeck a number of notebooks and instructed Steinbeck to use them to write.

  • Consulting is a Relationship Business

    Consulting is a relationship business. A special product may make you competitive. Differentiated services may make you distinct. But only carefully crafted relationships will create a breakthrough firm.

    — Alan Weiss, Million Dollar Consulting

    In preparation to launch Rizers — my new company — I am reading Alan Weiss’ classic tome, Million Dollar Consulting.

  • Simple Financial Recovery Plan

    My new favorite podcast is Planet Money. As the economic turmoil has progressed from frightening to surreal, the NPR crew at Planet Money have done a wonderful job explaining the intricacies of the complex financial world in terms that are easy to understand.

    Here is what I have been able to figure out so far. Forget about the subprime mortgage crisis. A huge part of the problem is these credit default swaps – to the tune of $55 trillion dollars. These “insurance policies” were not only taken out by people who lent money to protect themselves against potential loss. Financial gamblers were also taking out credit default swaps on other people’s loans! This is raw gambling. Some analysts estimate that for every CDF taken out to by a lender to protect a loan, ten other CDFs were sold by and for third parties on the same loan.

  • Contentment

    There are two ways to get enough: one is to continue to accumulate more and more. The other is to desire less.

    — G. K Chesterton

    When Linda and I returned from our stint in London, we landed in New Jersey. Within a few weeks of our US re-entry, and for reasons that still escape us, we bought a beautiful, 2,400 square foot house with a large basement on the north side of Princeton. Despite the delightful, well-groomed neighborhood, we quickly began to discover the folly of our ways. The sweeping windows that let in so much light in the spring became a greenhouse in the heat of summer. It seemed cavernous to heat and cool. Finding enough furniture to fill all the rooms took the better part of a year. …

  • Embrace It!

    I love it when I meet people who understand winter, as in the only way to thrive during winter is to take it head on, get out in it. Dress warm and get outside. If you are cold, dress warmer, get moving.

    — Jeff Smith, editor, Traverse, Northern Michigan’s Magazine

    From A Cross Country Ski Tale

    I’m a northern girl. I was born and raised in an environment whose seasons were punctuated by the first frost and the spring thaw … and the highlight of the year was the day the ice broke on the river.

    The secret to happiness in these “harsh” environments is to meet them head on. Dress warm and get outside. Do not let the weather control your emotions or your happiness. If you are cold, dress warmer, get moving.

    But isn’t life itself a harsh environment? Life is hard. The secret to happiness is the same. Embrace it. Meet it head on. Get out in it. Dress warm. If you are cold, dress warmer, get moving.

  • Checks and Balances

    Power tends to corrupt, and absolute power corrupts absolutely.

    — Lord Acton

    I was born in Canada and came to the US between my sophomore and junior year in high school. One of my first courses in my newly adopted country was high school civics. I learned with a newcomer’s sense of awe about the three branches of government and their important role in each checking the power of the other. It is highly attributed that this system of checks and balances is the genius of the America.

    In the intervening years since those wide-eyed high school years I have been a casual observer of the reality that power and money are self preserving. …

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.