Monday, September 24, 2007

Use your strategy to drive your acquisitions, and vice versa

It's often seemed to me that following a corporate strategy is like driving a car at night. You must decide what direction you want to go, but you have also to pay close attention to what you can see ahead of you--and adjust if necessary. As you progress, more is revealed, and you approach your destination. If you drive too fast, or focus too much on the route you've predetermined, you get into trouble.

I thought of this metaphor again when I read the article "Rules To Acquire By," in the September Harvard Business Review (link - $$). The author, Bruce Nolop, is CFO of Pitney Bowes, and in the article he describes his company's method for assessing and executing acquisitions, refined over seventy acquisitions in the past six years. It's a fascinating read, and instructive if, like me, your companies' corporate acquisition strategies were less than rigorous.

I was particularly struck by this passage in a sidebar:

In the traditional model, a company identifies—either on its own or with a consultant’s help—a new business strategy or a new space and then buys something. By contrast, we work with our board of directors to develop a general sense of our strategic direction and then refine our strategy along the way through the process of acquisitions.

It's as perfect an example of driving-at-night strategy as I've read anywhere.

(Photo: "Driving at Night" by cpurcell via stock.xchng)