“So what’s the vision for the company? What’s the vision for growth and expansion?” asked a CIO friend Kate and I were having lunch with.
“Um, well, you know, we’re just doing what we do and trying to do it better and better, and we’ve launched a few new products in the last few months, but we’re doing great,” I said. “There’s no big vision for growth and expansion.”
As I said the above — which is essentially the same thing I’ve said for a long time and usually said with confidence — it came out as you can see, a bit mumbled, a bit unsure, even a bit defensive. This was strange. For the first time, rather than being proud of our modest aims, I felt embarrassed that I didn’t have larger ones; that I didn’t whip out a laminated roadmap for taking over the publishing world, or bust out the iPad for a quick PowerPoint demo.
What was going on here?
After some reflection, I believe it was a natural, momentary weakness inflicted by the almost ubiquitous opinion that businesses which do not worship at the altar of growth die. Now, I am not saying that I’m not interested in growth, for I certainly am, but it is not the primary objective. If there are other ways we can serve our market that dovetail with our organization’s strengths, let’s explore them. But the starting point is not: “Let’s figure out how to grow our revenue by 30 percent next year,” for that approach could force us into areas we do not belong.
But no matter how you try to stand your ground, you keep hearing it: “How are you going to grow? If you’re not growing, you’re dying. Don’t you want to grow?” And I believe it is these Siren’s songs that, over time, erode the discipline which keeps companies on track, which keeps them saying no to acquisitions that may look good on paper, but in execution almost always fail to deliver.
And I think this is what we have seen in the recently announced healthcare IT mega-acquisition — a loss of discipline from someone who has shown it for so long, from someone who got where he is precisely because of that discipline. The price: $1 billion plus. The chances the acquisition pays off are highly doubtful. We simply know how these things work, we have seen it so recently. One could think there had to be better, more sure-fire ways, to spend that $1 billion.
And who wins? The organization that continues to show the discipline I am speaking of. The discipline that knows mega-acquisitions among software companies almost never work, because even if you get the cultures merged, you almost never get the software integrated. And the discipline that knows customers counted as a lock for switching to the “go-forward” product are almost always left in the dark for too long, left without an iron-clad, go-forward product roadmap from someone in a position to make good. Thus, those assumed customers are often snapped up by opportunistic competitors who understand this dynamic all too well.
So, more than anything else, I see something Shakespearian in these events — one man giving in to his deep desire to be the biggest kid on the block. And so, for a while at least, he’ll have his wish. But when all is said and done, I suspect it will be she who reigns — she who has shown discipline to a sound fundamental premise that made her the Queen, not he who only attained the kingship by breaking it.
Two thoughts on this post.
Anthony, I think you are being disingenuous in not naming the vendors you have critiqued. Everybody knows you are referring to Siemens/Cerner. So why not refer to them by name? You’re not trying to ‘protect’ your advertisers, are you?
Second, in my experience an acquisition usually fails when the vendor tries to maintain both systems over a long period of time, and /or tries to integrate his offerings with the new acquired products.
However this acquisition can be financially beneficial to Cerner if they avoid that route. Considering they are paying $1.3 billion for a company that has recurring revenues of about 1 billion/yr. By cutting duplicate overhead (execs/finance /sales/ marketing/ R&D) you can easily generate profits of $300 million/yr so in 3-4 years the acquisition pays for itself. Of course not all Siemens clients will convert to Cerner products but even if only 50% do that’s all gravy with a minimum sales/marketing expenditure.
At this point you might say but what about the customers? The reality is Siemens sold the division because they did not want to make the big R&D investments needed to keep up. So over the next five years the product would have received mediocre support and little or no enhancements. Just bug fixes and regulatory changes. Customers lost out when Siemens decided to get out, not when Cerner decided to buy in.
Now a real winner in all this is Epic and they did not have to spend a dime. If Cerner holds onto 50% of the clients or even 70%, where are the others going to go? Based on past experience, the majority will go with Epic. I think Judy will be thanking Neal at their next encounter.