“Doesn’t anyone like slow-growing, hugely profitable businesses anymore?” lamented a colleague of mine near the height of the Internet boom.
By David Schutt
June 2002
Institutional Investor Magazine
He, of course, had a personal motive for decrying the trend: The division he ran was about to be folded into a faster-growing outfit. After repeatedly failing to meet his company’s 20 percent revenue-growth test, my co-worker paid the price , outplacement and an excellent severance package.
This month several of our features focus on the trade-offs that companies make in trying to reach for such growth. In “Théodore Rex,” starting on page 17, Paris-based Staff Writer David Lanchner details the rise of Jean-François Théodore, who runs Euronext, the Continent’s fastest-growing stock exchange. Euronext has successfully folded five bourses under its wing, outflanking its bigger rivals, the London Stock Exchange and Frankfurt’s Deutsche Börse. How did Théodore do it? “Friendly deals” , acquisitions in which jobs and local trading systems were saved. Will Euronext’s growth lead to a huge, inefficient marketplace, as Théodore’s more profitable competitors assert, or is he on to something?
Senior Writer Steven Brull chronicles another sort of growth dilemma in “Slow Go at DoCoMo,” on page 49. Keiji Tachikawa, who heads NTT DoCoMo, Japan’s hugely successful wireless telecommunications company, thought he could acquire minority stakes in AT&T Wireless Services, Hutchison Telephone, KG Telecommunications and KPN Mobile and get those companies to use DoCoMo’s innovative technology. Borrowing an idea from Microsoft Corp., Tachikawa wanted to make DoCoMo’s technology the global operating standard. Trouble is, he didn’t purchase controlling positions, and his partners haven’t fully embraced DoCoMo’s system. Now Tachikawa has spent so much time and money to expand abroad that he’s allowed competitors to make inroads into his home market.
And then there’s Poland, where the government seems at times to care less about growth than control (“Polish Power,” page 25). Contributing Editor Jonathan Kandell interviews Treasury Minister Wieslaw Kaczmarek of the Democratic Left Alliance, who has slowed the pace of privatization so that his party can steer the process. And the Polish government hasn’t been shy about taking control: State security police arrested one company president in the middle of a meeting with investors. Shortly afterward a manager more to Kaczmarek’s liking was installed. Sounds more like a regression to Communist-era approaches than a strategy for economic growth. Will Poland have to pay a price?
