Business Blog: Hoover’s Business Insight Zone

Reading this excellent GigaOM piece on Freescale, I was struck by this tidbit:

As the CEO of Intersil, [new Freescale CEO Richard] Beyer presided over several acquisitions and created a laser focus on analog chips. That strategy isn’t likely to work at Freescale, he said, which is too big in too many markets to pare down to just one.

No doubt Beyer’s judgment on this issue is sound — he’s earned his high reputation in the world of microchips — but it leads me to ponder this broader question:

Would you reduce the scale of your company if doing so meant that you enjoyed a better quality of business?

Some companies do. Earlier this decade, ABB hived off many of the businesses it had acquired from the mid-1990s forward, in favor of a devoted focus to its core markets. Alan Mulally has said that he intends for Ford to be a smaller — but much better — company when its restructuring is complete. And many companies have spun off lower-performing units in hopes of improving their own fortunes.

Such changes can be wrenching, especially because Wall Street loves to see apples-to-apples revenue growth, quarter after quarter and year after year. Just because the investment community wants it, though, doesn’t make it the right thing approach for a successful company. In any business, there will always be a tension between short-term and long-term gains — but in my view many, many firms would be better served to turn the knob more in the direction of the long term.

Freelancers and contractors know very well what it’s like to “fire” the customers who don’t bring them joy. The parting of ways could be over fees, personalities, irreconcilable creative differences, whatever. But the savviest veteran freelancers know that life — and a happy career — is too short to stick by unworthy customers, even though they do pay you such shiny, shiny money. (Stowe Boyd has a nice post here about dropping those clients whose cultures he finds toxic.)

Individually, we should also “fire” the worst uses of our time — but pride and the force of habit often prevents us from doing what we should. Since organizations are amalgams of many flawed individuals, it’s not surprising that they share the same hangups that many individuals do, even though organizations exist, in theory, to must our individual weaknesses while magnifying our strengths.

Does your company have the guts to go smaller-but-better? Do you?

(Porsche photo from the Porsche Club of America — and what a fine bunch of eye-candy those old cars make!)