why acquire?

May 11, 2008 at 1:51 pm | Posted in Business | 1 Comment

I was cleaning out my office the other day and found a notebook from 2003. I spent some time walking down memory lane when I stumbled upon notes from a meeting that caused me to chuckle. On Mar 27, 2003, I wrote:

Why do companies spend so much money doing an acquisition with little revenue? Why not just take the money and invest a 10th of it into dev teams?

Five years later, I understand a lot more about the fundamentals of why acquisitions are important. There are many reasons that I’ll group together in future posts. But perhaps the most fundamental reason is because innovation inside an existing organization of any substantial size is really difficult. Perhaps nowhere is this documented better than in the 2003 book The Innovator’s Dilemma.

Several years ago I read that book and thought it was interesting. For the past three years, I’ve LIVED the reality of that book and have found its insights painfully accurate. We’ll spend some time in the next few posts flushing out this topic of organic vs acquired innovation.

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