THE SYNERGY MYTH

The man primarily responsible for making ITT into a wondrously profitable world-class conglomerate during the 1960s and early '70s offers pieces of his lively mind on contemporary business issues. Nearly 20 years after his official retirement, the 87-year-old Geneen (Managing, 1984) remains active in a host of commercial ventures to which he alludes frequently in his once-over-lightly critique of corporate America. Although the author created the archetypal ITT mainly through acquisitions (over 300 of them), he casts a decidedly cold eye on the merger mania of the 1990s. In particular, Geneen scoffs at the alchemic notion that there are worthwhile synergies to be gained from the unions of enterprises with variant competencies. ``If you mix beef broth, lemon juice, and flour, you don't get magic,'' he asserts, ``you get a mess.'' By contrast, the author argues, genuinely integrated conglomerates (like General Electric and the old ITT), which can achieve lucrative growth by capitalizing on opportunity, are an appreciably better deal for investors and the economy than holding companies built on a false organizational premise. Geneen also whales away at what he considers trendy oversight theories (reengineering, total quality control, et al.), the pious (albeit largely unavailing) actions taken in the name of corporate social responsibility, information-highway hype, rapacious lawyers, the intransigence of government bureaucrats, and the docility of all too many corporate directors. On the plus side of the ledger, he commends industriousness, taking calculated risks, worker empowerment, and inspirational leadership. So far as executive compensation is concerned, the author deems few if any rewards too great for those who enrich stockholders and share their hazards (i.e., by owning company securities). Provocative pronouncements from an unrepentent conglomerateur whose accomplishments and longevity have earned him elder-statesman status in the Global Village's business community.