One of the more remarkable implications of Microsoft’s recent announcement
to return $32-billion to shareholders in a one-time special dividend
later this year was its sub silentio admission that it didn’t
have any better ideas about what to do with the money. From the
perspectives of both financial theory and corporate governance, this
is an almost shockingly lucid and correct decision.
Nevertheless, the business press was full of woeful stories to the effect
that the Mighty Microsoft, growth company par excellence practically
as far back as the attention-span-challenged investor can see, was now
"mature," a depressing and humiliating come-down. Employees
would desert and the new hiring pool would consist only of mediocrities: The
rusting, decrepit hulk of a once-upon-a-time Titan was given its last
rites.
Now, I’ll take second place to no one in my faith in "growth" as the
economic cure-all, but that’s on a macro level and even Microsoft is
just one company. Sometimes growth as a strategy per se is not
optimal, particularly when it tempts one to make long-shot investments
(or to overpay for sure-shot investments, which comes down to the same
thing).
As Exhibit A I offer you Holland & Knight, at least if this law.com article
is to be believed. The firm wants to acquire another 100 lawyers
to add to its 30-lawyer San Francisco presence. And why exactly? Well,
because "we’ve got to grow depth and breadth…to be able to sell to
our clients that we are a truly national law firm." One might
ask if the landscape of "truly national law firm[s]" is unoccupied territory
awaiting a land grab, but I digress.
The real point is that growth appears to be being pursued as an end
in itself. As a consultant puts it, "Some firms [are] not making
a lot more money, but they’re scared not to grow. So they keep
on growing." What would Bill Gates say?
