Bob on ITT and Harold Geneen

Harold Geneen the CEO of International Telephone and Telegraph has long been a hero of mine.  He ran one of the earliest diversified international conglomerates, from 1959 to 1977 and was successful. He raised revenue from $1 million a year to $15 billion and bought 350 companies.

He was also a simple liver.  Rather than have homes and travel with a suitcase.  He had hotel rooms in the major cities where he operated and had each one stocked with appropriate clothes. In the final decade of his life he lived in the Plaza in Manhattan working on deals.

I met a major subaltern of Geneen's at a party. Bob was in top management almost from the beginning of Geneen's rein. Bob served in Europe at first and later ran a major part of the Asian segment of the conglomerate.

 What I learned:  Geneen wasn't necessarily prompt.  He might come to a meeting an hour late in the morning but the meeting could go to mid-night.  There was nothing special about the reports required from the divisions, they were both financial and marketing projections.  Big future sales were recorded by multiplying the size of the sale by the probability of getting the contract (Bayesian math).  Most of the relevant big business had to do with building telephone systems or airport landing systems. Very heavy on the political operative side.  Capital allocation was the by-product of intense discussion by all the top managers.  Research allocation was handled the same way.  One of the most brilliant research allocations was toward making fiber-optic cables, where ITT was far ahead of everyone else.

ITT failed towards the end of the 1970s.  Bob mentioned how hard it was to bid against Siemens, Erickson and Nippon Electric.  He mentioned the 1977 Foreign Corrupt Practices Act that punished American based companies for using bribes in getting contracts.  I think that law, for good or bad, wiped out ITT and probably many other companies. 

Siemens recently got a severe penalty for using bribes.  A quarter of a century later Europe is finally meeting minimal American ethical standard.  Too bad so few lovers of Euro-socialism understand that reality.