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Harold Geneen was born in Bournemouth, England, in 1910. Geneen’s childhood was spent at boarding schools and summer camps. When Geneen started work, as a runner for the New York Stock Exchange, he continued to study at night at New York University. In 1934 his hard work was rewarded with a degree in accounting.

For the next 25 years his career took in a string of companies starting with the forerunners of Coopers & Lybrand followed by Montgomery an accounting firm, then the American Can Co., Bell and Howell Co., Jones and Laughlin Steel Co. and Raytheon. After Raytheon, where Geneen was vicepresident, came the biggest challenge of Geneen’s career and the job that made him famous — International Telegraph and Telephone Company (ITT).

When Geneen arrived at ITT in 1959 the corporation was a ragbag collection of businesses, loosely focused around telecommunications, with revenues of $800,000. During the 1960s the predominant organisational trend was one of diversification and conglomeration. CEOs went into a purchasing frenzy raiding the corporate aisles for any company, no matter what business it was in, so long as it turned a profit. Geneen was no exception.

Over the ensuing decade Geneen purchased over 300 companies operating in over 60 different countries. There was no rationale to these purchases, no common thread, other than that of profit. Sheraton hotels, Avis car hire, Continental Baking, were all tucked away in ITT’s roomy locker.

It was a mammoth undertaking to manage so many disparate companies. Fortunately for ITT, Geneen was a fiercely driven workaholic. His ITT office in New York was equipped with eight telephones and a clock that showed what parts of the world were in daylight, and what in darkness.

Ten suitcase-sized leather attaché cases crammed full of documents were stacked along the window ledges. Six of the cases, stuffed with reports, communiqués and memos from over 400 reporting corporations, followed Geneen around the country and the world.

In his late eighties long after he left ITT, Geneen was still working a ten hour day at his office in New York’s Waldorf-Astoria hotel running a company, Gunther International, that he had bought into in 1992. “If I had enough arms and legs and time, I would do it all myself,” said Geneen. Even then it required all his energy to control the ITT conglomerate. To keep ITT under control Geneen employed rigorous financial accounting methods.

Each month 50 or more executives flew to Brussels to spend several days examining the figures. “I want no surprises,” was one of Geneen’s mantras. Full information was paramount, as was the ability to tell real facts for details masquerading as facts. “The highest art of professional management requires the literal ability to smell a real fact from all others,” asserted Geneen.

And Geneen’s approach seemed to work. From 1959 to 1977 ITT sales rocketed from some $765 million to approaching $28 billion, with earnings up from $29 million to $562 million. It was a success by most people standards, not just Geneen’s.

Yet the more companies Geneen acquired, the harder it was to keep all the plates spinning in the air. In 1974 and 1975 profits fell, Geneen may have been able to keep up a relentless place, but his followers were either unable or unwilling to match it.

Geneen’s efforts to support his company’s share price sometimes strayed outside the boundaries of acceptable practice. In 1972 America’s Securities and Exchange Commission discovered $8.7m had been sunk into nefarious and illegal activities around the world. This allegedly included bribery and colluding with the CIA in an attempt to undermine the Allende government in Chile.

Geneen stepped down as chief executive in 1977, as chairman in 1979, and as a director four years later. Geneen carried on working in a number of different companies of his own creation until his death from a heart attack in 1997.

ITT, however, was a different proposition. Without Geneen to support it the house of cards collapsed. ITT limped on but eventually, after selling many of the companies acquired by Geneen, it was split up into three separate companies.

Harold Geneen was one of the last of his breed. He came to power at ITT at the height of the mania for conglomerates. Size mattered. It’s doubtful if any other CEO in corporate history has acquired more companies, over 300, with less rationale. Of course acquisition is one way to grow earnings, but eventually the relentless growth has to stop and increased earnings must come from existing operations.

In the decade following Geneen’s departure from ITT, the cry from the boardroom was “stick to the knitting”. Companies slimmed down, shed non-core business and left ITT looking like a bloated dinosaur. Yet, Geneen deserves his place in the pantheon of business greats. Why? Because he was the best of his type, the paragon of his age. The king of the conglomerates.

Source: Business Strategy Review, Autumn 2005

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