All organizations go through five phases of growth. Each phase needs different management structures and strategies, and ends with a crisis that demands change. The subject has been well documented in the Harvard Business Review and elsewhere.

Here are the characteristics of the 5 growth phases:

1. Entrepreneurial: $1M company, startup phase, 10-20 people. Informal communications, hard work with low pay. Usually ends with a leadership crisis.
2. Direction: $ 10-50M, 100-300 people. Good organization with well-defined functional responsibilities. Usually ends with an autonomy crisis, and acquisition by a larger company.
3. Delegation & Functional Management: $ 100M-$300M, 1,000-3,000 employees, decentralized organization. Usually ends with a control crisis.
4. Coordination and monitoring: $ 1B+, global span, 5,000-10,000 employees. Usually ends with an organization crisis.
5. Collaboration & Global organization: $ 10B+, 25,000 employees. Usually ends by stalled-growth crisis, and lack of visionary leadership.

The 5 phases are described in more detail in my Automation.com article (March 2008, Weblink below).

Here's my point about Rockwell Automation. The company now has revenues of $5B, with about 20,000 employees, and is run by CEO Keith Nosbusch, an Engineer. With a strong, but declining N. American market share in PLCs and related products (widespread low-cost competition) and inability to generate organic growth in other geographies and markets, Rockwell is stuck.

At $5B, 10% growth represents $0.5B, which is tough to generate organically, and almost impossible to implement with multiple $50-100M (phase-3) acquisitions. One small profits-slip at any one of the acquisitions will throw Rockwell off balance and cause their shares to slide, making them even more vulnerable to being acquired by someone like ABB.

Just as many mid-level acquirers know the vulnerabilities of Phase-2 and Phase-3 companies, company strategists in large organizations like GE and ABB recognize the growth barriers for Phase-5 companies like Rockwell. Which is why Rockwell is a specific target.

Rockwell MUST pull-off a phase-4 ($1B+) acquisition to sustain growth. But, beyond just cash (only about $500M available) they just don't have the vision and management depth to buy anything bigger than about $100M. And so they are busy with band-aid strategies - alliances and partnerships with Dassault, Endress+Hauser and others. And other leaders like CISCO and Microsoft play with Rockwell as an automation toe-in-the-water. Beyond just press-releases, these "alliances" won't generate any serious revenue growth.

Like Fred Kindle at ABB, Keith Nosbusch just doesn't have the moxy and chutzpah to take his company beyond Phase-5. And so, sooner or later, Rockwell will be vulnerable to takeover. By ABB, or someone similar.

Business growth barriers & plateaus for Automation suppliers:
http://www.automation.com/sitepages/pid3292.php

Managing Growth - 5 Phases of Growth:
http://www.themanager.org/Strategy/ManagingGrowthI.htm

Please provide your feedback via the Rockwell weblog:
http://jimpinto.com/weblog/rockwellog.html