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During the Vietnam War, the Navy had a problem it had never faced before. In previous wars, Navy fighter pilots shot down many more enemy planes than they lost. But in Vietnam, things were different.

The difference was expressed in what's called the "kill ratio." In Vietnam, the kill ratio was 2.5:1. That meant Navy fighter pilots won two and a half engagements for every one they lost. That was OK, but not as good as prior wars, and not good enough for the Navy.

The Chief of Naval Operations assigned Captain Frank Ault to investigate and make recommendations. The report he produced had a long government-like title, but it became known as the "Ault Report." It included two key findings.

Navy pilots learned their combat skills by flying against other Navy pilots. Those pilots had the same kind of planes and used the same tactics. Ault suggested creating "aggressor squadrons" who would use the kinds of planes and tactics that the enemy used. Pilots would then learn by flying against the aggressor squadrons.

Data analysis showed that Navy pilots who had flown at least 10 missions were far more likely to win in aerial combat and go home at the end of their tour, than those who had flown fewer missions. Ault called it the "Ten Mission Principle."

Ault recommended that training for Navy pilots include a realistic simulation of more than ten missions. The Navy adopted the recommendations and created Navy Fighter Weapons School, known as Topgun (which became two words when the Tom Cruise movie came out).

Ault's "ten mission" finding sounds a lot like what researchers found when they tried to identify what made a company good at acquisitions.

David Harding and Sam Rovit, of Bain and Company, examined the deal history of 1700 companies between 1986 and 2001. They found that "more than 70 percent of the big-bang mergers since 1995 failed to create significant shareholder value."

That was not a surprise. When Gretchen Morgenson, of the New York Times reviewed the research on corporate acquisitions, she summed it up this way. "Academic research suggests that few mergers add up to significantly more prosperous or successful companies."

But Harding and Rovit dove deeper into the data to find out what mergers were likely to succeed. They found small deals were more likely to be successful. And they found that "the more deals a company made, the more value it delivered to shareholders."

Another researcher, Benjamin Gordon, managing director of BG Strategic Advisors, examined almost 7500 acquisitions made by more than 700 companies between 1986 and 2001.

He found something similar to the ten mission principle, too. Companies that acquired more than 20 companies in the 15-year period of his research were more successful than companies who did fewer acquisitions.

It turns out that there are two kinds of research into mergers and acquisitions. Most of it concentrates on what goes wrong in the vast majority of acquisitions.

Tom Hall and I decided to follow the lead of Harding, Rovit, and Gordon. We went looking for companies who did a lot of acquisitions and did them successfully. Some of the companies we mention in Ruthless Focus are GE, ITW, Cisco, Brown & Brown, and Avnet. Here's what they have in common.

They have done enough acquisitions to learn what works and what doesn't for them. This is not a process that you can plan the error out of.

They have a clear idea of why they're acquiring companies beyond a simple goal of growth. They look for specific firms with specific characteristics and whose acquisition will be part of a coherent strategy.

They recognize that people and relationships are keys to business success. They assess cultural fit early and make it a priority.

They understand that the deal isn't done until integration is complete. They tend to complete the integration quickly.

They have a standardized, but flexible, process for doing acquisitions. Sometimes this is written down and carefully documented. Sometimes it's not. Sometimes it's called a "playbook."

All the top acquirers have found a way to do what works over and over. Their process incorporates all the other key points in one way or another.

Check out, Ruthless Focus, at Amazon.

Posts about Ruthless Focus

Ruthless Focus: How to use key core strategies to grow your business
The Story of the Book
Annotated Table of Contents
Keep it Simple, Strategist
Strategy: Staying with What Works
Ruthless Focus on the Business Basics
Theo Albrecht, Trader Joe's, and Ruthless Focus
Ruthless Focus: What about Toyota?
Ruthless Focus: Three Kinds of Crisis
The story of Yahoo's shifting strategy
Tom Stemberg, Staples, and the Two Strategy Questions
Learning about Differentiation from Barbeque
Danger, Trader Joes!