By Geoff Colvin and Ryan Derousseau
October 14, 2015

Massive-scale strategic redirection is one of the most important things a CEO can do, and this week we see three of the highest-profile CEOs of the past 20 years doing it. It’s fascinating to observe because – as with all real leadership decisions – success is far from certain.

-General Electric chief Jeff Immelt has sold a $32-billion portfolio of loans and leases to Wells Fargo, the latest move in his strategy of abandoning GE’s giant finance business and transforming the company into a 21st-century web-enabled industrial enterprise. He’s making it happen with blazing speed; since announcing the strategy six months ago, he has sold over half the $200-billion-plus of assets he aims to off-load, putting him way ahead of schedule. Nonetheless, this is a multi-year project, and investors aren’t yet persuaded the bold new strategy will work. The stock has risen in the past week, but it’s only back to where it was after spiking on Immelt’s April announcement that he was divesting GE Capital.

-Anheuser-Busch InBev CEO Carlos Brito finally convinced SABMiller to sell itself, for $104 billion. If the deal closes – regulatory approvals will take months – it will be one of the biggest deals ever, and AB InBev, already the biggest brewer ever, will be a whole lot bigger. The move is certainly bold, but it’s also worrisome. That’s because global beer consumption is shrinking, and this merger is mostly a move to give AB InBev sufficient scale to raise prices and cut costs. Brito is putting a staggering sum of new capital into this grindingly competitive business, and his ability to earn a return that beats his cost of capital – the most fundamental measure of business success – will be put to the test like never before. Investors would feel a lot more comfortable if he could also articulate a plan to get the world loving beer again. It ought to be possible. As he likes to say, beer is the original social network.

-The conventional view of Michael Dell’s $67-billion deal to buy EMC in the biggest technology deal ever is that it validates his decision two years ago to take his company private. The public equity markets, goes the argument, would have pummeled this bold, far-sighted redirection of the company because it will depress earnings before it raises them. And that’s likely true. But it’s also possible – and I’m not making any predictions – that public markets would have pummeled the move because they didn’t think it would work. Dell’s biggest business, PCs, is brutally commoditized, and EMC’s main businesses of storage and virtualization are attracting much larger competitors, like Microsoft. So a private company did a deal that a public company probably couldn’t have done. But whether it’s a good deal is a separate question.

It’s often observed by confused students of finance that big risks lead to big rewards. No, big risks lead to big rewards or big losses; in the language of finance, risk means variability, down as well as up. Immelt, Brito, and Dell are taking huge risks, and like all leaders worthy of the name, they believe their leadership can carry the company past the dangers to a glorious result. Now we’ll see if they’re right.

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