This is about how big companies balance old business with new ideas. Goldman Sachs' chief strategy officer Stephanie Cohen says M&A isn't zero-sum—both sides can win. She sees opportunity in partnerships (like Apple Card) rather than building everything in-house. Key mentions: Apple (Apple Card partnership), Chrysler (post-crisis bailout that repaid the government), and Clarity Money (Goldman's money-management tool). Her tip: internal innovation fails when it's a side project—it needs full-time commitment.
Goldman Sachs Chief Strategy Officer Stephanie Cohen shared insights on the evolution of M&A and corporate strategy during the program. The core view is that large, mature companies like Goldman Sachs need to strike a balance between innovation and improving existing operations. She emphasized that
Stephanie Cohen is Goldman Sachs' Chief Strategy Officer and a member of the Management Committee, having previously spent many years in the firm's investment banking and M&A divisions. The core theme of this episode is: how large, mature enterprises balance innovation with improving existing operations. The most impactful takeaway from the entire segment: Cohen argues that M&A is not a zero-sum game — "There are ways to create value for both, whether that's through capital structure, whether that's through making sure that when you're marketing the story to new investors or rating agencies that you're telling the story in a way that gets the optimal outcome for the company." This directly challenges the prevailing market perception that the average return on M&A is negative.
Cohen argues that good M&A is part of everyday strategy, not a remedy for growth anxiety.
She notes that M&A is an experience-driven business—buyers and sellers often meet again in the market, so participants "spend more time than you think doing the right thing." The bad motive is clear: "You feel your core business is growing slowly, so you use M&A to compensate... to catch up with the market's growth expectations for you, rather than for strategic reasons."
Historical case: The most complex deal Cohen participated in was the bailout and restructuring of Chrysler after the financial crisis—involving multiple stakeholders such as the U.S. government and pension funds. She recalls: "We would get emails saying 'the President doesn't want to do that,' and you don't even know how to respond to that kind of negotiation tactic." The deal ultimately repaid the U.S. government and generated returns, allowing the company to continue operating.
Key mechanism: Cohen emphasizes that M&A is not a zero-sum game. She believes value can be created for both sides through capital structure optimization and telling the right story to investors/rating agencies—"You can decide it's just about winning and losing, or you can decide we have great companies and find ways to give them the right capital structure to grow, while providing reasonable returns to former shareholders."
Cohen offers specific advice for both buyers and sellers, with the core being early preparation, relationship building, and clear bottom lines.
Seller Preparation:
1. Do not wait too long — "The longer you wait, the longer you are not investing, the more that business shrinks." Proactive portfolio management is crucial.
2. Build relationships early — Establish connections with potential buyers (strategic or financial) in advance, rather than suddenly scheduling a meeting and saying, "I have a business to sell." Cohen points out that such relationships can start with collaboration and naturally evolve into a transaction.
Buyer Strategy:
1. Step out of deal mode — First clarify the strategy, list target companies and alternatives. When the deal moment arrives, it is difficult to maintain clear judgment if others tell you how much to pay.
2. Think about integration upfront — Good buyers have the integration team sit with the deal team, "knowing what is difficult and what is easy, which synergies can be relied upon and which cannot."
3. "Charm offensive" — Cohen believes this is an underappreciated non-financial factor. Building a good relationship with the seller allows you to obtain more information, thereby making better pricing decisions. She calls this relational alpha.
4. Define the walk-away price — Good buyers know when to exit, but also understand how to consider strategic value. "No one has a crystal ball... but when you have a matrix of different growth rates and profit margins, you know at which point in the matrix there is no longer credibility."
Cohen defines Goldman Sachs’ strategy across three levels: growing existing businesses, optimizing the business portfolio, and enhancing operational efficiency—with the third level most prone to creating tension between "innovation and change."
First Pillar: Grow and Strengthen Existing Businesses—Expanding investment banking client coverage (especially for small and mid-sized clients) and focusing securities business on asset management firms rather than just hedge funds. These are "very safe" directions for innovation.
Second Pillar: Optimize the Business Portfolio—Driving more stable, recurring, fee-based revenue. This includes cash management services (offered to existing corporate clients), growing the alternatives investment business (particularly external funds), and the consumer business (Marcus). Cohen notes that this is not a choice of "liking this business over that one," but rather "creating the right ecosystem with the appropriate mix of recurring income and deposits."
Third Pillar: Enhance Operational Efficiency—This is the most prone to tension, as it requires people to change how they work. Cohen emphasizes that this must be paired with training, upskilling, and change management—"how to help people understand different management levels, how to think about high-value locations… presented in an exciting rather than frightening way."
Definition of Strategy: Cohen believes that a good strategy means "if I walk into the cafeteria and ask someone what Goldman Sachs’ strategy is, they can give a coherent answer; ask four or five more people, and their answers are also coherent." At the same time, each individual needs to understand how their daily work impacts and connects to that strategy.
Cohen argues that large organizations are naturally adept at "exploitation," but "exploration" requires deliberately creating space.
Exploitation: Goldman Sachs is conducting a comprehensive "front-to-back" review to maximize the value of existing businesses. Cohen believes that those running day-to-day operations "have the best perspective to exploit these markets," and that maintaining a client-oriented approach with cross-departmental communication can generate a wealth of good ideas.
Exploration: This is more challenging, especially within Goldman Sachs' culture — "We are a high-energy culture, client-driven... but exploration requires quiet thinking, time to reflect." Cohen's solutions include:
Internal Innovation Mechanism: The Accelerate Program — Goldman Sachs' internal call for ideas received 1,000 submissions, ultimately funding approximately 10 projects. A key finding: the best ideas are often cross-departmental and the hardest to execute because they are "not related to my day job." Cohen emphasizes that dedicating innovators full-time is critical to success — "The whole problem is these things don't get done because they are part-time... If you're going to do it, you have to do it full-time."
Cohen explicitly stated that Goldman Sachs views FinTech as an opportunity and is shifting from "building everything in-house" to "deciding what to build and what to buy."
Historical comparison: "When I first joined, we had our own version of Word... and then we realized we didn't actually need to write the code for Word ourselves." She aims to create an environment where FinTech companies see Goldman Sachs as a "preferred partner" rather than "a scary institution that will steal their technology."
Uniqueness of financial services: Due to high regulation and economies of scale, Cohen believes the financial sector particularly requires "back-and-forth interaction" between large institutions and FinTech. "Some things are better built outside a large organization like Goldman Sachs—whether it's where the talent is, where the capabilities are, or because a lot of experimentation is needed, which is more suitable outside a large organization."
Unfinished business in consumer finance: Cohen noted that while most people conduct transactions on their phones, "managing your financial life is still not seamless"—whether it's buying a car, a house, or planning for retirement. She sees this as an area where Big Tech and financial services need to collaborate, citing Apple Card as an example once again.
Cohen introduces Goldman Sachs' LAUNCH initiative — a $500 million commitment to invest in women-founded/owned/led businesses and female investment managers, while building an ecosystem.
Data-driven: 80%-90% of venture capital flows to all-male founding teams. Cohen argues this "tells you that capital is flowing to the wrong places" — making it both the right thing to do and a compelling investment opportunity.
Beyond capital: Cohen emphasizes the importance of networks — "Data shows that if you come through a warm introduction, the investment is 13 times more likely to pass the investment committee." The core of the LAUNCH initiative is to create "everyone's network," not a "women's network" or a "Black network." Specific approaches include: bringing together renowned founders and VCs with early-stage women founders in the same room; and introducing large corporations as potential clients.
Marketing strategy: Cohen admits that most people know Goldman Sachs but "don't know we are interested in them" — they assume Goldman only does $10 billion deals. Therefore, the key is to "say it directly" and build trust through word-of-mouth and tangible help. Since the announcement, LAUNCH has received over 3,000 inquiries.
Cohen shared insights on communication, talent development, and time management.
Three Principles of Communication:
1. Repeat until you are sick of it — "You need to keep saying it until you are completely sick of it, and then maybe say it ten more times, and only then might people have heard what you wanted to say."
2. Truly embrace feedback — "People truly understand the narrative when they are involved, allowed to debate, and have their own opinions."
3. The medium is the message — 60% of Goldman Sachs employees are millennials, requiring multiple communication channels.
Talent Development:
Time Management:
Concerns about OKRs: Cohen worries about Goldman Sachs' "100% culture" — "In a culture that demands 100% correctness, getting people to set goals and then not hit 100% is, I think, very difficult. But if we don't do it, we aren't pushing hard enough."
| Position | Guest Sentiment | Key Data |
|---|---|---|
| Chrysler | Positive (as a transaction case) | Rescued after the financial crisis, repaid the U.S. government and generated returns |
| Apple | Positive (as a collaboration case) | Apple Card partnership |
| Caterpillar | Neutral (as an example of industry trends) | Announced a focus on service revenue |
| Clarity Money | Positive (Goldman Sachs business) | Helps users manage their financial lives |
1. M&A is not a zero-sum game (Cohen) — "There are ways to create value for both sides, whether through capital structure or by telling a story to new investors or rating agencies." Evidence: In the Chrysler case, multi-party coordination achieved government returns + company survival + job retention.
2. "Charm offensive" is a hard skill in M&A (Cohen) — She calls it relational alpha. Evidence: Building good relationships with sellers yields more information, enabling better pricing decisions; referrals from acquaintances make an investment 13 times more likely to pass the committee.
3. Large organizations must deliberately create space for "exploration" (Cohen) — "Exploration requires quiet thinking… it is our responsibility to give leaders time." Evidence: Goldman Sachs' culture excels at client-driven "exploitation," but "exploration" requires stepping away from daily routines, cross-departmental communication, and external collaboration (e.g., Apple Card).
4. The biggest obstacle to internal innovation is "part-time effort" (Cohen) — The Accelerate program found that good ideas failed because "they were weekend and evening projects, not work." Evidence: 1,000 submissions → 10 funded projects; full-time commitment is key.
5. FinTech is an opportunity, not a threat, for Goldman Sachs (Cohen) — "We are moving from building everything ourselves to deciding what to build and what to buy." Evidence: Historical lesson — "We had our own version of Word, then realized we didn't need to write the code ourselves"; financial services, due to heavy regulation and scale effects, particularly need collaboration between large institutions and FinTech.
6. 80%-90% of venture capital flowing to all-male teams is "capital misallocation" (Cohen) — The LAUNCH program is based on this judgment: it is both the right thing to do and an investment opportunity. Evidence: $500 million commitment, 3,000+ inquiries received; network effects increase the probability of investment passing the committee by 13 times.
7. The hallmark of strategic success is that a random employee in the cafeteria can give a consistent answer (Cohen) — "If I walk into the cafeteria and pick someone at random, ask them what Goldman Sachs' strategy is, they can give a coherent answer; ask four or five more people, and their answers are also coherent." Evidence: 37,000 people globally distributed require repeated communication until "you are completely sick of it, and then maybe say it 10 more times."
8. There is a fundamental tension between Goldman Sachs' "100% culture" and OKRs (Cohen) — "In a culture that demands 100% correctness, setting goals and then not reaching 100%—I find that difficult. But if we don't do it, we aren't pushing hard enough." Evidence: Since the analyst era, the culture where "100% is an A here" has been deeply ingrained.