It's Not Luck (35 page)

Cliche or not, it fits.

“Which means,” I say, “that we have another necessary condition, ‘Provide satisfaction to the market now as well as in the future.’ That’s it. We don’t need any more necessary conditions.”

“What do you mean, we don’t need any more?” Jim doesn’t agree. “You mean that there are no other necessary conditions besides the two you mentioned? What about obeying the rules of society? Your own example, about opening a bank ‘late at night’?”

“That’s already covered, ‘Provide satisfaction to the market now as well as in the future.’ Think about it Jim. All the moral code is covered by the two necessary conditions.”

His expression shows that he doesn’t agree yet. No wonder, for a long time we thought that business and social values were almost contradictory. They were. Not anymore.

To help him quickly digest it, I say, “Let me review what we have agreed on. We agreed that we should, ‘Make money now as well as in the future,’ ‘Provide a secure and satisfying environment for employees now as well as in the future,’ and ‘Provide satisfaction to the market now as well as in the future.’ The first one represents the traditional view of people who own companies. The second is the traditional view of the unions, the employees’ representatives. And the third expresses the message that all new management methods are zealously advocating. We, as top managers, must make sure that our companies provide all of them.”

“Easy to say,” Granby sighs. “The problem is that so often there are conflicts between them.”

“No, there aren’t,” I say. “There are modes of operations that apparently conflict with one of them. These same modes in the long run conflict with all of them.”

“What you are telling us,” Jim is trying hard to digest, “is that we have to realize that there is no conflict between them. That they don’t contradict but in fact supplement each other.”

“Precisely.”

“Alex is probably right,” Brandon joins me. “As people who believe in making money as the goal we are also awakened to the fact that the other two entities are absolutely necessary conditions for achieving our goal.”

“The same awakening is happening in the other camps,” I add. “Show me a union leader who believes that there is job security in a company that constantly loses money. Show me a quality zealot who thinks that a company can provide good service to the market while constantly losing money.”

“So you claim that these three entities are actually important to the same degree?” Jim is on to it. “If that’s the case, how come everyone is talking about making money as the goal?”

“Maybe in Wall Street circles, everyone is,” I can’t resist the opportunity. “But you have a point. Making money is much more tangible than the other two. It’s the only one that can be measured.”

“I knew that we were right,” Brandon smiles.

“Don’t fall into the trap that the first entity is more important,” I warn him. “Making money can be measured just because of a coincidence. You see, somewhere in prehistory a genius invented a way to compare wheat to goats. He or she invented the abstract unit of money, a currency. No one yet has invented a unit of measure for security or satisfaction.”

“I’m three-point-seven X secure, and Jim is fourteen and a half Y frustrated.” Brandon demonstrates my point.

“I think that we’d better order dinner,” Jim says. “This conversation is deteriorating.

While we wait for our appetizers, Jim presses on. “Alex, this is all very interesting, but you still haven’t told us a thing either about strategy or how you suggest investing the money.”

“I don’t agree,” I say. “I think that we have actually defined what makes a good or bad strategy.”

“Maybe we did, but if so, it escaped me.”

“Do you agree that strategy is the direction we take to reach our goal?”

“Naturally,” he agrees.

“Do you also agree that if we violate any of the three entities that we outlined before, we are bound not to reach our goal? Remember, whichever of the three you choose as a goal, we agreed that the other two are necessary conditions to achieving it.”

“So a good strategy must not clash with any of them,” Brandon concludes. “How are you going to find a strategy that you know will not violate any of the three entities? And even if you find one, how do you know that it will work?”

“First of all, by not choosing a strategy that we know is bad. As you just said, any strategy that clashes with one of the three entities should be discarded. That trims out half of the strategies I’ve ever come across.”

“More than half,” Granby corrects me.

“You’re probably right,” I agree. “They are, by definition, not sensible strategies; at best they are panic-driven.” Like the original decision to sell the diversified group, I almost add. “So if the only strategies that I can come up with clash with one of the three entities, I must keep on looking.”

“Yes, but how?” Jim continues to urge me on.

I refuse to be urged. “I haven’t finished telling you what I think should not be done. We shouldn’t ever build a strategy based on a market forecast.”

“That trims away all the remaining strategies that I’ve ever seen,” Granby laughs. “But are you saying that we shouldn’t start with a forecast of the market? To me that seems like the most natural point to start.”

“No, because trying to forecast the market is like trying to capture the wind,” I say. “For decades we’ve tried to forecast sales. Did we ever succeed? Is there something that we trust less than the accuracy of our companies’ sales forecasts?” Hilton Smyth, I secretly answer my own question.

“For years we blamed the forecasting methods,” Jim supports me. “Recently, I read that the chaos theory proved that accurate forecasting of the weather is not a matter of more sensors or bigger computers. It is theoretically an impossibility. Probably the same holds true for detailed market forecasts. So, Alex, what is your starting point?”

“I’d start with developing a decisive competitive edge. If the company doesn’t have a unique technology, or outstanding products, I’d do the same as we have done in the companies of the diversified group. Concentrate on small changes that eliminate the negatives for the market.”

“You call what you have done, small changes?” Granby almost chokes on his salad.

I wait a second to let him recover, and then explain, “We haven’t changed the physical products at all. We have changed policies, on a large scale, but not the products. That’s what I meant by small changes. I agree that the name is not appropriate, it’s just a residual from when we developed the way to do it.”

Brandon and Jim nod their heads.

“But I wouldn’t stop there,” I continue to explain. “Then I’d move immediately to find ways to segment the market.”

“Did we do it?” Jim asks.

“We did it at Pressure-Steam, that was easy. When you have to substantially tailor the product for the client, there is no problem segmenting. We haven’t for Bob and Pete’s companies. But I made sure that they know how to take what they have done to the next level. You see, I believe that as long as you haven’t established a decisive competitive edge in many segments of the market, you should feel exposed.”

“Why?”

“Because the competitors will catch up,” I explain. “There is no absolute competitive edge, it’s just a window of opportunity, which will be closed.”

“So what you’re saying is that we must always be on the move,” Jim concludes.

“Of course.”

“When can we afford to relax?” Brandon asks jokingly.

“When we retire,” is Granby’s answer.

I hope much before that. There are ways to identify windows that will take a long time for the competitor to close. But if I mention it they will hold me here until morning. Better to not mention it.

Instead I say, “Having a decisive, competitive edge in many segments of the market is far from being enough.”

“What more do you want?” Brandon is surprised. “Alex, Alex, do you ever say ‘enough’?”

“Yes, when all necessary conditions are met.”

“And you think that bringing a company to a position where it has a decisive competitive edge in a segmented market is not sufficient to be considered fulfillment of a CEO’s duties?” Jim waits tentatively for my reaction.

“How can it be?” I’m amazed at them. “We agreed that the market cannot be accurately forecasted. You know better than I do that markets oscillate. Today it’s booming, tomorrow a recession.”

“You have to make enough money in good times to carry you through bad times,” Granby confirms.

But that’s not the point. I have to be more explicit. “What are you going to do when the market drops below your capacity? Fire your people, or let them twiddle their thumbs?”

It’s Granby again, “In bad times you have to tighten the belt.”

I know that’s what he believes in. I went through what he calls tightening the belt.

It’s not prudent for me to continue. I need these people. I need their active help in finding a new job and I worked hard to earn it.

“Did you already forget the second entity?” I hear myself say. “ ‘Provide a secure and satisfying environment to employees.’ ”

They don’t say a word. What are they thinking about? Why are they looking at me like that?

“Alex,” Jim is careful choosing his words, “are you against layoffs, no matter what the profit of the company is?”

“Yes.”

It’s funny. They probably think that they just uncovered a radical in disguise.

They don’t smile. They look at each other in silence. The atmosphere becomes heavier and heavier.

Jim says, “I don’t think that this is realistic.”

Granby says, “It’s dangerous.”

That gets to me. Why can’t they see the obvious? Just because it puts more responsibility on their shoulders? Let them think whatever they want. I’m sick and tired of top people who refuse to acknowledge the responsibility that they actually carry. Refuse to acknowledge it at the expense of the people around them.

Give me all the authority, none of the responsibility, that’s probably their motto.

Good-bye connections.

Julie will understand. She will.

31

“So, what happened then?” Julie is not happy with me.

“Nothing for a while.”

“And after that while? Alex, stop pulling my leg.”

“I’m telling you exactly what happened,” I say innocently.

“Listen, my dear husband. I’ve known you for many years. And I know you would not throw your career to the wind and then come home with a face like a cat who just swallowed a canary. So please stop these funny games and tell me what happened.”

“You want just the bottom line? Without what I had to go through to get it? No way, darling. The entire story or nothing at all.”

“Sorry, I’ll be patient. Continue.”

“So then Brandon asked if I am against laying off no matter what the situation. What a question! Of course when you have maneuvered your company into a cash crunch, you must lay off. Otherwise everybody will lose his

“Sorry, but I don’t understand. If that’s what you think, why did you put them off when Jim asked if you are against laying off when the company is not profitable?”

“Because I am. Not having cash and not having profits are two different things. Listen, Julie. Seven, six, even five years ago, UniCo was firing like crazy. The company was not profitable enough, but at the same time it had hefty cash reserves. There was no reason to lay off. That was the easy way for top managers to try to improve their bottom line. Cut cost rather than finding ways to better satisfy the market. Of course it didn’t help. We laid off and we continued to lose money, so we laid off again. It’s a vicious cycle. That’s what I’m against.”

“I see now. So what was their reaction?”

“The same as yours. I had to explain the difference to them as well.” “And?”

“They were unhappy. Especially Granby. He said that not everyone can come up with new ways to take the market.”

“He has a point.”

“No, he doesn’t. We were discussing what a good strategy is, and at that point in the conversation, we were discussing a company that had already achieved a competitive edge.”

“You lost me. If it’s the best company in its field, how can it lose money?”

“Let me remind you where we were. A company succeeds in developing for itself a dominant competitive edge, or as you call it, is the best in its field. Everybody is working, the company makes a lot of money, everybody is happy. Now the market goes down, the demand drops. As a result you have more people than you need. What do you do? That was the question.”

“I understand. What can you do?”

“My answer is that if you are operating under a good strategy, it will never happen.”

“Once again I don’t understand. Look, Alex, companies and markets are not my forte. I’m a marriage counselor. Why don’t you just tell me what happened? Why are you so happy?”

“No, Julie, it won’t help you. You understand no less than they did. It’s common sense, you don’t need to know much about industry. What you read in the newspapers is more than enough. So what don’t you understand?”