It's Not Luck (31 page)

She’s relaxed. I wish I felt the same. Stacey is not moving at all. The news about what is planned for Pressure-Steam has paralyzed them. I have to go there. But can I move them? I doubt it. And if the situation there is not resolved, nothing else counts.

Besides, there is a lot of work on all the other fronts, and frankly, I spend too much time on worthless corporate issues. The paperwork takes more than half of my time. Am I spreading my efforts too thin?

According to this Prerequisite Tree, I am. What it tells me is that: I must make sure that Stacey develops a solid marketing approach that will guarantee her division a decisive competitive edge; I must work with Brandon and Jim to make them embrace the concept of selling Pete’s company (and later Bob’s) as a “model for excellence”; I must ensure that Bob’s solution is implemented as smoothly as possible.

But most importantly, nothing should be allowed to distract me from doing it.

27

This was an excellent day. A week ago, the morning after Bob, Susan and Jeff presented their solution to me, I suggested to Brandon Trumann and Jim Doughty that I come to New York to update them. We met in Brandon’s offices, on one of the top floors of the twin towers.

What a sight. All the world is at your feet. On the other hand, it’s a long fall from here.

One of my objectives for this meeting was to gain time for Stacey. I had to convince them that we do have a realistic chance to develop a marketing breakthrough solution for Pressure-Steam. To accomplish this, I decided to start by bringing them up-to-date on Bob’s solution. My assumption was that it would be enough to show that this solution was not the result of an ingenious intuitive flash, but rather the result of meticulously following the generic process that Don and I had constructed. The Future Reality Tree of how one should go about developing a competitive edge. They were already familiar with that tree.

I gave them a copy of the client’s UDE list that Bob, Jeff and Susan put together. Brandon and Jim examined the list, no surprises there. Then we read the Current Reality Tree that was built from this list. Brandon commented that to construct this Current Reality Tree is child’s play compared to the one we built together. Jim agreed.

Once we finished reading the Current Reality Tree, they didn’t have any difficulty translating the core problem into the natural solution. The cloud was almost redundant. And then we went over the Future Reality Tree. That was important. It convinced them that the solution will be very attractive to the shops.

Of course they raised negative branches, lots of them. That was the fun part. They couldn’t come up with any negative branch that Bob’s group hadn’t already analyzed in depth. So, in response to each reservation they raised, I simply handed them the appropriate page, showing which injection Bob came up with, and how it not only trims the negative, but leads to more positives. It was great.

When they had exhausted all their reservations, they started to raise a long list of implementation concerns. I was well prepared. Bob’s team had given me all the ammunition I needed. Trumann and Doughty were impressed. No, not just impressed, they totally bought in. Frankly, only when I had finished explaining it all to them did I realize to what extent Bob’s solution is really powerful.

And my plan worked. Brandon said that he is now a believer in the Thinking Processes. Jim even asked if I can take the time to teach them how to become masters in using Jonah’s techniques.

Then I played my trump card. I suggested that we do the calculation of how much cash Bob’s company will generate in the next four months. They couldn’t believe their eyes; they checked the numbers over and over again. But there it was. Under the most severe assumptions, shortening the collection time on the receivables will bring in more cash than what we hoped to get from the sale of the company. You can imagine that I didn’t have any problem convincing them that it would not be a wise move to sell the company before we get the cash.

I was ready to move to my next step. I knew that I couldn’t simply ask for a delay for Stacey. They need to start having results, and results for Trumann and Doughty means more cash for UniCo. A lot of cash.

I suggested estimating the future annual profits of I Cosmetics. I wanted them to see the magnitude of the numbers. When we finished the calculation it came out that implementing Bob’s solution will bring I Cosmetics to a profit of eighteen percent on net sales. Not on the current sales, but on the increased sales. This means approximately thirty-seven million dollars net profit a year. Not bad for a company that just a week ago we were willing to sell for less than thirty million.

The return on net assets, when you take the crazy way we use to determine net assets on our balance sheet, comes out to be almost sixty percent a year. Sixty percent RONA for a company that doesn’t have any patents or proprietary technology .

You can imagine that Brandon and Jim hurried to calculate the selling price. Yes, they still intend to sell the company. They need the money to improve UniCo’s credit rating.

To estimate how much we can sell I Cosmetics for, we used a profit/earnings ratio of seven. The value of the company came out to be about two hundred and fifty million dollars! No wonder, a remarkable jump in profits causes a remarkable jump in value.

Brandon was quick to point out that there is no way we will get this amount. Not when profits are based on forecast rather than hard numbers from past history. But he thought we could shoot for one hundred and fifty million. What a change. They were praying to get this sum of money for all the diversified group. Now they want it from just Bob’s company alone.

At that stage I was ready to move on the issue of Stacey’s company. The negotiations with Pressure-Steam’s competitors are moving at a snail’s pace. A snail’s pace compared to what Trumann and Doughty want to see; an express train relative to what I want. At the current rate they have a good chance of signing the deal before the end of the year.

So I just speculated what would happen if Stacey develops an equivalent competitive edge in her field and starts to eat into the competitor’s market share. They were quick to realize that it would be like sticking dynamite in the competitors’ behind. It would also enable us to ask for a higher price. It was easy to squeeze a promise that they’ll freeze negotiations for the next six weeks. Right now they have more confidence than I do in our ability to rapidly develop a competitive edge for Pressure-Steam.

Once I knew that I’d won this battle, I moved on to my next objective. I reminded them of their estimate of the amount that we can get for Bob’s company, and declared that we can get much more, that we’re going about it in the wrong way. They were not surprised. I don’t think that I can surprise them anymore, whatever I claim. Anyhow, I laid on them the realization that I learned from Dave. You know, why are we putting ourselves in the trap of evaluating the company through its financial performance. We should evaluate it in relation to the benefits a buyer can get by acquiring it. And these benefits are not restricted to only the direct profits that can be made by the purchased company.

We discussed the concept of selling our companies as models of excellence, as catalysts to raise the performance of a much larger company. Initially it was hard for them to accept, but when I switched focus to Pete’s company, to the printing business, it was much easier for them.

The last three hours we spent attempting to construct a presentation for big prospects in the printing industry. Even though it was very helpful in bringing Jim and Brandon to buy into the idea, I didn’t like the results. It is not a good presentation, not at all. I will have to teach them how to construct a Transition Tree. This is the only way we can smoothly deliver such a complicated message. We scheduled a weekend two weeks from now at a resort area. We are going to try to bring our families, too.

Should I tell them then that in this meeting I was following a Transition Tree? That would be a bad idea, they might feel manipulated.

I’m going over what I achieved with them. I gained enough time for Stacey’s company. Bob’s company will not be sold for the next four months. In the meantime, we are going to prepare a dazzling presentation for the printing industry. Then we’ll be ready to concentrate on cementing the deal on Pete’s company.

By the way, we intend to sell Pete’s company for more than one hundred million. That’s their number. I think that if our presentation is really good, we can get close to two. We’ll see.

Not bad. Not bad at all considering where I was less than three months ago, when the board’s resolution hit me like a ton of bricks.

Now I am on my way to visit Stacey. Don will meet me at the airport, and tomorrow morning we are going to spend time with all Pressure-Steam’s top management. I must find a way to move them forward, to infuse them with the stamina to construct a solution. They must do it. They have the intuition, they have the know-how, and they are the ones who will have to implement it.

I don’t think that I will have any real problems, not when they hear that I have secured a sufficient window of time for them, when they hear that Trumann and Doughty are willing to wait.

At the gate I’m greeted not just by Don; Stacey comes too. As we go to the parking lot I break the good news to her. She doesn’t seem enthused.

“Did you complete the Current Reality Tree of the market?” I ask.

“Are you kidding?” she bitterly answers. “We couldn’t agree even on the market’s UDEs.”

“When will you?” I try to disguise my irritation.

“Alex, you are asking for the impossible. I haven’t even managed to get my people to move seriously on the distribution system.”

“How come? I thought you’d finished hammering out the details over a month ago?”

“Yeah. So what.”

“Stacey, what’s the problem?” I ask. “Do you think that I didn’t buy you enough time? That six weeks won’t be enough to construct your marketing approach? It took Bob’s people only two weeks to polish it.”

She doesn’t answer.

I’m starting to get fed up. “Of course six weeks won’t be enough,” I say in a hard voice, “if it takes you more than three weeks to write an UDE list. Listen, I bust my behind to buy you time. I can’t understand why you allow your people to waste it.”

“Alex, with all due respect, I think it’s you who doesn’t understand. You’re asking for the impossible. Do you know what is going on in my company?” I’ve never seen Stacey so depressed. “Have you seen my last report? Sales are down. Shipping is down.”

“I can imagine that morale is low, it’s understandable.” I try to be responsive.

“It’s not low,” she corrects me. “It’s hit rock bottom.”

This is too much. “Stacey, are you telling me that your people are declaring defeat?”

“What I’m telling you is that they are realistic. They have families to take care off. Many don’t have savings, but they do have mortgages. How can I blame them when all they can think about is finding another job.

“Listen Alex. Since UniCo bought this company four years ago, what have these people seen UniCo do for them? How much did UniCo invest in modernizing this company? Zilch. Not even a penny.

“And now UniCo is going to sell them out. UniCo is going to make a bloody fortune and they are going to be thrown into the streets. Will you please stop pushing for the impossible? Nobody here is willing to collaborate.”

This is a totally defeatist attitude. If Stacey doesn’t wake up, there is only one line of action open to me. To fire her and immediately take her place. I have to talk some sense into her. I hope that she listens.

We reach the hotel. I turn to Stacey and wait until she looks at me. “No, Stacey, you are wrong. Bloody wrong. You are taking from these people the last chance that they still have. And yes there is a chance, a real one. We can turn it around. We can secure these people a good job in a prosperous company, in Pressure-Steam. But not with the attitude you are taking. Not by declaring defeat before the battle has even begun.

“You are the president of this company. It’s your responsibility to make sure that it will continue to survive and prosper. And what are you doing? Deciding a priori that there is no chance? How can you do it?

“So what if upstairs they want to sell you to the cleaners? Does it mean there’s no way to reverse that decision? Of course, based on the current performance there is no way. But in whose hands is it to change this abysmal performance? And who said that we don’t have enough time? If we plan our actions carefully, if we deliver the correct intermediate results, we have all the time in the world.

“You can blame the board, you can blame me, you can blame the market conditions and even your people. But at the end Stacey, it’s all up to you. You can decide that you can, or you can decide that you cannot. In either case, you are right.

“See you tomorrow morning. Come on, Don, let’s go.”

28

At the entrance, Don and I are directed to their main conference room. They are all waiting for us. Stacey has packed the room. Not only with the entire sales staff, even the production supervisors and union stewards are here. They had to arrange for extra chairs along the walls.

As I go to take my place at the head of the long table, I shake hands with the people I know. They are very formal, but there is no open hostility. Don takes a seat at the back, near the door. Smart move.