It's Not Luck (33 page)

“Why not?” Stacey stands up. “What if we own the equipment, the spare parts, the maintenance people—all of it? We take care of whatever the client needs for pressure steam. We could sell him pressure steam. Not equipment, not spare parts, but pressure steam.

“Oh, don’t worry, we are not going to give it for free. We’ll charge for it.”

“How are we going to charge for it?” Joe spits.

“I don’t know,” she says. “Maybe according to kilocalorie, or BTUs.”

“That will not do,” he says. “We must take the distance from the furnace into account. Pipes, valves, everything that goes with it are a major part of the system.”

Well, well. He’s walking into the trap.

“Maybe we should charge according to BTU per yard?” someone thinks aloud.

“I’m sure we can sort it out,” Stacey says. “That won’t be the problem.” Turning to all of them she asks, “What do you think? Let’s not sell the physical iron but sell the real thing that the client wants. Pressure steam. Where he wants it, when he wants it, in the amounts that he needs. What do you think about the concept?”

Nobody hurries to answer. Some nod their heads skeptically. Some stare at the ceiling or at each other. But there is no negative reaction. They simply are thinking about it. I sit down.

Phil is the first to talk. He says only one word. “Xerox.”

“Yes, Xerox,” Stacey repeats. “Our large copying machines. We didn’t buy them. We don’t own them. We don’t maintain them. The largest ones we don’t even operate. It’s all done by Xerox. And we pay them. We pay them a flat fee per month plus a small sum for each copy. They didn’t sell us copying machines, they are selling us copies of whatever we want copies of. Joe, what do you think about it?”

“It won’t work. Most of our income and all of our profit comes from spare parts. If we are going to give them on consignment, we’ll starve.”

“Who said anything about consignment?” Stacey is surprised. “What I’m talking about is giving this new offer to new clients. Companies that are building new plants or expanding existing ones.”

“Ah, that’s another story.” Joe is more relaxed.

“Well, what do you think?”

“I don’t know.” Joe is much less aggressive now. “It might work. There isn’t much to lose. In any event, in order to penetrate we already sell the original installation for only the raw material cost.”

Stacey continues to consult with him. “Do you think that if we offer it for a flat monthly fee plus charging according to usage we can get the deals?”

“Depends on the prices. But for the right price we’ll get it. The real question is what price gives us a break-even point?”

“Our break-even depends on how much it costs us,” Stacey says. “A major burden is the spare parts. If we implement the new distribution system we can bring every part that is needed within a few hours. This will mean that we’ll need to hold much fewer spare parts at the client’s sites. It will substantially cut our costs.

“To some extent,” Joe grudgingly agrees.

“I also believe,” Stacey continues, “that we can maintain their system for a fraction of the maintenance cost that they spend.”

“That’s for sure,” Phil speaks up. “They don’t know how to maintain our equipment. Sometimes what they call maintenance, I call sabotage.”

“Which means that we can maintain their system for a fraction of what it costs them. Joe, we can give them a good price. A very good price.”

“We’ll have to do the calculation.” Joe is still skeptical.

“We don’t have to do any calculation to know the answer. Look, Joe, we have a tremendous amount of spare capacity,” Stacey reminds him of the obvious. “If you think that with this offer we can take the new market, any reasonable price will guarantee us a lot of profit. Don’t you see?”

“If it’s good, the competitors will immediately copy us. What’s the use?” He digs in his heels.

“We can make sure that will not happen,” Phil says. “If we can have all spare parts within a few hours, we will be able to guarantee extremely high reliability. Let’s offer to pay penalties for every breakdown that lasts longer than . . . say twenty-four hours.”

“Penalties? Why penalties?” Joe is immediately on guard.

“Because that way we’ll ensure that our competitors will not immediately follow,” Stacey says.

“And if they try, they’ll break their heads,” Phil completes the picture.

Joe doesn’t answer. Many are grinning. Only now I start to realize to what extent they don’t like him. Frankly, neither do I.

Stacey turns to the group and suggests, “Shall we examine, seriously, to what extent this offer will be attractive to the prospects?”

They start to argue about it. More and more people are drawn into the debate.

Before long Stacey takes a blank transparency and writes at the bottom, “We offer pressure steam where, when and as much as needed.” Slowly, the Future Reality Tree starts to emerge. Every time that they succeed in overcoming another reservation, a few more entities are added to the tree.

After two stormy hours, three pages are already finalized. They are over the hump. No one is now against the solution, they are polishing it. Making sure that it’s okay.

Their Future Reality Tree clearly shows how big and diverse the benefits are going to be. The benefits to them and to the clients. It’s impressive.

The details in their case are very involved, but the concept can be explained in a simple way. The offer that they are examining now, relative to the way they always did business, is like the difference between buying a car and leasing a car. You know that tax reasons make leasing quite popular. But that is just a tiny part of the story in their case.

To realize the real magnitude of it, imagine that currently you don’t have to just buy the car but also a fully manned garage to maintain it, an inventory of spare parts, and a gas station.

What they offer is to give you the car that you want, and to charge according to the miles you drive, as you drive them. The price is very fair. In total, considering the expense of maintenance people and carrying costs, it’s cheap.

Now imagine that you must have a car but you are measured on return-on-investment. The difference between the two offers is night and day.

Knowing how corporate thinks about these things, I’m quite convinced that if Pressure-Steam presents it well, they’re bound to win almost every new installation. Considering the fact that they have a lot of spare capacity, they’re bound to make a hefty profit. How much? I’ll have to wait for a week or two until I get their detailed plan.

They are about to break for lunch when Phil says, “Why offer it only to new installations? Why don’t we offer it to our competitors existing clients? With this offer we can eat them for lunch, and they can’t do a thing about it.”

This remark starts the madhouse. Everybody is talking. There are many negative branches they’ll have to hammer out. Many.

I decide to leave. My presence isn’t contributing a thing—maybe even the opposite. Stacey is firmly in control and action-oriented. Nobody thinks anymore that there is no way to increase sales, on the contrary, they are bloodthirsty. Their competitors’ blood.

Don wants to stay on. Stacey doesn’t have any problem with it, on the contrary, she is glad to have him.

29

Six months later we are sitting in my office.

“How long does it take them?” Bob asks for the tenth time.

“More coffee?”

He ignores me. “These bloody lawyers. What are they doing in there? Sharpening pencils? How much time does it take to insert a few minute changes?”

We are waiting for the lawyers to put in the last-minute changes that were agreed on. Then Granby and Nelson will sign and I Cosmetics will no longer be part of UniCo.

Bob stands up and starts to pace. “And I still say we sold it short.”

“Bob, let it go. Two hundred and seventy million is a fair price. Besides, what is it to you? In an hour or so, you are them. You change camps. Any last-minute regrets?”

“Not really.” He sits down again. “You know I didn’t have any real problems with it. Especially after talking to Pete.”

“Yes,” I laugh, “he is as happy as a cat in a dairy.”

“Why shouldn’t he be? He is expanding like there is no tomorrow.”

“I think that what really counts for him is that he can now teach people how to do things the right way. You know how much Pete likes teaching. As I heard it, they plan to rotate all their managers through his company. Even the corporate comptroller has to spend two weeks there. Can you imagine what Pete will probably do to him?”

Bob’s laughter fills my office.

“By the way, Alex, you never told me how you managed to pull off that miracle. To get one hundred and sixty-eight million dollars for that small pimple.”

“I don’t think you want Pete to hear you calling his treasured company a pimple.”

“If he does, I’m dead. But Alex, with all due respect, it’s a small company. How much were they doing? Must be less than seventy million a year. You got more than twice their total annual sales!”

“They were also cranking out fourteen million profit a year. But the real answer is—we got it the same way we are going to get a fair price for your company. We didn’t sell just a company. We sold a valuable concept. The company and its management are the essential instruments to implement that concept.”

“I see.” He quiets down. “I could still learn a lot from you. Maybe I’m making a mistake leaving UniCo?”

“Are you crazy? Do you think that you’d get such an opportunity here?”

“No, Alex, just teasing. Who could ask for a better opportunity? Not only am I keeping I Cosmetics under my direct control, but on top of it I’m going to run the entire drugstore supply group. Your kid’s idea worked beautifully! What a job! Five companies. Nine plants. Over two hundred sales reps. A hefty budget. I can’t wait. What’s with these bloody lawyers?”

He starts again.

I ask Fran to bring in some tea. We don’t need any more coffee now.

“By the way, Alex. What are you going to do once Stacey’s company is sold? Do you have any irons in the fire?”

“Maybe I’ll come and work for you?” I ask jokingly. “I have some thoughts. Nothing concrete yet. But don’t worry, I’ll manage.”

“I’m sure. Any company would grab you with both hands. With your achievements and connections, I’m not worried at all. I just wondered if you’d already decided.”

Frankly, I’m starting to feel itchy. I had a little time to look around and there aren’t many jobs that I’d like to have. Not to mention being able to get. But there is enough time.

I hope.

“You know, Alex,” he interrupts my thoughts, “if there is one thing that I don’t like about my new job it’s that I won’t have you to turn to. No, don’t stop me. I have wanted to tell you this for a long time, but it was somehow inappropriate. Now that it’s apparent that I don’t need to brown-nose you . . .”

“You still need. The contract is not signed yet.”

“Will you shut up, please. As it is, this is not easy for me to say. I don’t need your jokes on top of it.”

“So don’t say a thing. There is no need. I understand.”

He sits quietly for a few seconds. “No. It should be said. Alex, I’m six years older than you. I reached where I am the hard way, nobody gave me any gifts. Especially not you. You made me sweat like no other boss. But in the past eight years I’ve gotten used to thinking about you as my father. Don’t smile. I’m serious.

“I knew that you were there watching and caring about me. Not like a hen helping when it’s not needed, but the opposite. Allowing me to grow, to make mistakes, but ready to guide me whenever I needed direction.

“I knew that no matter what happened, you would be there making sure that I found the way to put things back on track. You can’t imagine what a good feeling it is to know it. Thank you, Alex.

“Okay, I said it. Please don’t answer back.”

What can I answer?

When the signing ceremony is over, Granby signals me to stay. People leave the boardroom one-by-one, or in small groups. Everybody is leaving in a good mood. It’s a real win-win deal.

Finally, it is only Granby, Trumann, Doughty and me. Just the four of us in this large, luxurious room. We sit down in one corner. We all worked hard on this deal, it’s as if we want this moment to last a little longer.

“Congratulations, Alex,” Granby says. “I wanted to thank you personally. You turned a fiasco into a big victory. It’s much easier to retire knowing that I’m leaving a solid company behind. Thank you, again.”

“Hear, hear,” they say.

After a little while Granby asks, “How is Pressure-Steam doing? When can we move on that deal?”

“It’s too early to tell,” I answer. “They are doing well, but as long as we don’t understand the full impact, it’s very difficult to construct a reasonable proposal.”

They don’t seem concerned. “Can you elaborate?” Brandon asks.

“Everything is moving according to plan, no real surprises. They’ve already got four major new accounts, and their proposals are being seriously considered by another dozen or so companies.