It's Not Luck - Eliyahu M. Goldratt [1]
This is the longest speech I’ve ever heard Doughty make. He must be serious this time. Actually, he does have a point, of course, if you ignore the overall economy in which we operate. Never before has competition been so fierce. Never before has the market been so demanding. Personally, knowing very well how difficult this task is, I think that Granby has done a superb job. He inherited a blue chip company, but a company that had eroded its product base. A company that was diving into losses. And he brought it back to profitability.
Trumann raises his hand to quiet the murmur. This is serious. If Trumann backs up Doughty, they have enough power between them to do whatever they want.
It is quiet around the table. Trumann looks at each of us, the managers, and then very slowly says, “If this is the best that management is able to come up with . . . I am afraid we will have to look externally for a successor.”
Wow. What a bomb. Granby is retiring in one year, and until now everyone assumed that the race was between Bill Peach and Hilton Smyth, the executive VPs in charge of the two main groups. I personally wanted Bill Peach to win; Hilton is a political snake—nothing more. But now it’s a whole new ball game.
“You must have contemplated some more aggressive moves,” Trumann says to Granby.
“Yes, we did,” Granby admits. “Bill?”
“We have a plan,” Bill starts, “a plan that I must emphasize is not finalized yet, and it is very sensitive. It seems it is possible to reengineer the company, enabling us to cut costs by an additional seven percent. But there are many details that have to be hammered out before we can announce it. It’s not a trivial task.”
Not again. I thought we were over this stage. Every time bottom line improvements are pressed for, the instinctive action is to cut expenses, which actually means laying off people. This is ludicrous. We have already downsized thousands of jobs. We didn’t cut just fat. We cut into flesh and blood. As a plant manager, and even more as a division manager, I had to fight Bill all the time to protect my people. If we put the same effort that is constantly drained by reorganizing into figuring out how to get more market, we would be much better off.
Help comes from an unexpected place. Doughty says, “Not good enough.”
Trumann immediately follows, “That’s not the answer. Wall Street is no longer impressed by such actions. The latest statistics show that more than half the companies that laid off did not improve their bottom line.”
It’s not just me, everybody is puzzled now. It’s obvious that this time the directors are synchronized. They are aiming toward something—but what?
“We must focus our company. We should concentrate more on the core business,” Hilton Smyth says in a decisive voice.
Count on Hilton to say some meaningless empty phrase. What is preventing him from concentrating on the core business? That’s his job, nothing else.
Trumann asks the same question. “What else do you need to better develop the core business?”
“Many more investments,” Hilton replies. And with Granby’s permission, he goes to the overhead projector and starts to show some transparencies. Nothing new; it’s the same stuff he’s been bombarding us with for the past few months. More investments in fancy equipment, more investment in Rand D, buying some more companies to “complete our line.” Where the hell does he get his certainty that this will help? Isn’t it the same way we have buried over a billion dollars in the past few years? “This is definitely the direction,” Doughty says.
“Yes, it is,” Trumann backs him up, “but we shouldn’t ignore what Hilton said at the beginning. We must focus on the core business.”
Hilton Smyth, the snake. He was in it with them all along. It’s all just a big show. But where are the concrete actions? Where are they going to get the huge sums needed to invest in this