It's Not Luck - Eliyahu M. Goldratt [107]
“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