It's Not Luck - Eliyahu M. Goldratt [30]
I force myself to smile back. But in spite of all the warning bells, I cannot play the game. “I don’t think so,” I answer flatly.
“Why? What’s the difference?”
There is a difference, a huge difference, but for some reason I can’t find the words to clearly demonstrate it. What is this leech thinking to himself? That sitting in board meetings can be compared to having the responsibility of running a company? Does he know how hard and demanding it is to turn around a losing business?
“Do you know that in the last year I’ve turned three companies around?”
“Alex, don’t get me wrong. In spite of the fact that you never show off in the board meetings, Doughty and I are quite aware of your achievements. We do read the reports carefully, including what is written between the lines.”
“So?”
“So, you didn’t answer my question. What is the difference between your job and mine? Do you produce something with your own hands? Isn’t it true that all your work is done through talking?”
“Yes, of course.” I’m starting to get irritated at my inability to express myself. “I think, I talk, I decide. That’s how the work is done.”
“Why do you think it is different for me?” Trumann continues to be calm and gentle. “I also think, talk and decide.”
He does—at least the latter two. He talks and decides. He talked in the board meeting, and he decides. He decided to sell my companies. The only thing I don’t know is whether he thinks. Selling my companies makes no sense at all. Then it dawns on me. There is a difference, a major one. How can I express it without offending him?
“I guess,” I begin slowly, “that I don’t know enough about your job.”
“Apparently.”
“I have responsibility for managing companies. What are you responsible for?”
“I manage money,” he answers.
I think about it. I guess he’s right. But how does a person go about managing money? Probably through investing in companies, and then . . .
“So your job is to be a watchdog, observing the companies you have invested in?” I think I could have chosen my words more carefully.
He bursts out laughing. “Yes, I guess you could describe it like that. My job is to determine which companies to invest in, and then to be the watchdog. Watching out for local optima.”
This piques my curiosity. “Local optima?” I echo.
“Alex, do you know how many top execs forget that the goal of their company is to make money? They concentrate on production, on costs, on strategies, and so often they forget that those are only the means—not the goal. Take UniCo, for example. Do you know how long the top executives have behaved as if the goal of UniCo is to provide them with fat jobs? Sometimes I get the impression that top executives forget that it’s not their company; it is the shareholders’ company.”
I don’t answer.
“Take your group as an example. We invested almost three hundred million dollars in it. What we’ve gotten back so far is zilch. And now we will be lucky if we can sell it for half. Who’s money is it, do you think? Who paid for it?”
“My group is not losing money anymore,” I say. “Give me some more time and I will make it really profitable. Why sell now?”
“Alex, how profitable can you make the diversified group? I’ve seen your forecast for this year. Do you realize inflation exists? In order to protect the value of the money, and bearing in mind how risky it is, we must invest only in companies that have a real chance of making more than inflation.”
I see where he is coming from. I cannot guarantee that my companies will bring more than inflation. Still . . .
“That’s the most unpleasant part of my work,” he continues. “Sometimes management makes a bad decision; it is unavoidable. But when they insist on protecting their bad decision, we have to step in. That’s our job. Remember, the goal is to make money. Your companies have to go Alex, it is unavoidable.”
Trumann doesn’t have