It's Not Luck - Eliyahu M. Goldratt [39]
Remembering what Bob Donovan said about his cosmetics products, I agree completely. “There is another problem because of it. This constant introduction of new products confuses and spoils the markets.”
When Brandon finishes writing he asks, “Jim, do you have anything to add on this topic?”
“You know I have,” Jim says. “You’ve heard my skepticism regarding the positive impact of new products. Many of them fail. Most don’t justify the investment in their development, but even when the new or improved product is successful, it almost always eats into the sales of the existing products. In fact, it’s not just with new products; the same holds true for new outlets.”
I wonder if I should tell him my opinion on what he just said when Brandon backs him up. “Just last week I heard a story you won’t believe. Unfortunately it was in a company we are heavily invested in. Six months ago they reported on a big success—they had signed a very large deal with a club chain. Last week I found out that the drop in sales we saw in the last quarter is due to the fact that the club sales substantially ate into the sales of the shops.”
Since exactly the same thing happened to us in UniCo recently, I prefer to close this issue as fast as possible. I say, “Why don’t you write ‘Most new outlets and most new or improved products eat into the sales of existing outlets or products.’ ”
“Good.”
I do a quick count of Brandon’s list. “Okay, we have ten. That will be enough.”
“No, no,” says Jim. “You are not going to get away with this list. This list puts too much blame on the market and too little on the companies. Let me add some more.”
Turning to Brandon he says, “Write that ‘a large percent of the existing sales force lacks sufficient sales skills.’ ”
Before he continues I interrupt, trying to somewhat balance the picture. “Salespeople are overloaded.” I make sure it gets listed.
Jim continues, “ ‘Production and distribution do not improve fast enough or significantly enough.’ ”
“Wait, wait,” says Brandon. “Let me catch up . . . . Okay, continue.”
“Engineering,” says Jim.
“What about them?” I ask, as if I don’t know.
They both smile at me and Brandon writes, “ ‘Engineering is unable to deliver new products fast enough.’ ”
“And reliably enough,” adds Jim.
“Okay, I have enough,” I say. “There’s really no need to go on.”
Jim smiles at me. “Let me close the list with one last problem that will remind you what we are talking about. Write it carefully,” he says to Brandon. “Companies don’t come up with sufficient innovative ideas in marketing.”
Jim Doughty waits for the reminder to sink in, and then says, “Alex, do you really believe you will be able to connect all the entries on this list with rigorous cause and effect relationships?”
“And remember,” Brandon Trumann says, “according to what you said, this recipe of yours is supposed to lead us to the identification of only one or two core problems that cause this list. It looks hopeless. Alex, maybe we should just drop the idea and forget about it? You have a lot of things to concentrate on this week.”
“No,” my pride forces me to refuse. “Let me have it.”
“Okay,” says Doughty, all business. “But before we return to the States we’d like to see what you’ve done with it.”
“Sure,” I say, feeling that I am once again facing an important test. Why didn’t I drop the whole thing when I had the chance?
13
We are in a meeting discussing the sale of Pressure-Steam. It’s a strange meeting. It’s not with a company (like the meeting yesterday), or with investors (like the meeting this morning). I have the distinct impression that we are talking with a wheeler-dealer. It makes me nervous.
“Okay,” Mr. Smooth-Talker says after a while, “let’s discuss the real issue, the assets of the company.” He opens the balance sheet.
“The real assets of the company are its people,” I can’t help myself from reminding this person of the obvious.
He looks at my card and then smiles at me. “Are you in