It's Not Luck - Eliyahu M. Goldratt [42]
“If there is one thing that can ruin a deal,” Brandon said, “it is a last minute surprise. This is our first meeting with prospective buyers for I Cosmetics. Give it to them in full, don’t hide a thing.”
Even in the elevator they kept on telling me to emphasize the benefits, but to be very explicit about the expected negative outcome from the one-shot decrease in inventories. I followed their instructions and my explanation was well received. It seems that most investors are aware of the fictitious profits and losses associated with a change in inventory levels.
The prospects were not concerned with the short-term drop in profits. On the contrary, they were impressed with the changes we implemented, and the speed in which we did it.
They received it so well that Trumann insisted the expected one-time negative impact should not be a factor in determining the price. To my surprise, in both meetings the prospects agreed.
Of course they questioned me, in depth. But the concepts of our new distribution system are so logical, and make so much sense, that I didn’t have any problem convincing them of the validity of what we are doing. The only question that I couldn’t answer was, “Why didn’t you do it before?”
I guess that is always the question with a new, common sense solution.
Maybe I’m too paranoid about selling my companies? Maybe the world has changed and it’s not as short-term numbers driven as it was? If everybody is like the people I’ve spoken with today, I think Bob and Stacey will be allowed to run their companies their way.
No, that is not correct. It’s just my attempt to persuade myself that it’s okay to collaborate in the sale of my companies. I know, too well, the distortions coming from the pressure to meet the budget. This quarter-to-quarter, month-to-month pressure that forces even prudent top executives to interfere. If the sale of the companies goes through, Bob and Stacey don’t stand a chance. I must find a way to stop the sale.
But now I can’t even think about it. I have something urgent to do. In an hour I have to be in Trumann’s suite.
I throw my clothes on the bed and get in the shower. It is hot here in London. Very hot. In more than one way.
No, it’s not what you think. They don’t intend to hang me for what seems to be my blatant attempt to sabotage the sale. There is another issue. Alex Rogo, the world champion at putting himself in impossible situations, has done it again.
You see, when the last meeting was over, Doughty and Trumann came down really hard on me: “Alex,” Brandon started, “I want to ask you more about this new system for distribution.”
“It’s just common sense, nothing more to it.” I tried to avoid what was rightfully coming to me.
“Just common sense, nothing more to it,” Brandon sarcastically repeated. “Have you noticed that your solution is very awkward? In your solution, plants are no longer judged by what they are traditionally responsible for, their production.”
“But this doesn’t mean,” I hurried to correct his impression, “that they are not measured on something that is essentially under their control. It is their responsibility to have, at the plant, enough inventory of each item.”
“Which only brings me to the next point,” Brandon continued. “In the name of reducing inventory, you increased inventory in the plants from less than a day to twenty days. On top of that, in the name of quick response to the shops, you now delay shipments until almost the last possible minute. Alex, if you don’t mind, all of this, every aspect, flies in the face of common practice.”
I didn’t know how to answer this line of attack. I thought they had understood the distribution solution. My problem, I thought, was that they also understood why I hadn’t told them about it until the last minute.
Should I start explaining the distribution solution from the beginning? No. Their