Known and Unknown_ A Memoir - Donald Rumsfeld [133]
Robson, Denny, and I encouraged the heads of Searle subsidiaries to tell us their priorities to increase their profits for the longer term. For example, we saw potential in one of Searle’s units, then much less known than it is today.
Pearle Vision was first formed in 1961, when an optometrist named Stanley Pearle opened a store in Georgia that not only offered eye examinations but also could produce prescription lenses on-site and sold a wide selection of frames. The division’s president, Don Phillips, embarked on a well-conceived plan that used the profits of existing Pearle Vision centers to build new centers and exponentially expand the franchise. The approach allowed us to increase the number of Pearle Vision centers from 240 in 1976 to more than 860 by 1981. We then franchised some of the centers to increase the incentives for store managers. Still later, we took a portion of Pearle Vision public while retaining a majority interest and management control. Our shareholders profited at each stage of the process.
To get clarity and insight into how things were really functioning at Searle I dug down into one division at a time. I had a habit of asking employees from senior managers to lab technicians direct questions, some of which may have seemed intrusive, but it was the best way I knew to gather the information I needed. On occasion, my approach made people uncomfortable, particularly if they didn’t have ready answers. But more likely than not, they would have the answers the next time.
Like many companies in the mid-1970s, Searle had acquired numerous subsidiaries. Before I decided what to do with them I resolved to visit most of them personally. A number of the units were related only marginally to Searle’s core businesses. One subsidiary’s business was to produce and sell sperm from livestock. Its main source of revenue came from an aging bull named Astronaut. As fine a bull as he was, it was clear that this revenue stream was finite. Another was a centrifuge factory in France plagued by labor union activism. I had some inkling that the situation there was difficult when I was advised I should show up for my visit late at night, not during working hours. A visit by top management was not likely to be well received by the workers, I was told. Hostile labor conditions and weak earnings made the decision to divest an easy one.*
I decided to divest Searle of a number of its subsidiaries, even though I knew it would have the effect of temporarily reducing our revenues and earnings, since a number of these companies were profitable. Within a year I had directed the sale of twenty companies. One Rumsfeld Rule I developed is “Prune. Prune businesses, products, activities and people. Do it annually.” Perhaps paradoxically, my intent was not to make Searle smaller through these divestments—I wanted to reinvigorate the company and invest in our core businesses to achieve growth.
To reduce costs and improve performance, we initiated a sizable reduction of Searle’s corporate headquarters staff, which had the added benefit of decreasing the distance between the top of the organization and our customers. In good times, the company was able to afford a growing corporate payroll, but times had changed. We needed to let some people go and move others from corporate headquarters to the divisions. Keeping in mind the memory of the way Bob Haldeman had summarily requested blanket resignations from Nixon’s cabinet and subcabinet the day after his 1972 reelection, I wanted to treat our employees as fairly as possible.
It helped that the cost-cutting measures extended to all corners of the company, even to the executive offices. It was not a pleasant task for a new CEO to have to tell longtime members of the board of directors