We often
hear of conflict at the top of our business organizations, but seldom hear
exactly what the conflicts are about. To
give you some idea of what goes on, I want to give you some of my observations. The difficulty top managers have can stem
from their personal priorities based on their own experiences and beliefs.
At Hayes
Microcomputer Products we had talented people, but half of us were more frugal
than the other half. The Owner and the heads of Sales and Engineering were sales
oriented and wanted to spend a lot of money on TV commercials. The rest of us
ran Operations, Finance, International and Personnel and we wanted to use our
profit windfalls to build working capital and thought that more advertising was
unnecessary. Hayes was already the standard of the industry.
We met
and made our case, but the “free spenders” didn’t budge. I told my frugal group
that we should consider leaving the company very quietly. The Operations guy
was going to stay and the other 3 of us decided to leave.
The “big
spenders” were all younger and were successful because they were risk-takers
and their expertise was on increasing revenue.
My “frugal” group was older and had more experience and were successful
because we had a better understanding of business. Our expertise was on
lowering costs and improving processes. The 3 of us did leave in 1986 and Hayes
closed in 1994 because they were out of cash.
I heard
another story at Western Behavioral Science Institute for Strategic Studies in
La Jolla CA in 1985 about DEC that was instructive. The CEO of DEC had a
protégée and put him in charge of developing a new PC. When this was completed
in 1982 he introduced the “Rainbow”. Its development was fraught with division.
Engineers complained that it wasn’t “relational” and couldn’t connect with
mainframes, but the protégée didn’t listen and the CEO backed him and the
Rainbow failed.
This was
a case that started with hiring the wrong guy, ignoring the Engineers’
objections, failing to manage the protégée, miscalculation that things would
work out and letting the product fail.
In 1986
the Challenger Spacecraft Shuttle exploded after its launch because the “O
rings” that held the booster rockets failed. The investigation revealed that
the Engineer working on the “O ring” tried to warn NASA management, but they
ignored him and ordered the launch.
The
mistake here was similar to the failure of the DEC Rainbow. The top guy ignored
the complaints and was in too much of a hurry to meet schedule.
In 1975,
I was called by a headhunter to interview with Rockwell in Galesburg Illinois.
They had purchased
Admiral
and wanted me to turn around the union contract with forced arbitrations to
clear out the grievance cases. I liked the idea, but declined their offer. They were losing $8 million a year, the plant
was closed due to a long strike and after meeting with their top management I
was convinced they weren’t going to make it. They didn’t. Rockwell sold Admiral
to Magic Chef and Maytag bought Admiral in 1986.
GM
announced the Chevy Nova in 1962, but when they introduced it in South America
it failed. Nova in Spanish means “no
go”.
At
Monsanto HQ, Constanstine Anagnostopoulos was the golden boy and could transfer
anywhere he wanted. He was a Harvard PhD
in organic chemistry, but at the time Monsanto’s only division where that
expertise could use that academic skill was the Ag Division and they made
fertilizer. He moved to the Organic chemical division and was able to secure
lots of patents. At the time, I thought
his celebrity was due to his ability for self-promotion, but in fact he was
overqualified for almost every job Monsanto had. He ended up being the
CEO. I suspect he had a hand in the
development of GMOs in 1994 using what he learned about seeds, pests and soil
nutrients in the Ag Division.
Good
judgement on the part of top management is critical. It requires knowing
yourself and having the ability to recognize good ideas, bad ideas, real
opportunities and existential dangers. Confidence is fine, but it can be
overdone. We need to concentrate on assessing management experiences to gain
insight to what drives them and is related to beliefs and values in addition to
observing management style that reflects personality. In the end, we hire who
we like assuming everybody will like them. That’s is often true, but not
always. I have a higher tolerance for strong personalities than most, but only
if their business judgement is good. I remember managers saying “He’s a good
man” and my first question was “At what exactly?”
Norb
Leahy, Dunwoody GA Tea Party Leader
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