Monthly Archives: July 2012

The Business of Life Chapter 24 – can success come from losing?

I had settled into the pattern of a weekly commuter.  Monday mornings would see Denise dropping me off at Leeds-Bradford airport to catch the first flight down to Heathrow where I would switch terminals to catch the next Swissair flight.  Because of the time difference, I didn’t get into the office much before noon.  On Fridays I managed to flee the office by late afternoon in time to catch the BA flight to Manchester where I had arrangements with a local taxi firm to pick me up.  Frequently, I would be making mid-week trips to one or more of our subsidiaries or meeting with two of my direct reports who were based in our factories in Nuremburg and Tienen (Belgium).  Evenings in Geneva would have me either entertaining visitors or taking dinner on my own in one of the small local restaurants.  Given the uncertainty of the situation, it was my intent to save as much of my Swiss salary as I could.

Highlights were the weekends when Denise came over to Geneva.  We would visit some of the restaurants in the city centre or in the small villages on both sides of the lake.  We travelled around as much as we could at weekends and also managed to take a couple of short breaks walking in the mountains.  We also had a great week when my daughter Victoria also came to visit (marred somewhat by meetings I was required to attend).  Sundays were never a complete success when Denise came to stay as it seemed as if we were simply killing time until the time came to drive her to the airport.  The realisation that we were going to spend yet another week apart would cast a gloom over the day however much we tried to divert our attention with lunch out or trips further afield.  There was always that flight to catch and the growing realisation that the sale of the company would provide little of benefit to me.  I had pretended to myself that it might not happen (maybe no-one would want to buy us) but now the reality kicked in.

The meeting with our prospective buyers was a dispiriting occasion that only served to prove to me that, whilst our own senior management might have had no strategy for long term success, this lot had even less.  The reality was a management buy-in team (MBI) backed by CVC Capital Partners represented by Michael Smith, CVC’s CEO.  Michael Smith came across well enough but said nothing of substance to enlighten us of the plans they had for the business.  The management team comprised Norman Scoular (ex CEO of a small UK conglomerate) and another individual, Eddie Bartlett, who I can only describe (on his subsequent behaviour) as Norman’s enforcer.  Norman, pleasant enough on the surface, also said little of substance except to talk of personal responsibility for personal targets.  In turn, Eddie droned on repeating most of Norman’s utterances as if he believed that the repetition would somehow add weight to the vacuous comments.  The only concrete aspect to emerge was that we were now into the due diligence phase of the sale process.  We were instructed by our new prospective masters to respond to any questions they asked to the fullest extent of our knowledge

There was no mistaking the wealth in Switzerland, with fine houses, exotic cars, expensive shops and starred restaurants everywhere.  The Credit Suisse cash machine situated in the lobby of our building had a disconcerting habit of dispensing nothing smaller than a 200 Swiss Franc note.  This was probably fine if you were pulling out a wad of these in one of the many Michelin starred restaurants in town but was a definite problem if your intended destination was merely the local bar!  However, wealth had its positive side and my Swiss bank balance was growing nicely as a result of my abstemious lifestyle.

Having assembled my evidence on the malign effects of the bonus scheme on stock levels across Europe, I decided to discuss the matter first with Alain (VP HR).  A large Belgian man who took an equal pride in his systems and procedures as he did in attempting to demonstrate the correctness of his views regardless of the subject, he listened with growing impatience.  “Listen,” he finally roared, “I spent a vast amount of time putting our incentive scheme together and I’m not about to change it on the basis of some flimsy information!”  Knowing that little happened on the HR front without Alain’s consent I argued to myself that, without Alain’s agreement, Don was unlikely to listen either.  Instead, I decided on a different tack.  We had a general managers’ meeting due for the next week so I merely told Don that I needed a substantial time slot to impress on the assembled group the importance of accurate sales forecasting.  He agreed and the time was duly allotted for late morning.  I worked on my presentation until I was absolutely confident that the logic and rationality were impeccable.

The day of the meeting dawned fine and sunny but as the meeting room started to fill I discovered that neither Don nor Swaanen were present.  I had a quick word with Germaine who informed me that Don, Swaanen and Dan (VP Finance) had decided to play golf in Evian and wouldn’t be back until lunchtime.  I tried to rearrange the agenda to put my slot back until the afternoon but found that this wasn’t possible.  I therefore either had to withdraw the subject from the agenda or go ahead without Don.  By this stage I had no alternative but to proceed.  It was conceivable that Swaanen had got wind of what I was planning and had decided to encourage Don to take the morning off.  Events would later prove at least my first supposition to be correct.

For this meeting I had decided that the issue of the bonus scheme was not relevant, it being purely a head office decision if a change was to be made.  Instead I was intending to focus on the need of minimising stock levels across Europe and the vital importance of letting the DRP system play its role.  For the presentation I had made slides of the graphs generated by DRP showing the accuracy of the system sales forecasts versus country amended ones and the actual results.  In order not to be confrontational all the information I showed was without any country identification.  Instead I had prepared an envelope for each of the general managers enclosing the results for their country that I handed out at the end.  I made known the saving we could make if everyone could trust the DRP generated forecasts and I asked for their support.  Wishful thinking.

All hell broke loose.  Ignoring the incontrovertible evidence in front of them I was attacked on all sides by men who argued black was white.  I knew that there was a degree of animosity existing between country managers and the factory managers who supplied them but I had simply not expected this outcome.  There was simply no-one in the room who was prepared to even acknowledge that their forecasting could be improved.  By the time Don appeared he wasn’t interested in becoming involved in the subject and quickly moved the meeting on to the next agenda item.  I had failed in two battles but I hadn’t given up.

The following week we had a meeting scheduled in London for Monday and that evening I travelled back to Geneva with Don & Alain.  As we had time to kill we decided to eat at Heathrow and over dinner I raised the stock and bonus subject with Don, going over the full facts.  For some reason Don would not acknowledge that there was anything wrong with either the stock or the bonus systems that couldn’t be put right by my team reviewing every single product line forecast for every country every month.  It was both an illogicality and an impossibility and I told him so.  Don disputed this and we went around the subject again but with voices getting louder with every sentence.  Alain stated that the bonus system had no part to play in the situation.  I reminded them of the investment that had been made in the DRP system and that it was being ignored by everyone.  By this time we were all shouting at each other in the middle of the restaurant.  In the end I said that I could not achieve better than the existing system.  But, if he was serious about making an improvement, he should take the whole logistics function away from Swaanen and give it to me to manage and I would commit to making it work.  We were by now red faced and out of breath but Don brought things to a close by agreeing with my proposal.

The following day I went into the logistics department to request that a further analysis I needed be produced.  Sheepishly and with great embarrassment the team informed me that Swaanen had that morning instructed them to not even speak to me again.  When I got to see Don he also looked embarrassed and said that upon reflection overnight he had changed his mind and I must proceed as he had originally instructed.  I had lost the war.  By connivance and weak management we were wasting $10m a year in working capital and no-one wanted to even look at the root causes.  I couldn’t give up.

By this time it was clear that, unless a last minute disaster occurred, the transaction to sell the business would complete.  Feeling less and less respect for the senior team I gave up the daily ritual of lunch with them and started eating instead with one or other members of my team (something that was far more relaxing).  In a last ditch effort to preserve something of the work I had put into the goal I had been given and the findings I had made, I told Norman that I would appreciate a meeting with him as soon as possible.  The problem was that he seemed always to be travelling.  Meanwhile, Christmas was approaching and I decided to drive back to England with my son Alex.  He had been attending a French language school in Chambery, had come to the end of his course, and needed a lift home.  We enjoyed the time together and it made a pleasant change from air travel.  Christmas passed too quickly and it was soon time to return.

A harsh winter had descended upon Europe after Christmas and by the time I drove back across France the temperature was showing -18C.  I had tried to keep the situation out of my mind over Christmas but as I drove along near deserted autoroutes the situations I faced looked decidedly unattractive.   If the sale by some chance fell through it was clear that my role was going to become increasingly more difficult. I had a brain that wanted to understand the big picture and address the things that influenced it.  The problem was that I had neither the skills nor the inclination to enter into politics.  I had also by now made myself something of a pariah amongst the senior team in Geneva by fighting without fear or favour for what I knew to be right.  On the other hand if, or now more likely when, the sale went through I faced new management that seemed to hold views that were an anathema to me.

Finally, in January I met Norman for dinner one evening.  He wanted to know my views on the business, which suited me just fine.  I gave him an overview that I felt was realistic and showed opportunities.  I took him through an abbreviated version of the stock saga and shared with him the savings that could be made in working capital. However, Norman surprised me with his response that indicated he had little or no interest in the DRP system and that country managers should take responsibility for their own stock levels.  They should be completely responsible for their own results.  We talked on but it became clear that in terms of modern management thinking, Norman was back in the Stone Age.  Newco was not going to possess a culture that would play to my experience, training or skills.  A new threat wormed its way into my consciousness; what if they did want me?  A great concern.  I also had to pick up the bill.

A week or so later we got the news that the transaction had completed and Norman and his team marched into the offices.  Don had disappeared and then Norman promptly got on a plane to somewhere.  Eddie quickly took up his role as enforcer with relish.  As will have become apparent by now my view was that whilst many of the problems in the industry were structural, we certainly hadn’t made the best of the hand we had drawn.  However, that is different from some diminutive clown telling us we had all been complete idiots.  The only thing of note that happened that first week was that business class travel was banned and we all received a long lecture from Eddie on the need to save money and how life was going to change.  I’m not sure what motivational training Eddie had had but he wasn’t a patch on my old headmaster at the art of bollocking.  Life at the back of the plane on Friday evening wasn’t too bad but the signs for the future were.

A few days into the following week Alain called me into his office.  Looking less like his usual bombastic self than I could ever have imagined he fidgeted and launched into the worse version of a HR scripted Dear John speech I had ever heard.  I put my hand up to halt him, “Don’t worry about the niceties, Alain” I smiled, “Just be good enough to tell me if this lot are going to honour my contract?”  It was with relief that he nodded and handed me the paper laying out the terms of my severance, which were exactly as my contract.  Alain went on to tell me that my whole team was to be fired with just one exception   He held out his hand for my office and car keys.

At the age of 47 and after 13 years of constant commitment and effort to the organisation that had given me more highs and lows than I can now recall, I was out of work once more.

Postscript

The North American business of GTE Sylvania was sold to Siemans shortly prior to CVC purchasing the European and Rest of World business.  Europe and ROW was subsequently sold on by CVC some years later and has passed through several ownerships since.  The business is currently owned by an Indian conglomerate and was the subject of an article in the Sunday Times (22 July 12) describing the difficulties they had in changing the company culture.  

My inactivity in the ‘non-job’ referred to above did not in fact stop me from carrying out a very detailed research project to establish the viability of the Linolite brand.  The results I obtained indicated that attempting to extend the brand’s franchise was not a viable proposition; this was ignored and the product range I had developed was rebranded Linolite despite my stiff opposition.  Today the Linolite brand is no longer owned by Sylvania (which has gone on to develop its very successful industrial and commercial lighting fittings identity) and appears to have a very limited market presence.

Greg retired to Florida where I understand he still lives.  Don now works for a small venture capital company owned by a past GTE Sylvania president.  Alain still lives in Geneva where he runs a successful multinational HR consultancy.  Swaanen was persuaded to stay with the business.

Norman died on Swissair flight 111 in a crash over the Atlantic in September 1998.

Image courtesy of  www.Fecielo.com

The Business of Life Chapter 23 – Keeping Enemies Close

An early, hazy summer sun was shining the morning my flight approached Geneva and I could see the Jura, the city and Lac Leman spread out below.  I had spent ten years flying into Geneva on a fairly regular basis but this morning was different.  I was coming here to live and to work and although visually everything was familiar it felt very strange indeed.  A few years earlier our European head office had moved from tiny, cramped offices next to the lake into a new block adjacent to the airport.  Although it was now just a short walk from the terminal to our offices, the heat of a sunny day together with the humidity that came from Geneva’s position, ringed by mountains and built by the lake, meant I arrived drenched in perspiration. 

Sitting for a few minutes in the office I had inherited from Louis, my predecessor, I gathered my thoughts.  It was compact and somewhat clinical but did offer an astounding view.  Sitting at my desk I could see, over in the distance across the city and Lac Leman, Mont Blanc, just visible above the haze.  After a welcome cup of coffee delivered in beautiful white china by Germaine my new secretary, “Louis would never accept his coffee in anything else!”, I went in search of Don.  Sitting in his palatial office he proceeded to light a Marlborough.  The offices had previously been declared a no smoking zone but Don had imperiously decreed that the rule didn’t apply to his own office.

The briefing I received was perfunctory.  Don announced that stock levels across Europe were far too high and he wanted me to make a significant improvement.  I was perplexed as the company had spent a vast amount of money previously on a Distribution Resource Planning (DRP) software programme.  This programme (identified and implemented by Peter, a Cambridge PhD, who had been recruited to head up pan-European logistics) was designed to analyse sales history and trends and make more accurate forecasts than the capabilities of mere mortals would permit.  I politely reminded Don of this but was greeted with the response that my marketing team should be close enough to the market to be able to predict sales far more accurately.  He would hear no counter argument and made clear the meeting was concluded but not before emphasising that this was to be my absolute priority.  I said I would investigate and see what needed to be done.  This issue was destined to become my Nemesis.

The rest of the day was spent gaining the views of my new team.  They were a real multinational group including Swiss, German, French, Belgium & Romanian members most of whom I already knew extremely well.  The marketing department numbered 13 out of a total headquarters staff of 70.  In addition I also had what is referred to in management speak as ‘dotted line responsibility’ for the sales and marketing functions in all of the 16 European countries where we had subsidiaries.  At the end of that first day I was sitting quietly in my office writing notes on the day’s meetings when Rien Swaanen (VP Manufacturing) burst in.  Without pausing first for pleasantries or even common courtesies, he immediately launched into a vitriolic attack on me, my function and the whole of my new department.  I was totally mystified because the attack was laughable and demonstrated a gross lack of understanding of the issue he was complaining about.

A few years previously after Jean’s death,  I had heard from a colleague that Swaanen’s wife was suffering from the same cruel disease.  I felt spontaneously driven to write to him and let him know of my concern for them both and offered an understanding ear if he ever felt the need to talk.  Very shortly afterwards, I got a call from Swaanen’s secretary to fix a date for us to have dinner on his forthcoming visit to the UK.  We talked late into the night and he poured out his soul to me and thanked me profusely for my concern for them both.  It wasn’t long after that I heard the sad news that his wife had finally passed away.  I wrote again but it was some time before we met as I was still running the UK while he was based in Geneva.

A year or so later, I again received a call from Swaanen inviting me for dinner on his next visit.  Business concluded I drove him to his hotel.  As the sun was shining brightly on that fine summer evening, we decided to take a walk along the river that ran by the country hotel I had chosen.  Once more Swaanen talked at great length, of the pain of his wife’s suffering and death, of the slow repair of his inner self and of a returning belief in the joys of living.  And then he shared with me his love for a new woman in his life, how they had met, what she meant to him and how they would spend their life together.  I had been pleased for him but now, for some inexplicable reason, he was acting as if I was an enemy appearing in his back yard.  I retired to the hotel that shared our building.

The following morning I was met by Walter the office manager, a genial Swiss German who proved an invaluable part of the process of integrating me into Swiss life.  Our first stop was the ministry responsible for registering foreign workers and I was guided carefully through the process of obtaining my visa.  We then set out to inspect the half a dozen apartments Walter had lined up for me to view. In the end the last viewing of the day proved to be the one.  It was a pleasant and large apartment in an old block, close to the lake with on street parking and local cafes and bars, close enough to walk into the old town and it gave me a good feeling.  Critically, it was on the same side of the lake and only 3 kilometres from our office.

Louis had promised to meet me for a full briefing on my role but this never materialised.  Instead, I received in the post a few notes he had jotted down, which included the suggestion that I read through the files he had left.  One of the priorities was to continue working closely to bring a project with The Boston Consulting Group (BCG) to a successful conclusion.  It seemed that Don had initiated a number of major projects when our parent board had put the business up for sale, of which this was one.  The scope of the project was an outwards one to look at the European market and assess what could be done to improve our position.  I also discovered that another major project had been to look at the performance of our manufacturing operations across Europe but this had been put on hold (it was never instigated and I suspected Swaanen’s dead hand).

When I met with the BCG management a short time later I learnt that on finding that no product line profit and loss statements existed on a pan-European basis they had managed to create these.  I was staggered to find that our company, a major global player, had never attempted to create this basic information.  I had been carrying out this process in the UK for some time and found the information simply invaluable.  What the BCG exercise revealed was staggering.  Working from the factory cost price through to the ultimate selling price at market level less all costs showed that our entire incandescent product range was making large losses.  Furthermore, France which had for years been paraded as the premier example for their marketing excellence in this product area, was making the greatest losses.  The situation should have been recognised and addressed years previously.  However, in the current circumstances the required solution (closing obsolete factories and investing in new production facilities) was out of the question.  My previous UK profits for this product group were amongst a minority and vindicated my strategy in this area.  My cynicism started to mount.

The routine side of my new role involved monitoring progress on planned new product development projects, touring subsidiaries to review and promote good marketing and sales practice, sitting through Don’s meetings, which never seemed to address core issues and taking part in the travelling circus that was the individual country operations reviews.  New product development was driven by technical developments that manufacturing felt would enhance product performance rather than any attempt to establish what markets required.  It became crystal clear that my previous suspicions were well founded.  The central marketing function was largely reactive and existed without a clear role in overall company strategy.  In fact there was absolutely zero talk of strategy to improve the long term viability of the company and if such a strategy did exist it must have been securely locked away in a Credit Suisse bank vault.

The hectic schedule of meetings I was required to attend (both in Geneva and elsewhere in Europe) gave me the feeling I was on a treadmill that custom and practice had determined but which rarely achieved anything of value.  However, during this time I had been working away on the objective I had been given by Don and had started to see some startling results.  Swaanen had an entire department (headed up by Peter the director of logistics) solely to run the DRP system and manage the logistics of our business.  I had always kept close to Peter and had been a fervent supporter of the DRP system.  I had encouraged him to work with me in widening the scope of the relationship I had built with some of the largest UK distributors and this had borne fruit.  When I arrived in Geneva I found that this whole department with its huge potential was largely ignored by Swaanen.  With the added benefit of the relationship I built with Peter’s team, I soon had them working enthusiastically with me.

The DRP system complimented Manufacturing Resource Planning (MRP) that ensured materials for production in our factories were available when required.  The purpose of DRP was to ensure that our subsidiaries around Europe had exactly the correct stock levels of all finished stock at any time.  The system was participative with the subsidiaries in that it required that each and every one to define stockholding parameters, share key demand factors (e.g. large contracts producing sales spikes) and merely to review the sales forecasts generated by DRP each month for individual products lines.  In this system the subsidiaries never had to place an order as once up and running and reviewed regularly it replenished stock automatically.  This system was predicated on the finding that the best place for non-differentiated stock was in the centre (the factories) with rapid replenishment of subsidiary stocks.  The problem was that it seemed that the system was not working, giving rise to Don’s complaint of high stocks.  There were profound systemic problems.

Every employee at management grade and above (worldwide) participated in a Management by Objectives (MBO) system. Each individual had as many as eight or more quantitative objectives they had agreed to each year and bonuses were awarded on the basis of performance against each component.  At senior management level these objectives were spread across set areas and could be very prescriptive. For country and factory managers and above there was a specific target given each year for stock levels.  Given that stock levels were contributing to bonuses, subsidiary managers in each country felt inclined to attempt to manipulate these by adjusting the sales forecasts produced by DRP.

The factory managers also had an incentive to manipulate stock levels as they too had targets to minimise stock at factory level.  At one meeting shortly after a year end Swaanen had actually boasted that only the action of his factory managers in overriding sales forecasts agreed by subsidiaries prevented sales targets in subsidiaries from being missed.  The factories had an additional incentive to ship more stock than required because of the ever increasing drive to increase line speed to reduce costs.  Driven by a misguided bonus system both sides were playing the same game and I suspected this was the cause of excess stock.  The problem was that I had lacked the means to prove this.

Working with Peter and his department we solved the issue.  I asked if the DRP system could recover the individual product line sales forecasts it had generated for each subsidiary for the previous 12 months.  “Of course”, came the immediate response.  I then asked if these could be plotted against actual sales achieved over the same period and the revised sales forecasts the subsidiaries had made.  “Of course”, again!  Within hours I had a complete picture.  With the exception of a few low volume lines that had a very lumpy and unpredictable sales pattern, every major product line, in every country, monthly sales forecast by DRP had been far more accurate than the ones adjusted by the subsidiaries.  If the subsidiaries had done nothing more than merely tick the original DRP forecasts without making any adjustments and the factories had shipped against these, the calculation showed we would have ended the year with $10m lower stocks!  I had the answer and the proof.  We had to change the bonus system and stop the counter productive double guessing that was driving stocks higher.

Could I convince Don that I had found the root cause of the stock problem?  And would he agree to make the necessary changes?  Before I could take this issue further it was announced that a sale of the business finally had been agreed in principle and the potential new owners were to visit us the following week.

Image courtesy of Europeupclose.com

The Business of Life Chapter 22 – Saved by the Bell

Some years earlier our European finance group decided to implement a new IT system, which like most such schemes, was late and over budget.  Finally the UK was selected to be the first to implement the new systems.  An external team was parachuted in to attempt to do in a few short months what should have taken a year or more.  It was obvious that the system hadn’t been fully developed and the implementation process was horrendous and continued to be subject to endless fixes, that unknown to all, would leave gaping holes.

Another decision that was taken under heavy pressure from Europe was the appointment of a new Financial Director for the UK (who shall be nameless).  Recruited in Brian’s time, Nameless came with glowing recommendations from his previous (internal audit) role. He initially appeared to be competent but over time I began to realise that his interpersonal and management skills were severely lacking and had brought this to the attention of Claude the VP Finance in Geneva.  What I didn’t realise (until it was too late) was that he also lacked key functional skills that I might have spotted had I been more experienced.  Whilst preoccupied with the pricing & margin scenarios that were playing out at the time I discovered that we had suffered a stock loss that Nameless had not revealed to me.  The loss was not huge in relation to our business but large enough (at $250k) and the brown stuff hit the fan.  Suddenly, everyone in head office was an IT and an accounting expert and making known opinions on the UK situation.  An accounting hit man was put in to get to the bottom of it.  The process rumbled on for months with the interim result that Nameless was fired and I would make a big mistake.

By this time the stock loss had become a cause celebre within the company and it was being used to settle scores.  In the middle of all this Gregg had made one of his lightning lunchtime raids on me and demanded to know if I had known about the stock loss prior to it becoming public knowledge.  My mind was in turmoil.  If I admitted that I had known nothing of it, I would demonstrate that I didn’t have my hands around the accounting and IT functions in the UK (which was true enough).  On the other hand if I said I was aware of it but hadn’t blown the whistle, I could stand accused of being complicit (which I wasn’t).  In a snap decision that haunts me still, I lied and claimed I had been aware of the situation earlier.  Ultimately, it became known that the loss was a paper one and stock had never physically disappeared.  The issue had been faulty IT and accounting systems that couldn’t reconcile all the components of a transaction with the physical stock.  The head office IT and Accounts people were in full CYA mode and Claude never forgave me for making known that his appointment (Nameless) was a very poor manager.  He was also ‘retired’ a short time later but I came out of this episode badly.

Early in 1992 Gregg met me for what transpired to be the most open conversation we ever had.  He shared with me his view that I was a very bright strategic thinker and a loyal manager.  He went on to say that he felt I’d had a terrible set of problems to deal with but was too much of a nice guy who did not fight enough, “Nice guys come last!”  It was clear from other comments he made that a fairly comprehensive image destruction job had been carried out on me by others in the head office team.  He went on to share with me the news that he intended to integrate my company with another in the group (Linolite) and that I was not being given the role of heading up this new structure.  I put up a spirited defence but to no avail.  Gregg said that his view was that I had done a fantastic job in the past but that I might have been out of my depth with all the problems I’d had to deal with, “Anyone might have been.” he said and then added,  “but I don’t want to lose you from the organisation.”   I had worked tirelessly (and yes, in difficult circumstances) and could not have spent more time with either our customers or my people or had more support from them.  I was deflated.

I was duly served with notice of redundancy but simultaneously what I considered a non-job was created for me.  I had to sit on the sidelines, in a shiny new office, as my company was merged with Linolite by Gregg’s new protégé.  The only factor the two businesses had in common was that they both sold via the distribution channel and I could only disagree with the manner in which the businesses were merged.  My non-job was boring in an extreme and I took full advantage of the outplacement programme that was also offered to me.

My consultant, Max Eggert, was the most fascinating character who had the most profound and beneficial effect on me.  Max put me through a battery of psychometric tests and the words he used to describe me from the results were, “tough, strong leader, stable, assertive, competitive, change agent, highly creative, socially strong, relaxed, self-assured, secure, open, self-sufficient, warm, enthusiastic”.  These were very similar to results that I had been given some years earlier by a Professor of Psychology at Yale (Vic Vroom) describing me as,  “a strong leader, visionary, with a participative and informal style and a transformational leader”.  I felt somewhat vindicated, that I had been in the right role and decided that I would use my severance package to take a full time MBA and start afresh.  I applied and was accepted for the programme at Bradford Business School to start in the October of that year.  However, events soon took an unexpected turn that led me to decline the offer.

Soon after it was announced that our parent company GTE was putting the $2bn global Sylvania lighting business up for sale.  Whether my analysis of the industry and presentation to the President had played any part in this, I have no idea.  But I had clearly been correct in my analysis of the situation.  Another decision was announced soon after; that Gregg was retiring.  His replacement was Don, another American, and an accountant by profession from elsewhere in the organisation.  The European business limped on hindered by a hiring and firing freeze with rumours and uncertainties rampant.  I couldn’t have done too badly in my new non-job as my records show that Don awarded me a bonus for that year!  As my redundancy was effectively placed on hold and my salary was still being paid I continued to fill my days as best I could.  I ignored as many of the duties of my non-job that I could as they were futile.  However, events overtook me and a life changing event took place that demonstrated to me that I hadn’t learnt all the lessons from my psychometric testing that I might have done.

Early in 1992 I took a call from Alain, the European VP for HR.  I was asked if I would take on the role of European Product Manager for a group of our products and be based in the Factory in Belgium.  My heart sunk as this was a role that filled me with horror.  It had no line authority over the subsidiaries, their pricing or their activities but carried responsibility for the results.  It was also the product group that I knew to be struggling the most (and has subsequently been killed off by EU regulations).  I was never normally one to fail to respond when a challenge was put to me but I decided that this was a dead horse that would not respond to flogging.  I entered into a delicate process of negotiation, claiming that I wanted to assist the company but that the details had to be right for both parties.  I managed to drag the negotiations out for weeks whilst I did my research on life as an ex-pat in Belgium.  I pushed and wrangled, had meetings and more meetings and continued to delay until I had got to the point where I could procrastinate no longer.  Then, miraculously, at a minute to midnight, I was saved.

Alain came on the phone on the day I had committed to make a decision and said to forget Belgium.  Louis was leaving his role as VP Marketing in Geneva to run the operation in France.  This was the role I had wanted many years ago and I knew it would look good on my CV if things took a turn for the worse following a sale of the business (if indeed it ever happened).  I started to negotiate but it soon became clear that, given the circumstances, they were desperate to fill the role and I was the only one in the frame.  By the time we had finished I had on the table a salary in Swiss Francs that had doubled, a company flat with cleaner and all bills paid, a company car in Switzerland, the retention of my company car in the UK, business class travel to and from Geneva each week (or for Denise if she wished to join me in Geneva) and the guarantee of a severance package based on all this if I was made redundant from Switzerland (plus repatriation to the UK).  Delaying only for a discussion with Denise I accepted.

Would it work out?  Or had I gone from the frying pan into the fire?

Image courtesy of c&maccounting.co.uk

The business of life Chapter 21 – troubles mount

Gregg’s main management control system was a bi-monthly pan-European meeting of all the general managers from most of the 16 countries we operated in, plus those running our factories.  Seated in some vast hotel room in Geneva we would have to make our individual presentations of progress against our national budgets whilst being quizzed by Gregg and his large head office entourage.  There we sat for three whole days whilst the circus played out.  On one occasion (when Gregg was not suffering an attack of post prandial narcolepsy) I followed the German factory manager’s presentation with my own.  A key factor in an adverse variance to my budget so far that year was a very large exchange loss against the budget rate (set by head office) of the pound against the DM.  Gregg leapt into action, “Whaddayamean ya lost money?  Where’s it gone?” he roared, “Get the German guy back up here with his P & L, I wanna find it!”  Over half an hour was wasted whilst Peter, my German colleague and I were forced to submit our accounts to ever closer scrutiny whilst Gregg played hunt the profit that he felt sure would counter my exchange loss.  Gregg was convinced that someone was making money out of my budget variance and wasn’t placated when I finally offered the explanation that it had merely disappeared into the English Channel.

By around 1990 the situation across Europe was not improving and theUK’s performance was suffering too.  To provide an illustration; when I joined the company the average price we were achieving in the UK for a single fluorescent tube (we sold millions of these non-differentiated products) was in excess of one pound.  Ten years later I was averaging just £0.32 for each as a result of the extreme competition between the small number of manufacturers.  With common (and limited) suppliers of glass, basic metal, rare phosphors and gases across the industry, almost the only way you could drive the cost down was by finding ways to increase the speed of the automated production lines.  The result of this was that every hour you produced more product at a theoretically lower price but only if the additional production could be sold.  Unfortunately, the total market wasn’t increasing fast enough to counter the falling prices and the increased output, so the vicious cycle went on.  Efforts had shifted in my time with the business towards development of a stream of new products from all of the major manufacturers (driven also by the goal of energy savings) but the vicious cycle of downward pricing soon took over as they became commodities.  I kept a graph in my office that plotted the average price per unit sold against market share.  When I dropped the price our share rose and when I raised price it fell.  It was a perfect correlation.  I was getting beaten up on a regular basis for not raising my price in theUK.  But when I did, unit volumes dropped and the factories became starved of demand.

The business was already global with 90% of our UK production exported to the rest of the world and 85% of the ranges sold in the UK being imported from our overseas factories.  Whilst our UK production facilities were new and efficient, many of the overseas facilities we had to rely upon were old, unproductive and located in European countries with impossible labour laws and highly difficult unions.  Slowly and inexorably, our profits in the UK declined as I had to suffer far higher prices on our imports when the pound declined.  I found myself under increasing attack for failing to overcome this structural problem.  It seemed that little was being done at a European level to really counter this critical issue.  Despite my resistance to product strategies that made no sense, I always worked extremely closely with the European management and had very good relationships.  The only exceptions were a small number of Gregg’s direct team who seemed to follow his style of never discussing but only attacking.

One decision from head office illustrates the poor decision making going on at the time (exacerbated by the law of unintended consequences).  During this period of falling margins across Europe, a decision was announced that the transfer prices from our Belgium factory were to rise significantly for the next year onwards.  I never got to the bottom of what I felt were the underlying reasons for this move but I suspected it was simply to bolster manufacturing profits.  It was announced at the time that no country would be penalised for this increase as the effect would be taken into account in the budgeting process (in other words the lower margins that flowed would be ‘forgiven’ for that year).  However, the ‘forgiveness’ disappeared over time and countries, still under margin pressure, inevitably started to de-emphasise this particular product line.  In this way countries improved their margin percentages.  The Belgium factory certainly gained higher unit margins as a result but on declining volumes.  Some years later I managed to get to the bottom of this situation (as we shall see) and the reality was even more astounding.

The issue of pricing became more and more to the fore at every meeting.  Coming under attack yet again at one of the large European meetings, I put up a slide of my graph, which plotted market share against price.  I made the comment that one could either have increased market share and volume or increased prices and lower share and volumes.  Given the dynamics of the market nothing else was possible with non-differentiated commodity products.  Gregg responded with one of his usual eruptions saying that other countries were making more effort and running better marketing programmes (Sal, my Italian counterpart, had just given details of his latest sophisticated promotion – offering T shirts and beach towels).  Finally, he said he would close the UK operation if I couldn’t improve performance.  Throwing caution to the wind I turned to Swaanen, who was VP Manufacturing and the most influential of Gregg’s team, and asked him if he could afford to lose the production volume from the second largest market we had in Europe, “Of course not!” he growled back.  I turned to Gregg and asked him what he wanted to do.  I may have won that battle but I knew by then that I wasn’t winning the war.

I was becoming rapidly more disillusioned.  The company had spent a fortune on a business education for me that had been simply superb, providing cutting edge theory and technique, direct from the mouths of some of the best academic brains across the US.  The problem was that our senior management in Europe, whilst happy to tick boxes that said that bright people were getting the right training, simply didn’t understand what we were being taught.  Worse, they didn’t wish to know what we had been taught and constantly demonstrated that they wished to keep doing what they had always done (probably in the hope that it might yet produce a different result).  It was clear that there was a profound lack of real business acumen and strategic skill in our European headquarters.  My cynicism grew.

Some months later I received the news that the US company president was to make a UK visit.  I was required to meet him in London and make a presentation on the UK business.  Realising that I was probably being set up for a good kicking, I set about a robust analysis of the situation facing the entire light source industry.  A few years earlier Michael Porter, a Harvard professor, had published the first of a number of what became seminal works on strategy.  As a result of my US business education I was very familiar with Porter’s theories and decided to use these to analyse our industry.  What emerged was an indisputable picture of a global industry that was doomed to low profitability unless (and until) savage consolidation and production rationalisation took place.  Unless our ultimate parent company (now Verizon) was prepared to invest heavily in acquisition and new and fewer production facilities across the globe, we would continue to suffer declining margins.

On the day of my meeting the US president sat quietly, paid close attention and asked pertinent questions as my presentation unfolded.  Something had either prevented Gregg’s appearance or, deciding that he would leave me to my own downfall, had sent Louis our VP of marketing in his place.  Louis turned puce and kept attempting to move me onto what I was going to do to meet the UK budget that year.  At the end of the meeting, the big man thanked me warmly for the presentation and asked me to send him my full analysis.  My name inEurope was lower than low from then on and I subsequently learnt that I was being accused of ‘intellectual arrogance’ and ‘executive burnout’.

Did I know what I was talking about?  Had I been doing all that could be done?  I hold to this day, that by this stage, I had a better grasp of the market dynamics across Europe than anyone else.  Either that was the case or, much worse, others knew and wished to ignore the situation long enough to get their retirement package.  I had also succeeded in substantial market share growth and repositioned the image of the UK company.  Nevertheless, I had a weak spot and events found me out.  I had taken my eye off an important ball and it was to cost me dearly.

Image courtesy of Pacific Exchange Rate Service (© 2012 by Prof. Werner Antweiler,University of British Columbia,Vancouver BC,Canada.)

The business of life (Chapter 20 – from a dark place)

Although I was no stranger to the death of loved ones, having already lost both my sister and my father and other close relatives, nothing had prepared me for the loss of my wife.  Yes, I had mentally rehearsed the situation over and over in my mind in the preceding months as her health continued to deteriorate, trying to imagine how I would cope. At the same time I had been desperately hoping that somehow she could survive and return to her former self.  But the reality of her death, the awful, aching sense of loss, was something horrifyingly new.  Without Jean and with the certainty that she would never return the house seemed emptier than ever.

Work seemed an irrelevance and I stayed away for several weeks, never phoning or attempting to keep up to date with what was happening.  There was a human side to Gregg after all and he made it known he wouldn’t push me to return before I was ready.  With my son away at school and my daughter often out doing the sort of things that teenage girls do, life seemed hollow.  I prowled the empty house in the evenings half expecting to receive some sign from the heavens that I was not alone but all that remained were reminders of the life we had shared.  One morning, sometime in October, I awoke to find the sun was shining and I set out on a new bike I had bought not long before in an effort to distract myself.  It was one of those magical, calm days when the sun shone as it only seems to do in autumn and I cycled deep into the Dales, soaking up the beauty around me.  The world was carrying on and I had to join in.  The next morning I returned to the office.

A welcome distraction came in the form of an invitation to run a session at a pan-European meeting of our HR directors in Geneva.  I decided to take a few days holiday, took my son out of school and together we drove to Switzerland.  Already a skiing enthusiast at the age of fifteen he cajoled a visit to a ski resort from me and a new ski outfit.  Following my session we drove to Les Diablerets only to find that the snows had yet to arrive and the sun was shining brightly.  “No problem,” beamed Alex, “there’s a glacier that’s open all year round.”  The following morning, subjugating my fear of heights, I joined him on the cable car that took us to 3,200 metres.  Alex quickly disappeared on a set of hired skis while I was content to sit on a terrace in the warm sun.  Surrounded by high peaks set against a deep blue sky, I read an old copy of Women in Love for the second time and felt at peace.

When I became Managing Director I had joined the industry trade association (the Lighting Industry Federation) sitting on the governing council (comprising some 16 CEOs of the largest members).  I had been a little over-awed initially, not only as the youngest member on council, but being the only one who had not spent his entire career in that same industry.  I felt I had been talked down to and treated very much as the junior.  So, having kept a low profile for the first couple of years was then astonished to be asked to take up the role of president.  At first I couldn’t work out what had raised my profile to warrant the appointment.  But by the time I made my acceptance speech and took the chain of office in one ofLondon’s oldest clubs overlooking The Mall and with a Government Minister as my guest, I had worked out what lay behind it.

Long held, polarised and explosive views were held across the membership on a range of partisan issues.  The association (which set technical standards for the whole industry and ran a highly effective parliamentary lobby group) was facing a particularly critical issue at the time that threatened to pull the association apart.   I perceived that none of my largest competitors wished to be seen to preside over an issue that could be a PR disaster for them.  Ranged against them were a large number of members (of smaller firms) in the association holding the opposing view.  Had I been elected as a scapegoat?  Was I being set up to fail?

Deciding on a policy of diplomacy for my year of office, I felt I had to ensure that all views on the subject were heard and taken into account before a decision was made.  I had clear views of my own as to which route the association should take but reasoned that making these views known was only going to make my task harder.  And anyway, I calculated that my own company could exist equally well under whatever regime emerged.  Attempting to force my views on council was not going to work given my image as an outsider who was believed to know less of the industry than anyone else around the table.  Therefore I decided that the process should take priority, be seen to be inclusive and fair and should lead to whatever the membership ultimately decided.

I ran my council meetings in the classic chairman’s style, ensuring that all views were fully explored but never revealing a viewpoint of my own.  I found that by a policy of correct process, questioning and ensuring everyone’s opinions were sought, all relevant opinions and options could be uncovered.  I carried this process through to the wider membership, travelling to regional meetings up and down the country.  At these meetings, where I again chaired the sessions to ensure that every aspect of the subject was explored, I also never revealed an opinion.  I also held one-to-one meetings with the holders of the most entrenched views (large and small companies), always travelling to meet them in their own offices.  At the end of the year when the time came for a decision, the vote was almost unanimous, with everyone feeling their view had been heard and considered with the right decision made.

One surprising and pleasing outcome for me was that several of those who had held some of the most rigid views at the outset felt able to cross over to the opposing side without losing face.  Additionally, the few members who voted against the final decision, came to me later and said that although disappointed they felt that the process had been fair and the decision was one they could support.

By this time I had found love and companionship again and had married Denise.  A hilarious and old fashioned event took place some months before our marriage that showed yet another face to Gregg.  Having taken Denise with me to an industry function in London, I had duly filled out my monthly expenses sheet and sent it off to Gregg for authorisation with receipts attached (why MPs and civil servants can’t go through the same simple procedure still eludes me). A few days later I got one of my lunchtime calls from Gregg, who proceeded to pose questions about the industry event and my accommodation arrangements in more delicate terms than his usual style.  After a lot of beating about the bush, and in a decidedly embarrassed manner, he shared with me his concern that taking a woman who was not my lawfully married wife to a hotel for an industry function would damage my reputation!  Even when I shared the date for our impending marriage he expressed his delight but wouldn’t budge from his ‘grave concerns’ in the interim!

I was happy at the good fortune that life had once more bestowed upon me. However, I began to recognise some fairly profound changes in myself that seemed to have occurred since Jean’s death.  My entire being had previously been focussed upon achievement of my business goals.  I was always clear and focussed upon what needed to be done and prided myself on logical and rational decision making.  The exception had always been my immediate family but looking back I realised that even with them I seemed to have been somewhat removed from a real understanding of their feelings and emotions.  I understood anger and rage well enough, having always been quick to be roused but as far as others outside my close family circle were concerned, nothing had ever really touched me. People must have felt me to be cold and lacking empathy in my decision making when they themselves felt understanding and compassion was called for.

Now, since Jean’s death, I found myself crying for the first time whilst watching films.  I remember sitting sobbing uncontrollably through Truly, Madly, Deeply.  Even music began to touch me on a deeper level than ever before.  Knowing my love of Bach Denise bought me a CD of the Brandenburg Concertos.  As I listened to the opening allegro of the 6th for the first time, tears flowed down my face at the sheer joie de vivre the music conveyed. It touched me in a way that I had never experienced before.  On these occasions it was as if a veil had been lifted from my senses and I was experiencing the colours, sounds and sensations of raw emotion for the first time.  I knew it was connected with Jean’s death but it was some ten years later before I could finally begin to understand what had happened.

In an effort to improve selection of candidates for key roles in the businesses I was then running, I started a process of qualification for a range of psychometric instruments.  In the qualification process for one, the Myers Briggs Type Indicator, I was assessed as an ENTJ (Extraverted Thinking with Introverted Intuition).  Without going into a lengthy explanation, I found that there was a ‘shadow’ or hidden side to my behaviour.  As it was the fourth and least preferred of my four key behavioural functions, my preference for ‘Feeling’ in decision making was underdeveloped.  Whilst someone who has ‘Feeling’ as a preferred function for decision making would be sympathetic, tender hearted, assessing impact on others, compassionate, guided by personal values and be striving for harmony, these were not behavioural qualities I had ever used.  These underdeveloped aspects of behaviour (which differ from person to person) are referred to as the ‘shadow side’ of behavioural preference, usually only being revealed at times of great stress or under the influence of drink or drugs as behaviour completely unnatural to the individual.  Being unfamiliar in using this side of my personality it was manifesting itself in almost childlike ways.  I can still cry at films that reveal emotion but over time I have also learnt to understand others in ways that would never have occurred to me previously.  Life is richer as a consequence but sometimes much more complicated now I can see more than one perspective!

When Martyn left I hadn’t replaced him feeling at the time that none of his team (good as they were) was ready for the role he had carried out and I didn’t wish to bring an outsider into the company.  I already knew the majority of our medium and large customers well and built on these relationships with regular visits.  I maintained a regular schedule of visits to major customers by accompanying our regional managers or sales people on their visits.  In this way I was able to demonstrate my commitment to customers and sales force and, importantly, ensure I was hearing directly from both on their views concerning our strategies and service compared to competition.

One of the strangest situations I ever had to manage was that with our largest customer.  The owners (tax exiles) worked initially from beautiful offices overlooking the lake a few kilometres outside Geneva and then moved to Monaco where the tax regime was even kinder.  They had built one of the largest electrical distribution businesses in the UK and were spreading across Europe but had the strangest (and possibly the most Machiavellian) management structure and systems I had come across before or since.  There was no one person in charge of the UK and buying was spread between four regional general managers.  The buying process (designed to drive price down) was in fact so fragmented that, despite their size and potential clout, they were paying prices considerably above anyone else of their size (and many smaller firms).  Whilst I enjoyed the profits that flowed, at times their purchasing was so out of line on price I had to feed the senior management with a series of hints that would then lead them to ‘put the squeeze’ on me.  I just couldn’t run the risk that they would find out how terrible their prices actually had become!

I was now totally immersed in and enjoying every aspect of my role.  But whilst I was widening and deepening an understanding of my colleagues, our customers and the industry and steadily improving results, events were quietly and inexorably moving towards the most challenging set of circumstances I had ever had to deal with.

The business of life (chapter 19 – the end of a dream)

With my wife recuperating from her major operation and my business life far from stable, I had to develop a strategy that would allow the greatest chance of keeping everything together.  Once again I cancelled business trips and kept close to home until Jean could achieve what she considered was sufficient strength to resume some semblance of daily life.  Work was now out of the question for her and with it the dream of a degree that she had tasted all too briefly. I found strength for myself in a process of compartmentalisation.  By dividing my life into discrete segments I tried to preserve time for the things that were important in my life; time for Jean, for the children, for work and lastly for myself (cycling and playing trumpet in a terrible but enthusiastic band).

By the time Brian had moved on leaving the role of managing director of GTE Sylvania vacant, I felt I was holding the constituent parts of my life together.  Jean had encouraged me to apply for the job and I was awaiting news of the procedure.  My probing had revealed that there were at least 4 other candidates from within the global company but evidence of a selection process appeared non-existent.  Finally, I got a call to advise me that Gregg, the European President was coming to the UK, would interview me and then join the rest of the senior UK team for dinner.

I collected Gregg from the airport and drove him to The Devonshire Arms, a beautiful country hotel in the Yorkshire Dales that he enjoyed.  I had known him for approximately 6 years, although not closely.  I was aware he was a lifelong employee of the company, possessed of a mercurial attitude to the business (you never knew where he was going next) and a volcanic temper.  Seated in the elegant lounge with our coffee, Gregg got around to what passed for an interview and demonstrated that, whatever other skills he possessed, interviewing was not one of them.  It was like playing a game against a competitor who had no real experience or skill and didn’t want to be on the court.  Frustration (and more than a little doubt) was beginning to rise in me when we were interrupted by a call for Gregg and he excused himself to take it in his room.

What seemed an eternity passed while Gregg was on the phone and it gave ample opportunity for my fears and doubts to surface.  By this time I had spent 6 years with the company and had achieved significant success but had not returned to a full general management role. I was also 41 and one year behind the schedule I had set myself of attaining an MD’s role.  The thought of working under any of the other candidates filled me with gloom and I realised that I was going to have to leave if this appointment went against me.  Gregg then returned and shared with me that one of his oldest friends had died suddenly.  “Ah hell, you just never know what life is going to throw at you.” he said shaking his head and then, slowly looking at me with tears in his eyes, “Look, I’m going to give you the job.”  The evening went by in a blur shared with my colleagues at least two of whom had emerged unsuccessful.  Celebration at home later that evening was a quiet and emotional hug.

Margaret Thatcher was elected to a third term and Ronald Reagan was challenging Mikhail Gorbachev to tear down the Berlin wall when I took up my new appointment.  One of my first duties was to sign a flurry of papers legally registering my appointment.  I don’t know if it was an error or a quirk of the corporate structure but I realised before I got to the bottom of the pile that I had also been appointed as MD of the ultimate UK holding company encompassing the complex web of businesses we then owned.  Technically I was now Brian’s boss.  I did a quick mental exercise and realised that, despite this, there were still ten layers of management between me and the president of GTE!  Flat management we did not have.

Life working for Gregg was never easy.  As he was based in our European headquarters in Geneva, I might go for several months without a meeting with him.  When we did meet either on one of his UK visits or at a pan-European meeting he always wanted a formal presentation.  He always travelled with one of his team and he would simply never sit and discuss subjects with you.  His style was that you either submitted to an inquisition on a subject of his choosing or, if you went to him with a proposal he would either attack it or ensure that you made a decision and not him.    He had a combative style, which may have been associated with his lack of height (around 5′ 5″) and, given he had one glass eye, you never knew if you had his attention or not.  The only time you ever got an easy ride was when he fell asleep in a meeting after lunch.

The time I loathed most was the day following one of Gregg’s board meetings in Italy.   We had a joint venture with Thorn in a manufacturing company there and Hamish, the Thorn MD, would usually succeed in winding Gregg up with a pack of half-truths or downright lies about our UK business.  I would then get a call the following day that interrupted my lunch in the staff canteen and would have to suffer Gregg for the next half hour bellowing down the phone at me on some issue that had been fed to him.

Being promoted ahead of my colleagues within the company I had worked within for years was a new situation.  All of my peers knew me well but not as their boss and I realised that, even putting the situation with Martyn to one side, they may not have welcomed my appointment.  I decided that this was irrelevant as my new role required a fresh start.  I had admired Brian and worked hard for him but I had to pursue my own style.  The first change I made was in not moving into Brian’s old corner office suite but staying put in my own.  Our margins were under pressure at this stage and it provided me with an excuse to not replace my previous position of Marketing Director.  The format of our management and board meetings I changed and was scrupulous in playing the role of chairman / facilitator.  I found that, with a combination of ensuring everyone’s full contribution and a variety of problem solving tools, we could resolve previously difficult issues with the team invariably making a unanimous decision without me having to reveal an opinion.

Worried about morale within the company, I instigated a company wide climate survey.  Results showed that the number one issue was a distrust of management, with a widely held belief that employees were not being consulted or informed on key issues.  Following discussion amongst my senior team, we agreed that I should speak to the entire company, share the survey results and ask for volunteers to join teams, to address each of the key issues (they had all recently been trained in problem solving techniques).  On the day of the meeting I made the assembled employees a number of promises.  Firstly, I would only hear the findings or recommendations at the same time they did.  I would also agree to any recommendation the teams made so long as the cost did not exceed our local country budget level, or contravene international corporate policy (if a recommendation did, I undertook to sell it to our company president).

I seemed to hold my breath for the next month, staying away from any of the team meetings and did not quiz any of my direct reports as to progress.  We assembled in the staff canteen on the day the results were due and the atmosphere I can only describe as electric.  Would the employees pressure for unrealistic changes?  Would my team leaders have handled the process democratically?  One by one each of the four teams presented their analysis and their recommendations.  I need not have worried.  The changes requested were surprisingly modest and reasonable and after asking further questions I was delighted to say, “OK, go ahead and implement everything and you will all receive regular feedback on progress.”  I learnt that together we could build a much more decentralised style of management, enabling us to make significant progress.  It also taught me a lot about trust and it taught me to empathise more with the feelings and views of the entire company.

We made rapid progress and my first year as MD ended strongly and over budget.  The new structure within the sale team seemed to be working better and emphasis on refining the customer groups we worked with was producing improved margins.  However, despite this and the more harmonious climate amongst the management team, I was sad to receive Martyn’s resignation.  He had received a good offer and had made up his mind to go; all I could do was to wish him well.  I missed him but it was almost fifteen years before we met again and resumed our friendship but that’s another tale.  Sad as I was to see Martyn depart another event proved shattering and changed me forever.

Despite battling on and regaining some semblance of normality following her operation for a brain tumour, Jean had entered a slow decline.  One Sunday morning driving herself back from church just half a mile down the road she lost control of her car, hit the kerb and came back complaining of severe pain in her neck.  Urgent investigation showed that the cancer had spread to multiple sections of her spine, which then severely restricted her ability to be mobile.  We made enquiries and managed to move Jean into a Marie Curie hospice a short distance from our house where she spent the remainder of that summer.  The staff were angels, caring for her constantly but her decline was relentless and one night in late September whilst I was by her side she passed away.

We had been married for twenty years and neither my two children nor I knew how we were going to face life without her.

The business of life (chapter18 – Influence versus Power)

My wife had cancer and our world changed, the effects of which are still with my family today.  The immediate results of her illness were two major operations, radiotherapy and lengthy recuperation.  My wife was a nurse and well placed to understand her illness and the prognosis.  Despite her medical training she also took support and advice from the Bristol Cancer Help Centre (including a diet so heavy in carrots that her skin turned orange).  But she drew on of levels of courage and determination I never knew she possessed and gradually life went back to an appearance of normality.

Following this period, when I cancelled all travel to ensure that I was at home or close by, my focus returned once more to the challenges I knew we still faced as a company.  Our major competitors were heavily involved in the manufacture and sale of lighting fittings and this was important for a number of reasons.  By working with architects, electrical consulting firms, Local Authorities and large clients, competition ensured that their fittings were specified (usually ensuring the sale of their light sources within the fittings).  This power of specification ensured a large degree of leverage and influence over the electrical wholesale channel when it came to the supply of light sources and effectively inhibited the sale of our own.

The addition of a range of mainstream light fittings seemed to be a logical and essential extension to our activities.  Our European head office had already launched a small number of sophisticated (and expensive) fittings that were way ahead of competition in performance.  Unfortunately, these were niche solutions that were extremely difficult to persuade architects to specify or distributors to stock whilst we lacked mainstream products and an image as a competent supplier.  The logical next step was to introduce our own range of popular fittings with which we could attempt to establish our brand in this vital sector and overcome the barriers competition had created.

Having agreed this shift in strategy with my colleagues, I pressed ahead with further research into the market for lighting fittings.  Despite our own huge factory in West Yorkshire it made sense to outsource production, at least until we could justify investment in our own facilities.  After an extensive search across Europe, I located a manufacturer of the required quality in Eire who not only had spare capacity but who didn’t compete with us. Working with an industrial design group we produced and refined prototypes, which I tested using focus groups of architects, specifiers and electrical contractors.  Following a national launch supported by heavy trade advertising we achieved our initial sales targets.

Meanwhile, Brian had remained true to his word that he would support my career development.  An early demonstration of support was his engagement of a personal French tutor to start the process of preparing me for a career move into our European businesses.  This was followed by my enrolment in a management training programme that took place on both sides of the Atlantic.  GTE (our parent in its pre-Verizon days) had recently invested in its own ‘university’ spending $50m (30 years ago) building a magnificent redbrick management training school in Norwalk CT.  Spread over acres of prime real estate the objective was to provide a world-class business education.  Not only were the physical facilities superb but I studied under the best professors that Harvard, Yale, MIT,Dartmouth and Columbia could provide.

Eager to learn and with 20 years of business experience already under my belt, I soaked up everything I could that was at the cutting edge of business strategy and technique. Between programmes I found I could directly apply what I was learning to the challenges of my role.  However, the more I learnt the clearer it became to me that senior management, whilst supporting the concept of advanced management training, simply wanted a ‘business as usual’ life and would resist any moves that threatened change.  The scene was set for great future frustration on my part and friction with those to whom I reported.

One moment of levity at this time came from a delightful character, Phil Thurston, at the time Professor of Business Administration at Harvard Business School. At the end of one programme Phil gathered us around and said, in his slow, hesitant drawl reminiscent of the actor Jimmy Stewart, “Well, guys I’ve taught you what I know about the subject and you’re well prepared.  But there is one additional quality you’re going to need in that world out there that I just can’t teach you – rat like cunning!”  Oh how right he was and how I wished I had found a way to acquire this vital quality.

Whilst our initial launch of lighting fittings had gone well the situation we were now finding was that the stock was not selling out of the wholesalers as planned.  Our sales force was now of high quality.  Having worked closely with Martyn on profiling, recruitment & training, my research now showed that we had moved from the worst image in the trade to the best.  Something else was wrong.  The sales force were supposed to start calling on electrical contractors, the critical group who actually bought the fittings from the wholesaler and installed them.  The problem was simple; the sales team weren’t making the contractor calls but the remedy was far from easy.

Whilst we had got good acceptance of our new product amongst our wholesale customers, and despite our advertising, they were finding it difficult to sell to the contracting trade.  We were an unknown quantity in a very traditional sector.  The solution was to split the sales force into two parts; one group continuing to sell into distribution and the second trained to enable them to design lighting schemes, obtain specification and to influence contractors.  I also started an intense period of public relations activity with the Electrical Contractors Association, building relationships with some of the key people in that sector.

During this same time I stepped up activity with our core customer group, the wholesalers, taking a number of those most loyal ones across the Atlantic to visit their major counterparts in the USA & Canada.  In this way we were able to demonstrate that whilst we might have been new to the UK, we were a company with a long and deep history of support to the distribution channel.  Another venture, in conjunction with a leading trade publication, was in forming of group we identified as the leaders of tomorrow and in creating training and development events for them (with appropriate publicity).  My latest research showed we were viewed by the trade as #1 for our sales force, service and trade support.

Despite these improvements in customer perception and growing share in the market for light sources, our progress in the new area of lighting fittings remained very slow.  Realising that gaining a foothold in this tightly controlled sector of the market was going to be difficult, I commenced a search for a suitable acquisition candidate.  Alongside this new strategy I continued to look closely at the performance of our sales team.  The technical sales team were small in number and it was clear that their progress was going to be slow against long established competition.  The main sales team however appeared to be neglecting the tasks set to them to support the new range and it seemed to me that they were staying within their comfort zone.  I repeatedly raised this issue with Martyn but little seemed to change.

During the time I had been working closely with Brian (and supporting him in every way I could) I had also been taking every opportunity to remind him of my general management experience and the unused competencies that I possessed.  I was constantly pushing for a wider role in the business either in the UK or inEurope. Additionally, I had also used external opportunities to demonstrate I was a saleable property (which did no harm to my salary but achieved nothing else tangible). As the fittings growth stalled my representations to Brian increased and I was actively lobbying him to put sales under my control.  Instead, in a surprise move displaying the judgement of Solomon Brian, appointed both Martyn and I to the board!

With a new stripe on my sleeve my CV improved but nothing else had changed and the problem of little or no growth in our fledgling fittings business was causing me great concern.  The strategy I had constructed and implemented with the support of all in the UK andEurope included the vital component of achieving a shift in the image of the company from a light source company to a comprehensive lighting company.  In practice this would enable us to break a stranglehold competition had on sales via the wholesale channel (the vast majority of the market).  Our pitch to major distributors had been predicated on our commitment to displace competition in a sizeable share of the fittings market that would lower the wholesalers’ risk in moving more light source purchases to us. The power of competition came from the constant threat to route specification business away from wholesalers if they reduced their light source purchases.  Failure to establish our fittings range was jeopardising our means of breaking this tactic.

The relationships I had with the management team within our European headquarters were also a source of frustration for all parties.  With many of the team I had an extremely close and productive relationship.  However, the European strategy (such as it was) brought me into constant conflict with both senior management and the various holders of the role of European Product Manager for our incandescent light sources (ordinary household light bulbs).  There was constant pressure for me to target the retail sector in the UK (several of our other major subsidiaries were present in this sector and achieved reasonable volumes).  All of my considerable experience in the retail sector showed me that we could never make any profits from such a move and I resisted strongly whenever the subject was raised. Information gained some years later shed a fascinating new insight into this issue.

Armed with a great deal of knowledge concerning the UK retail sector, how it operated and differed from its European counterparts together with a great deal of personal experience, overcoming these representations was like shooting fish in a barrel.  It earned me enemies though.  Instead, Martyn and I sidestepped the main problems of trying to establish our own brand by winning considerable private brand orders that for a while boosted our volumes.

Over the next few months a number of shifts took place that saddened and frustrated me but finally gave me some hope.  Over the previous few years life at home had returned to normal and, despite the residual effects of her illness almost 5 years previously, my wife seemed well and had returned to working in the health service.  A real boost to her self-confidence came when the local authority offered to sponsor Jean through a degree course.  She was elated.  The joy was short lived as a week or so later my phone rang and I heard the news that she had collapsed with what appeared to be a seizure.  More fits followed in the next few weeks as we waited anxiously for the test results.  It was with horror, fear and sadness that we heard the results; a large tumour in her brain.  An operation was quickly carried out but the outcome was that the tumour had been in an advanced state and the prognosis was terrible.  We battled on.

The disagreements with Martyn remained and I continued to plough on using a full frontal assault to achieve the changes I thought we required.  The result became an open rift and little progress.  What had been an incredibly successful working partnership (recognised across the industry) was no more.  It also cost me a friendship. At the time I heaped all of the blame upon Martyn and it took me many years to realise and accept that, had I modified my approach, we might have been able to reach an accommodation, preserve our relationship and make better progress.  I continued my hunt for a suitable acquisition target but became frustrated when it was made clear to me by our European management that I should desist in my efforts.  This frustration with senior management had not been enhanced by ourUS parent’s failure to pursue acquisition of our majorUK competitor (Thorn Lighting) in 1985 when theUS$ almost reached parity with the Pound (at £0.95).  An unbelievable opportunity missed.

All became clear a little while later when our European management proudly announced the acquisition of Rotaflex.  ThisUK business was focussed upon the design, manufacture, specification and sale of high end architectural light fittings via the Concord brand.  The group also included Linolite, a smaller company manufacturing and distributing ranges of niche, low value commercial fittings.  Neither of these companies would assist in achievement of the strategy that I had constructed and that had been accepted.  All of my difficulties remained.

A form of hope came when it was announced that Brian was to move to run the newly acquired Rotaflex group.  The opportunity for me to replace Brian was obvious but it soon became clear that I would have competition.  The overall growth we had achieved since I joined the company spoke for itself.  But had I acquired more enemies than friends?  Could I convince our irascible European president? I tossed my hat into the ring.

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