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The Business of Life – Chapter 44 Postscript II finding that elusive balance

 There are few phrases that have crept into the lexicon of life in the 21st Century that annoy me more than ‘Work-Life Balance’.  I believe it to be simply inane, socialist dogma to imply that work is somehow anything other than an integral component of a healthy life.  It would be equally inane to refer to a ‘Home-Life Balance’.  Work gives us an identity that for the majority of us defines what we do.  Yes, I also subscribe to the concept of multiple identities; after all I am also amongst other things a husband, a father, a cyclist, a volunteer mentor and an aspiring writer.  But when I worked, it was my work role that provided the answer to the invariable question at parties, “What do you do?”

Finding the elusive balance

The phrase and the concept that makes sense is ‘Whole-Life Balance’, which at least recognises there are multiple aspects of our life in which we seek or should attempt an equitable balance.  Nevertheless, this state of balance is an elusive and frequently ephemeral state to achieve and there is little room for compromise if you really wish to succeed.  There are too many variables, too many uncontrollable factors that do not cease to be demanding and which conspire to upset this delicate state of equilibrium.  Yes, I learnt to fight back against the petty aspects of work pressure when I could but competition does not sleep and creditors, the Government and the economy certainly don’t.

It’s strange that we can accept that the great sportsmen and women, the politicians and the artists and stars we admire so much make massive sacrifices to succeed in their chosen careers.  But do we ask, do we require, do we care if they strive to achieve this so-called balance in their lives?  How many Olympic medal winners do we hear being chided for not spending more time at home?  And yet we make so little allowance for those in everyday life when they strive to succeed in their chosen careers.  It’s true that the family can enjoy the lifestyle that comes with the salary the breadwinner brings home.  But is he or she not worthy of the same respect as our sporting heroes when they make the necessary sacrifices to succeed?

 I am a happy and a satisfied third-ager precisely because I have achieved a state of self actualisation.  Apart from an ever growing bunch of people doing their best to destroy this wonderful world we live in, I am genuinely happy with my life.  I could claim that the end justified the means.  Nevertheless, I certainly cannot claim it was either easy to achieve this state or to strike that elusive state of balance for more than a matter of weeks at a time.  Nor can I claim that it must have been easy for my family (but I’ll return to that shortly).  To achieve one big goal in life requires dedication, commitment and the subordination of all other roles and goals.

That I was never a successful sportsman may be down to a combination of my physique (now was that nature or nurture..?) and my lack of early exposure to the joys of ball games.  But I was certainly as driven as many a sportsperson.  That drive came as much from a fear of failure as it did a need to achieve.  When I was fired from Akai I was, one could say, a victim of my character.  It was an intense sense of failure that overcame me and then drove me on to succeed.  But it was the same set of behavioural preferences that had driven me to that situation in the first place.

For those initial twenty years I had one success after another.  I really believed that I had got the magic formula.  Not only had I believed that being very good at what I did would be enough to maintain my career momentum, I had always used my ability to present my case logically and rationally (but rather like a battering ram).  The problem was that I had no political skills to bring to bear and I wore my negotiating position on my sleeve.  When you’re being confronted with the choice of being burnt or scalded neither is easily preferable.  If the choice is actually being burnt today and scalded tomorrow, then my tendency was to enter the fight straight away.  With the benefit of hindsight, I could never have won the battle at Akai because I was working for a company that ultimately had to fail because it simply didn’t have the resources to succeed.

However, ten years later I was still making some of the same mistakes when I realised that the company I worked for did not have the strategy to succeed in reaching its stated goal.  I was right in my view (as history has again proved) but I still lacked the political skills either to convince others or to survive.  Anyway, by this time I was probably seen as a threat and was fighting a whole layer of senior management wedded to preserving a status quo that was doomed.  Should I have worked on my political skills instead of the full frontal, bare-knuckle approach?  I don’t believe so for two reasons.  The first is that being Machiavellian is beyond my natural style of behaviour, it’s simply not within my skill set.  The other reason was that having seen the future and the people my future would depend upon, I just didn’t like it or them.

It took just a couple of years more to realise that corporate life was not offering me the chance to play to my particular skill set.  If you are in the wrong company, in the wrong industry, with skills that are not recognised then life is going to be really tough.  More so if you are the one telling the emperor that he has forgotten his clothes.  I really think that in such circumstances you should think about doing your own thing – building or buying your own train set.  The constant stresses and strains of having to do battle within your own company, in addition to the real work of satisfying the market and battling competition and the economy, are debilitating.  They were for me and they were for my family.

If fear of failure drove me on, it never soured my enjoyment of the here and now and it never stopped me taking what some might call unacceptable risks.  Freed of the political constraints and frustrations of corporate life, I decided to take the king’s shilling of venture capital.  To do so meant investing my life’s savings alongside the millions from a VC and the banks.  It didn’t worry me as I felt I was really in control for the first time and dependent upon my own judgement.  I made a rule however that I would never give a personal guarantee to a bank.  The essence of the concept of limited liability is destroyed by providing some faceless, business-illiterate bankers with the ability to claw back your home if it all goes wrong.  If my life savings weren’t enough risk money, then they weren’t for me.  And I never had to give that guarantee.  In that sense I wasn’t prepared to jeopardise the balance between my aspirations and the roof over my family’s head.  In the event, two out of three ventures were successes and that was just fine.

When my dear late wife became pregnant with our daughter we agreed that she would put her career as a nurse on hold and become a full time mother.  It was her suggestion it and I thought it natural to agree.  Just as I thought it natural that I should do whatever it took to replace the money she had been earning.  It took a great deal of hard work and a toll on my health but I can’t recall that she ever complained that I had the balance wrong.  And when the time came and she wanted to return to her career, I supported that decision.  My daughter and my son might feel that I wasn’t around enough or that I wasn’t there when they needed me.  I don’t know.  A Dutch colleague once said to me that in Holland they have a saying that for the first seven years the child belongs to the mother, for the second to the father and for the next seven years for both together.  I do know that I wasn’t around as much as I might have been for my seven years and sadly, Jean wasn’t permitted to share the next and subsequent phases with me.

I now realise that for many years I was someone who made decisions solely on the basis of facts, logic, my reading of the future and the implications for my course of action.  This approach certainly gave me the advantage of having an uncluttered and largely rational approach.  Business decisions were made never pausing to consider others’ feelings and emotions but focussing on what was required to achieve the result.  It came as little surprise when in a group activity during a course in the US, I was described by colleagues as ‘remote and unreadable at times’.  My response at the time was to see this as something of an accolade.  Subsequently, I made efforts to try to include the human aspects in my decision making but most times defaulted to my natural style.

However, following the appallingly early death of Jean, something changed in me.  I cried for the first time at sad films and passages in books and even music could have the same effect.  What Myers Briggs call the ‘shadow side’ of my personality, the undeveloped natural senses, were seeing the light of day for the first time.  I don’t believe that I lost my natural, behavioural preferences but now make a real effort to understand the feelings and perspectives of others.  I would find it hard to describe a business situation where I would make a decision based solely on feelings and emotions.  However, seeking out and being aware of the human reactions and implications of a course of action has made me a more balanced leader.

My career was extremely stressful at times but on balance (that wonderful word again) I absolutely enjoyed it and cannot imagine what else I might have done.  I can only hope that Victoria and Alex have as much fun and gain as much satisfaction and self-actualisation from their lives as I have done.

Do I have regrets?  Or remorse?  I have often pondered what I consider to have been a grave error of judgement (spelt out in Chapter 22) when I claimed to have been aware of a major problem but when in reality I had been blissfully ignorant.  My misjudgement stemmed from a desire to conceal that I had been unaware of something (a stock loss) that I should have known about (even though it had been concealed from me).  If I had claimed the truth I might have come out on top for the subsequent battle for a bigger UK role.  However, had this happened, I would certainly have not been moved to Switzerland a few months later.  I cannot speculate if my career would have been better but I know that I would have missed the pan-European role and invaluable (but painful) experiences in Geneva plus the trigger to pitch for venture capital.

Certainly I made other mistakes for which I feel remorse and can still vividly bring to mind situations where my inability to see consequences from another’s point of view caused pain.  These were not situations where I stood to achieve gain from another’s loss but just where my lack of an ability at the time to see the world through others’ eyes made me thoughtless and careless in my attitudes towards others.

For many years I regretted (and felt less of myself as a result of) my lack of a university degree.  What I might have studied I really cannot speculate, although I was being pushed towards art.  I am sure that this would have been a mistake as I probably wouldn’t have been ready for the rigours of studying at university in my late teens and it could so easily have been a wasted experience.  Instead I had the pleasure of continuing to learn throughout life.  I am not an expert in any field (to my regret at times) but a mercurial mind has provided me with the inclination to delve into many and varied subjects.

I now consider that I was fortunate I missed out on university.  This might sound strange but it ensured that I was always focussed on learning whatever I needed to progress.  There were times when I thought I knew it all but the mistakes I made always spurred me on afresh with the learning.  Throughout my career I often found myself surrounded by people who seemed to have left the process of learning behind when they passed through the gates of their university for the last time.  Overtaking these people was therefore never too much of a problem.  So, even with the best degree (or two) there is always so much more to learn (and no more so than in business).

So, for all of you who have followed my writing to this point, I wish you health, happiness and all the satisfaction in your careers that I have had from my own.

I have the feeling that life has a few more challenges left in store.

The Business of Life Chapter 43 – Postscript (part 1)

It’s been almost two years since I sold up and retired.  The transition from hectic business life to retirement has taken more adjustment than I could have envisaged.  I hadn’t ever spent any real time imagining what life would be like when business ceased but the reality has taken me somewhat by surprise.

The Business of Life - Postscript (1) The euphoria lasted some weeks – a month or so.  I saw more of family and friends and that was very satisfying.  And a few health problems intervened to take and shine off things.  But very soon I started to get that old, nagging sensation that I needed a challenge.  I started a number of new activities before the world of blogging began to draw me in.  I had always enjoyed writing, even starting the great novel about twenty years ago (it still languishes unfinished enjoying a quiet life on a succession of hard drives).  The one thing I had intended when I did stop work was that I would write and had promised myself I would finish the novel.

 However, it was business thoughts and anecdotes that got me started with ‘The Retrospective Entrepreneur’ blog and it wasn’t long before I realised that I had the material for the book I wanted to write.  It was researching the life and times of my paternal grandfather that made me realise that there was a side to my life that had remained largely unknown to my family and certainly would to my granddaughters.  So, I started to write ‘The Business of Life’ and that has enabled at least many of the facts to be recorded along with all those anecdotes.  But now the tale has been concluded, I have realised that it still shines a light only on a part of my business life.

 Looking back I can see that what I have written leaves many aspect of the real me unrevealed.  Trying to strike a balance between the business and the personal aspects in a way that would satisfy all possible readers was a worthy enough aim.  But what was it that really drove me on?  What emotions and beliefs underpinned the decisions I made?  Did I really consider the consequences that the choices I made would have on my family?  Are there things I could or should have done differently?  And yes, are there regrets?

 So now I’m going to take another look back to try and answer these and other questions.

The issue of nature versus nurture has occupied psychologists and sociologists and a great many others for many years.  As the continued unravelling of the secrets of DNA accelerates and a backlash against politically correct thinking occurs, I expect we may find a definitive answer in my lifetime.  But what of myself?  Did the factors that drove me on and enabled me to succeed come from my genes or from my environment?  And does it matter?

The children of first generation Irish-Italian immigrant families, my elder sister and I had few advantages.  Our father was a cabinet maker and mum was a seamstress and we lived in what today would be viewed as absolute poverty.  But we both passed the 11 Plus and both went to grammar school, something comparatively rare in our neighbourhood.  Our families comprised solely of manual workers with the exception of an uncle who did well enough as a minor civil servant and a cousin who rose to run a major insurance company.  However, these were relatives I saw but rarely, therefore I don’t believe anything rubbed off there.  So if my sister and I had the odd extra grey cell or used what we had a little more efficiently, it might well have been something nature caused to trickle down through the gene pool.

 Apart from my father ensuring I was encouraged to discover for myself the world that books revealed, there was another aspect of my upbringing that must have had an effect upon me.  In our neighbourhood (like so many others at the time) kids played out in the streets, communal gardens and little parks at all hours.  But not my sister and I.  My parents resolutely refused to let us join in informing us that we were “better than that lot.”  Finally, at age 13 I had become big enough and determined enough that they couldn’t control me any longer and I took my place in the local pack.  After an early event that could so easily have brought me onto the wrong side of the law, I learnt to pick my new friends with more care.

 Only one friend from my neighbourhood remained as I entered my twenties.  It wasn’t a conscious decision, there just wasn’t a sufficient range of common interests to bind us together and so we drifted apart.  One effect of my enforced solitude I am (and certainly was at the time) acutely aware of was a lack of social skills.  At least I now know that to be the case.  At the time I was always the quiet outsider who never initiated a conversation or any activity.  I remember railing late into the night to my sister, on more than one occasion that I hated small talk and only wished to discuss things that really mattered.  I can only assume that the many years of pre-teenage solitude robbed me of the chance to acquire some form of social skill.

 Over the next few years my interests diverged from the local lads as I discovered I had no interest in football (one visit to watch Millwall play saw to that) or cricket and rugby and, instead, joined a weight training club and developed a taste for jazz, blues, folk and classical music.  When I entered the world of work, aged fifteen, the ties with my erstwhile friends fell away (with one exception, Mike, until his untimely early death).

I hated authority with an intensity that has stayed with me to the present day.  This was not helped by the beating regime at my school.  I was never that distressed by the regular canings I received from the sadist that passed for our headmaster (Brother Peter – a nice religious man) as I probably deserved them.  But when I was beaten for fighting back against the school bully, that did it for me and authority.  Even though my tormentor was absolved of wrongdoing, I did have the satisfaction of knowing that he had been carted off to hospital to have his face stitched up.  No-one at school tried pushing me around after that.

When I turned my back on education and started work I had no clear ambition.  Although reading had given me many insights into the world at large, I had no knowledge of where I might go in terms of career in order to succeed.  The majority of my neighbourhood pals had followed fathers and uncles into union dominated areas such as the ‘print’ (don’t believe for one minute that nepotism and patronage is the preserve of the middle and upper classes).  All I knew, with a burning intensity, was that I wanted to go far enough up the ladder that I could never fall all the way back to where I had started.

By the time I entered the workforce I was determined to learn as fast as I could what it was that would cause me to progress.  Anything or anyone who merely wanted to plod along or play the system, I shunned.  I sought role models I could respect and I learnt from them as fast as I could and, in turn, I supported them to the extent of my abilities.  Years later when I was reviewing my CV (following my final departure from corporate life) I made an interesting discovery.  My greatest successes had come in positions where I had worked for a person I had respected and enjoyed working and constantly going the extra mile for.  All of what I consider my failures came in roles where I reported to someone who proved incapable of engendering respect in me.

 I never enjoyed (and therefore shunned) team sports.  I think that this was another result of my enforced exclusion from the endless impromptu football and cricket matches played in my neighbourhood.  Sport was never played at my junior school and by the time I entered grammar school I simply had no skills or knowledge to demonstrate.  However, I have always been ultra competitive and was always quick to respond to a challenge or a dare (inevitably bringing me into yet another brush with authority).

 For many years  I thought myself to be an introverted loner (probably as a result of my enforced childhood solitude) .  Certainly I have never been afraid to be my own man, frequently taking the lonely path and a book always seemed a reasonable companion.  However, it wasn’t until many years later when undergoing training for the Myers Briggs Type Indicator (MBTI) qualification that I found that I corresponded quite clearly to the preference of extroverted behaviour.  For those who are interested my type is ENTJ (Extraverted Intuition with Introverted Feeling).

 Isabel Briggs Myers defined the ENTJ type as “Natural leaders and organisation builders.  They conceptualise and theorise readily and translate possibilities into plans to achieve short-term and long-term objectives.” She goes on to describe them as likely to be: “analytical, logical and objectively critical; decisive, clear and assertive; conceptual and innovative theorisers and planners.”  There are downsides to this type, which include, “Becoming overly impersonal and critical; being intrusive and domineering; and being abrasive and verbally aggressive.”  I largely recognised myself from this description.

Are leaders born or created?  I really don’t know the answer to that question but I do believe that everyone can learn to improve how they lead and that differing situations bring a requirement for different types of leader.  I had no influences of leadership that I am aware of in my early years but I was put in charge of a patrol in the Scouts aged twelve and then became troop leader at fourteen.  Having been given my first business to run at age twenty-nine, I suppose I must have shown some degree of leadership potential.  So what was my leadership style?

 Those who worked for me are best equipped to answer that question and I am certain that there are as many that saw the negative aspects as there are those who can recount the positive side of my leadership.  I have always believed in delegation but an interesting insight into this aspect came from Vic Vroom (a Professor of Psychology at Yale).  Following analysis he described me to be a clear believer in delegation, except in two circumstances; where time was of the essence and where I did not trust subordinates to make the right decision.  I can certainly identify with this description.  When I had a good, well trained team (as I did at Sylvania UK) I trusted them implicitly to make the right decisions.  When faced with a failing business and a team that sadly was lacking both experience and ability (as I found when appointed to turnaround Selmar), my style had to be far more decisive and authoritarian.

I find it sad that many senior politicians claim that they know they are doing ‘the right thing’ (usually when they are incapable of providing a logical explanation for their actions).  In business we have company law and legislation to guide us through many of the difficult situations we may face.  Despite my dislike for authority, when I fully understand the logic behind the regulations, I find it easy to do the ‘right thing’.  When I was called upon to make some of the hardest decisions (such as firing a friend and colleague and calling in the administrators) I knew that my actions were both legally correct and morally defensible.  Not taking these actions would have exposed creditors, other shareholders and employees to far greater risks.

With a life long thirst for learning I have always been interested in why people differ in their need and preference for learning.  A few years ago I came across the Learning Styles concept, pioneered by Peter Honey.  Taking the questionnaire I found my learning style preferences to be strongly for Theory and Activism (with lower scores for Reflector and Pragmatist).  This would explain my thirst for acquiring theory and a rush to put it into practice where relevant.  However, it also explains why I suffered from leaving the impression at so many interviews of ‘being all theory’ (despite my attempts to explain how I went on to successfully put theory into practice).

 Certainly, I have always tended to describe myself when asked, as being analytical and logical and I count myself fortunate in having had ample opportunity in my career to apply these behavioural traits.  And, looking back, I am fortunate to have succeeded more than I failed in my business endeavours.  It has also been possible to see how the negative aspects of my behaviour (and yes, every strength has a potential downside) have caused pain to others around me.  Not least of these have been those I loved the most.

 In the next part of this retrospective I will try to examine the emotional issues that I faced in tackling some of the problems I had to deal with and the consequences these had on those around me.

Image courtesy of Maiden-voyage-travel.com

The Business of Life Chapter 42 – where the road ends

“You’re a very lucky man.” my cardiologist told me as I tried to get my breathing under control following a treadmill stress test that had nearly collapsed me but produced no pain.  “You appear to have suffered no lasting damage.”  “What can I safely do in terms of exercise in future?” I asked hesitantly.  “Anything you want – anything someone who has never had a heart attack can do.”  The relief flowed over me.  He went on to inform me that I was already fitter than the vast majority of police he tested for their medical at age 40.  Six months after my heart attack I wasn’t sure if I should be elated or depressed.Where the road ends

“A poor choice of parents!” was his response when I enquired why I had suffered a heart attack as a fit man who ate healthily, wasn’t overweight, had never smoked, drank in moderation and whose cholesterol level was only average.  My father had had his first heart attack at age forty one and, despite suffering many more, had gone on to die aged seventy four.  He was very fortunate that we lived within a few miles of three of London’s major teaching hospitals.

Following four days in intensive care some months earlier, I had been discharged into the care of my GP and a Cardiac Rehabilitation Nurse.  I include my GP but he transpired to be conspicuous by his absence, something that was probably wise.  During the previous year I had ‘presented’ (as the medical profession love to refer to it – such an impersonal term) several times with acute arrhythmia only to be constantly informed that it was nothing to worry about.  It has since been confirmed that the arrhythmia was certainly a precursor to my subsequent heart attack.

My euphoria at still being alive stayed with me for a long time following my experience.  But the initial feelings of normality faded rapidly upon returning home.  For the first few weeks I realised I was as weak as the proverbial kitten.  Even a lengthy conversation exhausted me and I would take two or three naps during each day.  I consider myself extremely fortunate to live in one of the parts of the country where the NHS offer a cardiac rehabilitation programme.  I received home visits from my nurse giving detailed advice on diet and what I should and definitely shouldn’t do in the early days including guidance on the exercise I was expected to take each day.

Importantly, after six weeks I started with an exercise & guidance programme designed specifically for post heart attack patients.  Looking back the exercises we did seemed more like a programme for geriatrics but they were challenging enough (terrifying at first) and each day we were pushed a little further and a little harder.  My sense of competitiveness had returned and my new friend and fellow sufferer Andy and I subconsciously ensured we pushed ourselves harder each session.  Each day I walked and each week covered many miles across the moors around our home.  I felt good and eight weeks after my attack drove the 100 miles up to Newcastle to start work once more.

 I had read so many stories of people whose lives had been dramatically changed as a result of an acute and life-threatening illness.  But having been guilty of no life threatening behaviour that required immediate changes to my lifestyle, I felt that I didn’t need to make any great adjustments.  I had changed, however, inside.  I felt calmer and more knowledgeable.  I had been through hell for most of one day and been lucky enough to have survived.  I have always believed that all experience is a potential lesson for learning, so I’ve notched up one more.  Looking back the really curious aspect of that day was that I was never frightened.  I can’t say why, but it just didn’t occur to me to think of death or disability.  I just had faith that if I could just hold on, the medical profession would make me better.  It wasn’t religious faith, just a form of confidence I think.

So, no major adjustments were made to my life (despite the concerns of my wonderful family) and I went back to doing what I had done for so many years and continued to enjoy it.  Despite the continued frustrations!

 Roger and I knew that we had to replace him if we were ever to sell the Metal Spinners business.  However, over a five to six year period we went through three potential replacements.  All were very experienced and qualified engineers and senior executives.  I had drawn up very precise specifications, employed experienced head-hunters, exhaustively interviewed candidates and tested the lot and then took the required references.  All failed in a year or less.

 Despite years of experience, extensive qualifications in psychometric assessment and a rigorous interview technique I must admit that recruitment (at all levels) is still a hit and miss affair.  All of these executives (and more over the years) professed a desire to join a medium sized concern where they could make a difference.  However, one progressively took to hiding in his office, trying hard not be become involved in anything that might be threatening.  The next certainly got involved in everything that moved but suffered from terminally bad judgement.  And the third?  Well he was up to the job but ended up playing politics so I would have to question his judgement as well.  I have come to the conclusion that many executives get to their ultimate level in large corporations on the back of their teams.  Put them into a smaller organisation and they simply can’t adjust and can’t perform.

 Despite these problems the business prospered and our debt from buying out 3i was eliminated.  Without a replacement for Roger we decided to put off any attempt to sell the business and concentrate on improving profitability still further.

With the winding down of some of my business activities by 2009, I began to wonder what academic learning would feel like.  Having left school at fifteen and never having attended university, there had always been a feeling of unfinished business lurking in the back of my mind.  I knew from my business education in the USA that I could more than hold my own when it came to absorbing and applying knowledge.  Psychometrics had long been an area of interest (and application) and I had logged up numerous qualifications.  “Why not take a psychology degree?” I thought.  I enrolled with the Open University and was soon heavily engrossed with the course and receiving grades that satisfied me.  However, events were soon to conspire against (or at least interrupt my new found studies).

“We’ve just received a letter I think you’ll be interested in,” Roger said dryly in a phone call one Friday afternoon in late August the following year, “I’ll email you a scan of the covering letter but it’s actually a large parcel of information.”  A few minutes later I was reading a very serious communication from the London office of the international agents of a large USA corporation.  It was an expression of interest in buying our business.  Approaches from prospective purchasers were nothing new, I received a number every year and most went straight into the bin being clearly from people who didn’t understand our industry sector and were merely tyre-kickers incapable of raising the sort of money we were worth.

A couple of years previously (following our failed attempt to sell) we had received a similar approach from a firm of venture capitalists in Chicago on behalf of our largest US competitor.  The approach seemed deadly serious in that a team of four of them wished to visit and start acquisition discussions.  The party that joined us for dinner that Sunday evening a week or so later in Newcastle included the two VCs and the president and CEO of our competitor.  It seemed that they were on a buy and build acquisition spree and wanted an entry into Europe.  We sat and listened to a great deal of boasting and bluster over a long dinner and finally agreed to take them around our factories the following day.

Monday morning I left Roger to take the party around our two sites.  Several hours later they returned and almost the first words out of the president’s mouth were, “Jesus, you guys are already where we aspire to be a long way in the future!”  It was only too apparent that we were strategically and culturally incompatible.  Although three or four times our size they were far less profitable, had far lower levels of technology, chased high volume, low margin business and simply didn’t understand our markets.  They went away, never to return (although the VC did come back a couple of years later with another approach that also failed).

The package that had been FedEx’d to us indicated a very considered and very well researched approach on behalf of the parent of our most serious USA competitor.  Included within the information pack was an outline of the strategy of both Standex Corporation and Spincraft, their engineering division.  The letter indicated that they were deadly serious and were prepared to make a significant offer for our business, which they viewed as being strategically valuable.  Although we were very profitable, debt free and on a continued upwards curve we knew that we lacked a replacement for Roger.  Neither Roger nor I wished to undergo a lengthy period working for a new owner.  We were both refugees from corporate life and neither of us had any desire to return to that fold.  Nevertheless we agreed to meet with them.

Shortly after we succeeded in buying MSG I had said to Roger, “That was the hardest thing I have ever done.  But I know it’ll be even harder when we try to sell.”  Those words transpired to be acutely prophetic and what followed was another six months of difficult and exasperating negotiations.  It wasn’t that Standex was deliberately difficult,  but it was a large USA corporation with its legion of executives from every conceivable department all of whom became involved.  When you added in their lawyers, our lawyers, financial advisors and accountants it became the feeding ground for confusion and misunderstanding that I feared.  Somehow goodwill and commitment on both sides endured as the processed dragged on particularly with regards to environmental issues (not that any actually existed).

The replacement for Roger transpired to be a problem that was easily resolved.  We agreed with Standex to set about a recruitment exercise and I ensured that Len the CEO of Spincraft joined us for the interview sessions that I set up for our shortlist.  We had four excellent candidates and in the final analysis the decision was clear cut and unanimous and Brian was recruited to head the MSG business.

Completion had initially been set for December but it came and went with myriad strands of disclosures and negotiations still open and dragging on.  December moved into January, which came and went in similar fashion.  Misunderstandings flared up and were resolved with phone calls at all hours and a lot of goodwill.  It was clear they were deadly serious and committed to the deal but still the ground had to be covered and indemnities and warranties agreed.  A new date was set for the end of February but so many strands of complex issues remained it seemed that we would never get the deal to bed.

March came and suddenly it seemed problems were being resolved and the deal looked set for completion.  A date of 8th March was finally agreed.  The day dawned bright,  clear and spring like and I savoured the drive into our lawyers’ offices on the Quayside in Newcastle.  It seemed that it was finally going to happen but I held my breath and waited.  The day passed in great boredom interspersed with little flurries of activity as one last minute query or another was settled.  Shuttle diplomacy it was, with each party confined to its own meeting room.  Finally at around 3.00 pm the three of us were ushered into a third, large meeting room to put our signatures to dozens of documents.  It was done.  We had sold the business we had bought almost thirteen years previously, had invested in and developed and now it belonged to Standex Corporation and I was convinced would be good owners.

I sipped a celebratory glass of champagne, had a few words of thanks and congratulations with Roger and Malcolm and slipped away quietly.  I was just…numb.  Thoughts of what it would be like to make a successful sale had always been pushed out of my mind – business had always been too precarious to waste time on dreaming.

The sun was still shining from a perfectly clear, blue sky as I drove far out into the beautiful Northumberland countryside simply wanting to be on my own to think.  Finally I pulled over in a quiet lane where I could see only miles of rolling hills and switched off the engine.  It was still and so quiet and I let it wash over me feeling nothing but a delightful sense of calm.  I phoned Denise to let her know the good news and then Victoria and Alex, whom I had kept completely unaware of the whole process.  I stayed a little longer but no waves of emotion came, just that same feeling of tranquillity.  I had made no plans and realised I didn’t have the slightest inclination to start doing so.

After fifty incredible, roller-coaster years the business in my life had been concluded.  I had promised Denise that if the sale succeeded I would, aged sixty five, finally hang up my boots for good.  My time in business had finished in a way I could never have dreamt of at any time on the journey.  I allowed myself a smile of satisfaction.  I had started out on this journey through the world of business as a lad of fifteen armed only with an O level in English and a pugnacious determination to get on.  It hadn’t turned out too badly.

 Image courtesy of Antonio Androsiglio (via chilloutpoint.com)

The Business of Life Chapter 41 – when the attack comes (part 2)

I am somewhere inside Airedale hospital and in acute pain, the worst pain I have known in my life.  A stern but sensible looking female leans over me and informs me that I am having a heart attack.  I feel nothing except pain as she goes on to tell me that I am to be taken to Leeds where they have a specialist unit and they will perform angioplasty and insert a stent if necessary.  I am to go in the same ambulance.  Some conversation is going on with Denise over following the ambulance.  I am glad not be involved.When the attack comes (part 2)

“I’m in pain!” I tell the assembled throng.  They tell me that they can give me more morphine and soon a needle is in me again and then I’m being wheeled down those corridors again with Denise telling me she will see me later.  I feel alone but relieved to see my two ambulance men; they are good guys and I trust them.  We soon set off and I hear the siren again.  I try to work out where we are and succeed some of the time.  I am surprised at how fast the ambulance can go and how it doesn’t have to slow very often, when I’m not thinking of the pain.  My chest is being crushed.

I’ve always prided myself on what I feel is a stoic like ability to ‘hang in there’ through the worse times and I concentrate on doing this now.  I feel like I’ve been doing it forever; hanging in, holding on.  It’s not working.  I pull down the oxygen mask that has been placed over my face and I am ashamed to hear myself suddenly pleading.

“Make the pain go away!”

I have no shame.

I get a squeeze of the hand and stern instructions to replace the oxygen mask but they can’t make the pain go away.  I decide that all morphine can do is slightly blur the pain, perhaps take it down half an octave but the volume stays the same. The oxygen is about as much use as a chocolate teapot.  The pain rises to a crescendo and then gradually it reduces, ever so slightly it dulls a little and then a terrible wave comes again.

I’m going to be sick!

I vomit into a paper bowl.  It doesn’t feel better the way a good chunder usually makes one feel.  The ambulance man tells me that morphine can have that effect.  On goes the journey.  I dimly perceive that the sun has faded and been replaced by dark cloud or fog.  And it’s colder still.  How much colder can I get?  I think we must be going up Otley Chevin and try to work out how much longer it will take.

I vomit again.  I feel like the worse kind of shit. 

We speed on ….it’s taking forever.

I want to writhe around to ease the pain.  I do and it doesn’t   I try being even more stoical but it’s becoming a hard role to play.

Dully, I sense we must be nearing wherever in Leeds we are going as I am vaguely aware of a cycle of braking, slowing, turning and acceleration.  And the fucking speed bumps again, the cruel, fucking speed bumps.

Suddenly we have stopped and I am being wheeled out of the ambulance.  I feel cold as I am wheeled down corridors once more and then into a large room with a group of people – waiting for me.  I don’t have to wait – I must be important.   I am transferred from the stretcher onto another gurney-like bed where soon people are working on me.

 “Lie still.” I am instructed.  This is difficult, as I have found (relative) comfort (mental not physical) in a resumption of my writhing.  Something is happening in my groin.  I distract myself by looking at a bank of monitors to my left and over my head.  I decide I don’t like what is going on and concentrate on the pain.  From the bit of my brain that is still able to function I start to recall the comments made to me by my business partner, Roger, who had angioplasty and a stent inserted 6 weeks earlier.  Roger is a big guy who has battled MSRA and terrible pain for many years due to spinal damage before falling prey to angina.  I recall him telling me that the insertion of the stent was the worse pain he had ever experienced.  “Oh, fuck!”

“You really must lie still!” one of the hovering team sternly instructs me (I have decided to award them this description as they seem to be indulging in some sort of co-ordinated behaviour).  I wonder if he’s ever had a heart attack.  I think I stop moving for a moment before resuming a sort of slow, rocking, writhing and wait for the pain to get worse as I now believe it will.  Will I be able to cope I wonder?  This pain is bad, very, very bad.  Will I be able to withstand much, much worse?  Fiddling is still going on in my groin area, I am aware of this but it no longer has relevance to me.  I am detached, properly, not the semi-detached variety, but I am lost in my pain and the expectation of worse to come.

A slap on my shoulder brings me out of the depths.

“You’re done!” he tells me, whilst briskly ripping plaster about the size of the Isle of Wight from my chest.  “They’ll take you up to recovery now.”  I am shocked.  The pain didn’t get worse.  I am aware of being moved on the gurney by following my progress across the ceiling.

Somewhere between the room where they did things to me and the recovery ward, I think it occurs in the lift, something happens.  I am not sure at first, I have not been sure of much for some considerable time, except the certainty of the pain.

The pain has gone.

I feel normal.  The pain has not eased – it has gone.  I have no pain.  I HAVE NO PAIN!

I am soon wheeled into a small recovery room where a chatty nurse tells me she is going to attend to the incision in my groin where the entry was made into a main artery.  Soon I am sporting a large clamp-like apparatus over the wound that looks like something Lakeland Plastic sell for various kitchen tasks.  Then follows a short lecture on the dangers of moving too much and how I am to inform them if I feel a damp sensation in my groin.  I realise that my sense of humour has returned when I hear myself telling her that they would probably notice the blood on the opposite wall first, it being a main artery we’re talking about.

They then show me a couple of before and after screen prints of my heart.  The before shot shows one main artery completely blocked and another one almost closed.  The after shot shows the main one flowing clear and unblocked.  Amazing.  I ask for copies but am informed that is against some regulation or other.  I begin to feel like a third party again for a moment.

Soon a very cheerful nurse comes and tells me that they have saved me some dinner – am I hungry?  My brain is working once more and I calculate that I must have been having my heart attack for something like 7 or 8 hours.  My sense of humour really returns when I see that the meal they have saved me is macaroni cheese.  I have had a heart attack and they’re feeding me cheese!  It tastes like the best thing I have ever eaten.

Shortly my affable male nurse arrives this time proffering a pair of PJs at least two sizes too small.  He tells me it’s all they have and I accept them as they seem clean and better than the gown I am wearing.  We laugh together and it’s a great feeling.

I lie back and a wave of unbelievable relief and gratitude flows over me.  I am alive and I feel great.  I have survived a heart attack.  I speculate that this is how soldiers wounded in battle must feel when they know they have come through it and won’t have to return to front line duties.

Denise arrives with our neighbour, Michelle.  I feel like I am the luckiest man alive.

Image courtesy of thetherapeuticresrourceblog.blogspot.com

The Business of life Chapter 38 – when a dream goes sour

“I’ve lost my job!” were the first words David uttered when he turned up to see me in early 2002.  David and I had known each other for well over twenty years, since our time in the lighting industry running competitor companies.  Despite the intense rivalry between our organisations we had always enjoyed each other’s friendship when we met at industry functions.  We had lost touch with each other when David had moved to the south for a new role but he had recently relocated back to Yorkshire again.  We spent time together discussing what had happened and the options David had for his next career move.

Our business crest & motto “Strength through knowledge”

It was some months before I met David again, but when he came calling it was to set my career off in a new direction and widen my portfolio of roles still further.  “I’ve got an idea for a business.” was David’s greeting that second meeting, “Are you interested?”  He went on to say that he had paid a large sum of money to sign up with what claimed to be a not for profit organisation that provided re-training for executives wishing to move into business consultancy.  David’s view was that the course he had attended had provided poor value for money and he believed we could do far better in setting up our own competing service.

I was noncommittal that first day but said that I would research the sector and see if the concept of a competing business made sense.  I went through the process of producing a draft business plan.  After reviewing the company in question, all similar businesses and the Small and Medium Enterprise (SME) sector I came to the view that, given David’s recent experience, we could well put together a superior service.  When I added in our respective experience and skills I became convinced that this was a viable proposition.  I met up with David once more, took him through my findings and we quickly trashed out the actions required to get our new business started.

Within a short period I had registered a company (The Academy of Business Consultants), obtained a VAT registration, taken out the required insurances, produced a corporate identity, leaflets and business cards, created and implemented a website and sketched out a marketing and operations plan.  I was driven!  Working with David proved to be extremely productive as we found that we had a synergistic effect upon each other that made creating concepts and resolving problems a simple and enjoyable process.  Within six months of our initial discussions we had our business and launch plans complete and placed the first advertisement of our advertising campaign in the Sunday Times.

The concept we had developed involved refining the enquiries we received from the advertising campaign, getting the candidates to complete an online personality profiling questionnaire and inviting them to an evening seminar.  During these seminars we would outline a genuine array of career options open to them, present a profile of the SME sector and its needs, pitch our training course concept and provide valuable feedback on their behavioural preferences and how these might impact upon future roles.  The responses we received to the advertising were good and we ran seminars in the North, Midlands and London.  However, despite receiving healthy attendance and strong interest it quickly became apparent that we had a failure on our hands.  We had encountered an insurmountable problem.

We had offered a better and more relevant training programme, set our price at a more attractive level and matched the offering of refined leads and continuing support to those completing the training programme.   There was, however, a critical element of our main competitor’s offering that clinched business for them but one we had chosen not to follow.  One of the key factors that invariably clinched the sale for our competitor was an ‘income guarantee’.  Having reviewed the documentation that David had been given it was clear that the guarantee was all but worthless, so hedged around with conditions and procedures that it was almost inconceivable that anyone could succeed with a claim.  Little wonder that they boasted that they had never had to pay out!  We decided that it would be unethical to match this misleading offer and we changed the direction of our business.

Whilst David had found that the ‘hot leads’ he had been provided by our competitor were at best on the tepid side of stone cold he had, nevertheless, succeeded in building a strong client base of his own.  An interesting and resourceful turn of events had been David’s success in persuading a local firm of chartered accountants to sub-contract the provision of business advice for clients to him.  This experience had led him into a similar arrangement with other firms.  The accounting firms were all members of a national marketing membership organisation (we’ll call them XYZ) that provided help and assistance to members to enable them to run a better business.

We knew from research conducted by Strathclyde University that accountants were the most trusted source of advice amongst private business owners.  However, David’s experience was that beyond the traditional areas of accounting and tax, most small and medium sized accounting firms shied away from offering other forms of business related advice.  “Why don’t we offer our business advice service to more of XYZ’s members?” I suggested. “They obviously see the commercial wisdom of offering advice to clients but don’t feel confident or expert enough to do so themselves.”  David agreed and this was the genesis of our new business venture.

I joined David (in my ‘spare time’) in widening the number of firms we approached and we quickly succeeded in winning further clients amongst the members.  Convinced that the service we were providing was potentially of real value to XYZ, we decided to approach them.  This was not a simple matter and it took many attempts over six months before we sat across a desk from one of the two founders.  The meeting went well and we came away with an agreement to trial our service to a sample of their members.  We recruited another highly experienced business advisor to join us and once again proved we could deliver results.  Some months later the trial was extended to a further region and the results continued to improve.

A short way into our extended trial the three of us started to uncover the same situation time and again.  It was the practice owner rather than their clients who was in most urgent need of face to face business guidance and support.  Despite being highly qualified and experienced chartered accountants the vast majority of practice owners lacked the wider business skills to get the most from their teams and their clients.  The answer we soon implemented was to commence a coaching programme with the practice owner in addition to our work with their clients.

We had implemented a client satisfaction feedback process whereby our researcher, interviewed every practice owner and client we worked with following a set period.  The feedback we received was invaluable and showed our service to be rated either first or second out of the whole XYZ offering.  It also enabled us to take corrective action where required and ensure that our service continued to meet members’ needs.  We also fed back the results to each associate and the XYZ management.  The change of direction was extremely successful and led to a real breakthrough when XYZ asked us to provide a national service for every new member they recruited.  We then formed a new company with XYZ as partners.  Given that we were now about to create a business with effectively a sole customer, we argued that such a shared destiny required a reciprocal shareholding in XYZ.  We were not successful in this but settled for the right to attend and participate in their board meetings.

Faced with a national launch far beyond the geographic capabilities of three of us we started an intensive recruitment campaign to cover the entire UK.  Within a short period we assembled and trained a team of 20 associates, each of whom had previously held at least one role as MD or chairman.  Ironically, each of these new associates had been uncovered via our previous competitor’s online network!  Based on the experience that we had gathered from our existing work, our model was based upon a mix of coaching and mentoring.  We knew that pure coaching methodologies (the coach questions and the coachee provides their own solutions) can provide strong results.  However, our own experience showed that a combination of coaching blended with appropriate guidance (based on the vast experience of our associates) enabled a time-efficient and professional solution.

By this stage I had been running businesses for thirty years and been an owner of various different organisations for ten.  These organisations had been many times larger than the one David and I had created and they had given me rich and varied experience.  But having created a successful organisation together from the failure of our initial concept was richly and uniquely rewarding.  To start and build a successful business is something really rather special.  We were now helping many business owners and their teams to be more successful as organisations and more fulfilled as individuals.  David and I had continued to make a truly synergistic team where difficulties were merely fresh challenges to be overcome.  With David’s superior interpersonal skills and my research, analysis and organisational work we were a powerful team.

David and I also worked closely with our new partners, resulting in an initially a strong relationship.  However, management changes took place within their organisation after a couple of years and differences of opinion started to emerge over strategy.  As time moved on I found that I was spending more and more time attempting to negotiate a resolution of these differences.  I became to realise that the rich feelings of satisfaction with our business that I had enjoyed so much had all but evaporated.  I could see only opportunity squandered and a loss of personal freedom stretching ahead.  A concept that both David and I had planned to run on into retirement had become something from which I could no longer derive satisfaction.

Following lengthy discussions over the situation we both seemed to realise that events had changed so much that we could never recapture the fun and satisfaction we had previously enjoyed.  Subsequently, following discussions with our partners, an offer was made to buy out my stake in the business and in 2010, after 8 great years working with David, I departed.

Reading over this last chapter I realise that it ends on a very low note but that accurately reflects the way it felt at the time.  There is a very much more complex story that I have abbreviated into a few short paragraphs but legal reasons preclude me from going into greater detail.  I really missed what David and I had created but time and circumstances had moved on and I had to do likewise.

David continued to run the business with our previous partners for another two years until the situation changed once more and the contract was terminated.  He is now continuing to offer business coaching and advice to a much wider spectrum of professions and still working with most of our previous associates.  I wish him every success in what remains a valuable endeavour.

We had succeeded in building this business together whilst I was still heavily involved in the running of ABC, Trisk and Bison as well as chairing Hallamshire.  I still don’t know how it all fitted together into 365 day years – perhaps the extra day in leap years helped.  And yes, whilst I was having fun in all these businesses, there was always the time I spent each week in Newcastle with the big investment I had made in Metal Spinners Group.  And events there were becoming ever more involving.

Less than a month after my departure an event took place in Newcastle that was to have far reaching implications.

 

The Business of Life Chapter 28 – when it’s so much harder than you imagined

Unlike many MBI candidates I had met or heard of who merely waited for a referral from an accountant, lawyer or VC (usually whilst they continued to job hunt) my strategy was concentrated on researching the market to find the hidden opportunities,  those businesses that had yet to be put up for sale that I could convince to sell to me.  So, I was pleased and surprised when I received a referral from KPMG to a business that they knew was being put up for sale.  My months of hard work were beginning to pay off  and it meant that I was being taken seriously as a buy-in candidate.Staying-the-Course (The Business of LIfe)

The company concerned, a paper processor, was housed in an old Yorkshire mill (yet another one) and, as the name suggested, it processed large rolls of paper into toilet rolls, kitchen paper, napkins and the like.  It also had a small trade recycling old clothing into cleaning cloths for the engineering businesses that had once been plentiful in the area (destined to become the legendary oily rags). I can’t now recall the name of the paper processing side but the rags were sold under the trade name of Hyman Wipes, something that has stayed in my memory.  Can’t think why.

My heart sank as I toured the old premises filled with machinery and employees that looked for all the world as if they were from the same vintage.  The finances were not disastrous but the business would struggle to stay healthy and there was no way that it would be able to repay the debt I would have to take on to buy the business, let alone any investment in new equipment.  However, if I could buy not just this business but one or more of its competitors then there would be considerable scope for rationalisation into a small group of businesses in the same sector (with increased profits flowing in due course).

After writing up the notes of my visit and sending these off to Phil, I set about researching competitors that would be likely targets.  I soon had a meeting organised with the owner of another paper processor that seemed a likely target.  He was wary and would not agree to my visiting his premises but instead met me at a nearby hotel.  We played cat and mouse for an hour or so but it became clear that there was not going to be a meeting of minds.  Back in my office I spent more time analysing the sector.  It was clear that the smaller companies in the paper processing industry were under attack from far larger players who would be completely out of my league as acquisition targets being mostly owned in turn by yet larger companies.  I met with Phil, took him through my findings and we agreed this was an area best left alone.

Shortly after I got a call from a partner at Grant Thornton inviting me to an event they were staging at their offices in Northampton.  The evening centred around presentations from a number of experienced representatives from corporate finance lawyers and banks.  This included some useful additional information.  But the real value of the evening was the opportunity to meet other MBI ‘wannabees’.  Many private businesses that came onto the market were retirement sales and it was not uncommon for two or more shareholding directors to be attempting to exit at the same time.  It was impossible at that stage to guess all of the possible functional skills I was going to need in a future business but it was almost certainly going to include a finance director.  So, I was delighted to meet Mark over a coffee during the mid evening break.

Mark was employed as a finance director and wished to become part of a successful MBI team.  He quickly impressed me both with his commitment and enthusiasm for our common goal and with his knowledge of corporate finance.  Some ten years my junior and with a young family, we formed an immediate bond.  With an accounting qualification and PLC experience, Mark seemed to have a good grasp of the challenges of running businesses.  Following a further meeting at which we explored each others values and beliefs in more detail we agreed to team up for the task ahead.  We were also realistic enough to agree that if either of us came across an opportunity that didn’t include the other then we would go our separate ways with no hard feelings.

Despite being based some 150 miles apart we soon fell into a productive working routine.  I continued my processes of identifying likely targets and an initial financial analysis and would send a batch of information to Mark who would challenge my assumptions and verify  (and correct, where necessary) my findings.  I was also heartened to find that Mark was able to offer pertinent comment and ask searching questions across the wider business spectrum.  Together I was convinced that we would make the core of a credible buy-in team.

Meanwhile, I had been having further meetings with 3i and formed an initial relationship and agreed a working methodology with Paul, an investment director and Mark T one of his managers.  The understanding was that I would continue my work in identifying likely targets and would bring to them a short investment proposal on short listed businesses we were intending to approach.  In this way we would know, in principle, if 3i were likely to back a serious bid.  There was a danger in this approach that had been put to me by other successful buy-in managers.  This was that there was a risk that 3i could take the opportunity and go with another (preferred) buy-in candidate leaving me empty handed. I put this possibility to one side, reasoning that I had to build a relationship with 3i that demonstrated my professionalism and commitment to them.  If I demonstrated I didn’t trust them (by floating potential deals around a selection of VCs in an effort to find the best deal as others had advised) how could I expect loyal backing from them?

Having been working on the basis that I would have to do all my own work in identifying targets, I was surprised when I received a call from Mark T.  Would I be interested in taking a look at a business (Halifax Fan) they knew was on the market?  There would be no commitment that they would either support a bid or that they would go with me in the event that they did.  We agreed to meet.  I had previously advised Mark T that, amongst a few other industries, I was specifically targeting the engineering sector.  It had already become apparent to me that many medium sized engineering companies lacked modern sales and marketing skills, often resulting in no or limited export markets.  My believe was that I would be able to bring these skills to such a business.  I was pleased to find that the company in question was an engineering business and it was based in Yorkshire.

We met at the premises of Halifax Fan for an introduction and an exploratory look at the business.  It was an interesting company that specialised in the design and manufacture of fans for a variety of industrial uses often employing unique designs for challenging applications.  It was profitable but what was really interesting was that the owner (who wished to retire) had deliberately constrained the growth of the company as he didn’t wish to have the bother of additional employees.  I could immediately see growth potential plus it also had the ability to grow via acquisition.  Having come away with a great deal of financial information I arranged a further visit to progress matters in a couple of weeks.  Meanwhile, Mark and I started work on our analysis of the financial situation and into the specialist market for industrial fans.  A further meeting with 3i soon followed where I presented our initial findings and plans and got a green light to submit a comprehensive business plan.  Following further adjustments our plan was accepted and we waited anxiously as it went to the investment committee for approval.  A week later I learned that approval had been gained and 3i submitted our joint bid to Halifax Fan.

We knew that other interested parties might be bidding and Mark and I waited anxiously once more following weeks of work.  A phone call another week later dashed our hopes.  We had been significantly outbid.  I was disappointed but I was also heartened that we had been taken seriously by 3i who took the bad news with a shrug and the question, “What else are you looking at?”  Mark and I pushed on with our list of prospects.

I had given up on the lighting industry following many unproductive approaches over the previous months but a chance conversation with an old colleague reawakened my interest.  “Do you know Neville is dying?” was the question that took me by surprise.  Neville had been a customer of mine for many years,  running a well respected lighting distribution business.  I also knew Neville well as I had taken him on a study tour of a selection of US & Canadian electrical distributors some years previously.  Notwithstanding the sensitivity of the situation, I called Neville, conveyed my sorrow at his illness and best wishes and after a brief conversation said I would like to buy his business.  My approach was referred to his chairman who I met some days later and learnt that the business had already been put discretely on the market.  My pitch of venture capital backing, knowledge of the business and personal credentials succeeded in gaining me an acceptance into the process.

Over the next few weeks I met with the management team, collected information,  visited the retail operations they had and burned the midnight oil with Mark carrying out detailed analysis and pulling together our basic financial projections.  We then applied various sensitivity exercises to stress test the model before I wrote up a very detailed business plan which I submitted to 3i.  We agreed an offer, the plan went off to the investment committee and, once approved, our bid was submitted.  I knew that our price was realistic and our plans (including selling off the retail side and acquiring other distributors) were rational.  I had even found time to approach and have initial discussions with our first post acquisition target.  However, a few weeks later our hopes were dashed once more as we received the news that a trade competitor had outbid us by 100%!

During this period (mid 1996) I was still processing large numbers of potential acquisition targets through my financial and strategic appraisal model.  Following this latest setback, I stepped up the pace, extending my networking and research activities.  Over the next six months we worked on dozens more potential targets, analysing them and their markets and got down to the shortlist with several others only to miss out to trade buyers who, once more, heavily outbid us.  It was clear that although many trade buyers had no magic dust to sprinkle on a business they did have the ability to carry out immediate rationalisation and effect synergies with their existing operations.  I was confident that my development plans for our targets were sound and we also had a ‘Buy & Build’ post acquisition strategy to acquire other competitors.  The problem was that we couldn’t (and 3i weren’t prepared to support) pricing the benefits of a potential subsequent acquisition into our initial bid.  I knew this made sense as it would have raised the risk factor sky high.

As 1996 drew to a close I realised I had spent 18 months working to buy a substantial business using venture capital.  I had spent months in the most intensive efforts to locate and analysis targets, reviewing hundreds of businesses in the process.  I had become increasingly more creative in my approaches to extend my networking and increasingly more professional in my research, analysis techniques and business planning.  I had been almost to the altar on three occasions only to be heavily outbid.  Attempting to buy businesses from larger companies was also not working as, once more, competitors were willing and able to pay far higher prices.

So, at the end of my first full calendar year there had been no result.  Instead I was beginning to experience growing tension between the work necessary to bring a suitable target deal to completion & the mundane task of earning money.  To put matters in perspective I was earning at a rate that was acceptable but I knew I could be very much more successful at the role of consultant if I didn’t have to spend time chasing acquisition targets.  On the other hand, buying a business was my unwavering goal but I couldn’t spend the time at it that I needed because of the need to earn money.  This tension was made all the worse by my practice of doing whatever I attempted to the best of my ability.

Before Christmas closed the business world down for the holidays, I put together a detailed presentation for Paul at 3i laying out everything I had done with a detailed appraisal of what was working and what wasn’t and reconfirmation of my goal of acquiring an engineering business.  When we met I shared with him the frustration I had in being diverted from the task by needing to earn money but ended with a commitment to bring them a deal we could complete together in 1997.

The Christmas holiday was a welcome break with the family but it proved just too tempting to continue working as my goal was constantly at the front of my mind.  I couldn’t remember wanting anything in business as much as I wanted this.  I knew I could succeed as a consultant but, although I enjoyed the work and gave it everything I had in the time available, it really wasn’t what I wanted to do long term.  It was becoming brutally clear that I had entered a marathon not a quick sprint.  Could I stay the course in the year ahead?  Or was I chasing rainbows?

 Image courtesy of thebridgemaker.com

The Business of Life Chapter 25 – when it’s time to pick yourself up

The flight back from Geneva that evening gave me some time and space to get my thoughts together.  There was none of the rage I had felt when I had been fired from Akai 13 years previously.  Instead, what I felt was a mix of great relief and sadness.  The sense of relief had been something I expected, as working for Norman and Eddie would have filled me with horror.  This feeling was vindicated later that same year when a friendly head hunter shared his experience of dealing with Norman  But more of that in due course.

The sadness was an unexpected sensation.  I had spent all those years working for a company in roles that had provided me with enormous challenges, to which I had usually been able to rise.  The company had given me a superb business education, which I have since come to realise was peerless.  It had also provided me with rich and complex problems on which to apply my new found knowledge.  I still count some of the solutions I arrived at to be amongst the greatest successes of my career.  It was sad that middle management had not always been able to step back from their personal positions and embrace a new reality.  Strategic thinking had been subordinated to the protection of personal gain in many cases.  Nevertheless, I knew I was going to miss the company, the challenges it had provided and the people; even the ones who had frustrated the hell out of me.

One worry luckily I didn’t have was financial.  At least I was confident that I would find the next position before money became a problem.  With the savings I had accumulated and the severance pay I had received life wouldn’t be too bad.  I was under no illusions though as the UK was still recovering from a nasty recession.  For the moment I put that from my mind as I had more immediate matters to deal with.  I had an apartment in Geneva with more stuff accumulated over the previous year than would fit into a suitcase and I had to get it back home.  I made plans to drive over in a few days.  Speaking to a couple of my old team I discovered that they had already had a farewell lunch together but on hearing I was returning for a couple of days they decided to do it all over again – with me.

So, after a few days catching up on my sleep and delighting in being back home with Denise, I headed back over the Channel and through France to Geneva for the last time.  The lunch was bitter-sweet.  I was touched that they were all prepared to give up their time to meet with me once more.  It was apparent though that a number felt a lot less philosophical about the situation than me and it was clear that at least a couple were going to find it very tough to get another position as good as the one they had lost.  One saving grace for them was that Swiss welfare payments were a whole lot more generous than the UK but only for a time.  When the hugs and kisses were over we went our individual ways and I began the long drive back.

Back home in Yorkshire my first priority was to shake off the excesses of too many meals and probably too much to drink.  So, Tilly our Rottweiler joined me for long jogs across the moors around our home and gradually I began to feel good both physically and mentally.  Without a break I started work full time on the hunt for the next position.  In the following 6 months I travelled 20,000 miles attending interviews, networking and researching the market.  Contacts I had made were unstinting with their time and advice and the many head hunters I either approached afresh or renewed acquaintance with were generally extremely helpful.  Together with the advice I had previously received from Max, I was becoming more focussed and more professional in my approach.

Discussing the very exact profile a client had drawn up for a position I was reviewing with an extremely helpful recruitment consultant he suddenly enquired, “It was the same Norman that had run FKI that bought your old company, wasn’t it?”  When I nodded he went on, “God you had a lucky escape!  I had a brush with him a few years back.  He contacted me and said he was looking for half a dozen MDs.  Well”, he went on, “I thought Christmas had come early, so I asked Norman to let me have candidate profiles and I’d get back to him with a plan and an invoice for the amount we charge upfront.”  It seems Norman had responded, “Don’t waste my time with stuff like that, just get me the candidates and I’ll see if I like any of them.”

Things were certainly a lot tougher than they had been the last time I was ‘between positions’.  I was that much older, that much more senior and the number of openings higher up the greasy pole were that much fewer.  It became clear quite quickly that, despite my extensive contacts, I wasn’t going to walk into a senior role in the industry I had just left.  I think I was known as someone with strong views and a different perspective on things and that didn’t appeal to many.  In any case longevity in position was a hallmark of the industry I had been in and there was no game of musical chairs to join in.  Moving industries once again looked the most likely route back into gainful employment.  This bothered me not one jot as I had already worked in 6 diverse sectors and had found problems were invariably generic.

Drawing on the experiences I had accrued in my role in Geneva I reflected on the behavioural skill set that my role had really needed.  When I compared this with the psychometric feedback I had received over the previous few years, I realised that I had really been a square peg trying to fit a round whole.  Whilst the experience and knowledge I possessed had been more than sufficient for the role, my behavioural profile lacked the key political skills required.  I had the influencing skill alright but I clearly lacked what Phil Thurston at Harvard had referred to as ‘rat like cunning’.  My first approach to a problem or resistance was usually to summon the power of logic and rationality.  If that didn’t work I rarely shied away from a full blown, full frontal attack.  I could build and receive the loyalty and support of a team, I could understand the biggest of pictures and what was required to solve the underlying problems.  Yes, there was much I could learn of politics but, as I saw things, I was far more suited to leading than being led.

But my mind was beginning to move in a different direction.  During the final months in Geneva I had started to think of working alone as a consultant and had sounded out a few people I knew who had created successful careers in this way.  The advice had been to specialise rather than risk being known as a jack of all trades.  The obvious specialism was marketing strategy and I was pondering the prospect of setting up and promoting my own business when, in one of those amazingly serendipitous moments, my phone rang.

The call was from Gerard, the finance director of an old customer I had known for many years whilst with SylvaniaUK.  He explained that they had a problem he felt I might be able to assist with.  Was I interested in meeting to discuss the situation?  A few days later I travelled down to Croydon to meet Gerard and Steve, the MD of Jerrard Bros PLC.  The company had been founded by Steve’s father and uncle, had done well for many years but now required a new supplier of a key product.  Would I help them?  I said I would let them have a proposal.  During the visit it became clear that the company had reached a plateau over the previous few years and I probed for reasons.  I said I would also let them have some thoughts on working with them to address this issue also.  A couple of weeks later and after some good natured negotiation we had a business relationship based on two projects.

Almost straightaway I received two more approaches for significant projects and following discussions, proposals and more negotiations I found myself engaged to complete both.  One was a feasibility study for a foreign manufacturer looking to enter the UK market and the other was assisting a company looking to acquire one of my old, major competitors.  Very quickly I became extremely busy and drew a halt to any idea of seeking a new employed role.  I revelled in the freedom of working on projects that interested me at my own pace (although to agreed deadlines).   By now it was summer and I fell into a routine that, when I wasn’t travelling, I often cycled long distances in the Dales.  I would start early and return by midday and then work through until mid evening.  I had always found cycling conducive to thought and now I could actually keep fit whilst doing something I really enjoyed and apply my mind to various problems at the same time.

During my job hunting process I had followed a highly targeted approach seeking opportunities that had not even been advertised.  Each day I would scour the business press looking for news items concerning major companies that were either contemplating or had made major investments or acquisitions.  Whenever I came across a situation where I felt I could add value I would write to the chairman or chief executive (often to their home address so my letter wouldn’t be screened by a secretary).  I would either compliment them on their success or wish them luck with their plans and then spell a short but precisely targeted couple of sentences laying out how my experience could assist.  I would follow these letters up with a call aiming to achieve a meeting.  Several of these approaches got me in front of senior people.  I hadn’t succeeded in getting a new job from this approach but I decided I could use the experience to win new clients.

Another opportunity for creativity had arisen when I lost out after being down to the final two for a position running a national chain of builders’ merchants.  Having invested the time to carry out a great deal of background research on the firm and its competitors I thought it would be foolish to waste it.  I called the new MD, introduced myself as the guy who came second, congratulated him and suggested we meet as I had a proposition.  He was sufficiently intrigued to agree to meet me.  When we met I made the suggestion that as he was busy getting to grips with a big new role there was a way I could help.  He listened very carefully to what I had to say about the industry, the position of his company and the issues I had identified.  He considered for what seemed an age and then said he would be pleased to receive a proposal.  I went away and submitted a detailed proposal for a very focussed consultancy project.  He accepted but not before something else got in the way.

Towards the end of my period of applying for jobs I met a head hunter with whom I had established a good relationship.  Out of the blue he called me months later to say he had an assignment he felt was well suited to my experience.  We met and I listened to the facts he laid before me.  His client was Ross Group a small UK PLC with a number of businesses in electrical products.  They were seeking an MD for one of the group companies, Selmar Industries, itself a group of three businesses manufacturing in West Yorkshire.  The previous MD had departed after running up losses of £3.0m.  Smelling a dead horse, I declined to take matters further.  However, a couple of weeks later he was back on the phone pushing me to meet the Group MD at the company’s factory, “It’s just down the road from you, I’m sure you’ll get on famously with Neil and if you still decide it’s till not for you, well fine.”

The following week I duly arrived at Selmar’s factory, which was housed in old mill premises in a tight, wooded valley on the outskirts of Brighouse.  My heart sank; it looked a tip.  However, my head hunter chum was right about Neil with whom I quickly established a rapport.  He had also worked in major corporations and there was a basic understanding between us over how businesses should be run.  Nevertheless, after several hours of discussions I politely declined to take matters any further.  A week later Neil came on the phone to chat and pressed me to meet the chairman, “Nothing to lose, see what he has to say, eh?”  A long trip down to Basingstoke the following week produced a firm offer, which I rejected.  They responded with an improvement and promises.  By this stage, I have to admit, it had become something of a game, so I pushed on and won more concessions.  Finally I accepted but not before I had negotiated approval to continue my work with Jerrard Bros.

I was back running a group of businesses and was confident that I could improve them.  Would it work out?  Or had my pugnacious nature set me up for trouble again?

 Image courtesy of Eliasbadi.com

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 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.)