LA VITA CORPORATA

The Big Guy, guest columnist on Grumpy's blog, wrote a good one today about the firing of a very capable man in a large corporation and the shabby way in which it was done.

I have been long retired, but I have experienced the machinations and calloused ways of big corporations. I sold my small private company years ago to a conglomerate and saw some of the dunder-headed decisions made by reputedly smart businesses. The conglomerate that took over my company wanted to become a powerhouse in the sporting goods business and had purchased several small but viable companies to achieve that end. Within fifteen years, the whole sporting goods division was gone,the main reason being a total lack of marketing sense. They did have an established industrial division and managed to hold that together long enough to merge with a bigger, hugely successful industrial conglomerate.

When the conglomerate took over my company, we had begun to develop strength in the skiwear market with ski underwear and turtlenecks. The conglomerate had bought another small distributor of fashion skiwear made in Austria. This distributor was doing $400,000 in the American market, a quarter of a million of which was with one customer---not a healthy state of affairs. The conglomerate dropped the distributor and turned over to us the distribution of this Austrian fashion line, and in a three year period we built it up to over three million dollars with future prospects continuing to climb. Let me add, this was over thirty years ago, and three million was a healthy sum.

The conglomerate had a three-year contract with the Austrian ski-fashion company. Then the Chairman of the conglomerate, in his infinite wisdom, made the unilateral decision to terminate the contract because "he didn't like the Nazi son-of-a-bitch who ran the company". I argued with him that I knew how to handle "the Nazi son-of-a-bitch" and that we could be doing five to six million within a year or two. (The Austrian owner was actually a good guy underneath but had that Teutonic stubborn streak. When we used to go at it, I would finally say, "O.K., are you ready for World War III?" He would break up laughing and then we would get things done.)

In spite of my arguments to keep the line and reach dramatically increased sales, which were highly profitable as well, the chairman said no. Another American distributor took over the sales, and guess what? In two years they were doing six million!

After this experience I said to myself: hey, old boy, you've lost control of your destiny, I think it's time to move on and began to make plans to leave and start another business, which I did a year later. The conglomerate was not unhappy, because they liked "their own people" anyway.

The moral of this story is: Business decisions are frequently not rational but based on emotion and personality. And they certainly can be cold-blooded, as well as irrational. Live and learn.