Business Not as Usual: Beyond the Bottom Line

BUSINESS

NOT

AS USUAL 2

Beyond The Bottom Line

By Hugh Aaron

Published by Biblio Publishing at Smashwords

Copyright © 2013 by Hugh Aaron.

ISBN: 978-1-62249-059-2

All Rights Reserved. All content of this book is copyright protected by Hugh Aaron. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying or otherwise, without prior permission, except for inclusion of quotations in a review or critical article. For information address STONES POINT PRESS, 6 Henderson Lane, Cushing, ME 04563.

STONES POINT PRESS

6 Henderson Lane

Cushing, Maine 04563

www.StonesPointBooks.com

On the Vanity of Earthly Greatness

The tusks that clashed in mighty brawls

Of mastodons, are billiard balls.

The sword of Charlemagne the Just

Is ferric oxide, known as rust.

The grizzly bear whose potent hug

Was feared by all, is now a rug.

Great Caesar's bust is on the shelf

And I don't feel so well myself.

Arthur Guiterman (1871-1943)

CONTENTS

FOREWORD

PREFACE

ABOUT THIS BOOK

INTRODUCTION

Chapter 1 - ON STARTING OUT

No Cause for Regret

Time for a Change

Chapter 2 - ON FREE ENTERPRISE

The Immorality of Capitalism

Hooked on Growth

The Myth of the Heartless Businessperson

The Cruel Free Enterprise System

Chapter 3 - ON MANAGING FOR PROFIT

Irrationality in Business

Businesses Don't Fail, People Do

The Enthusiastic Company

The Seven Deadly Small Business Sins

A Review of The Machine that Changed the World

Increase Productivity: Work Less

It's the Culture, Stupid

The Many Lives of a Business

Downsizing for Profit

The Status Quo Be Damned

Shaping the Bottom Line

Chapter 4 - ON SELLING

An Understudy's Dream

Chapter 5 - ON MOTIVATION

Motivation American Style

Defining Incentives

What Makes a Team Go?

Chapter 6 - ON PROFIT SHARING AND EMPLOYEE OWNERSHIP

The Limitations of Employee Ownership

Stock Options

Chapter 7 - ON MANAGING THROUGH RECESSION AND REVERSAL

Why my Business almost Failed but Didn't

Chapter 8 - ON EMPLOYEES

Breaking the Discrimination Barrier

The Obsolescent Specialist

Beyond the Bottom Line

Making it on the Dole

Chapter 9 - ON CHIEF EXECUTIVE OFFICERS (CEOS)

Is Exorbitant Monetary Reward Necessary?

The Successful CEO

Facing the Awful Truth

What's a CEO Worth?

A CEO's Life Cycle

What Makes a CEO Go

The Public Company

Chapter 10 - ON ENTREPRENEURSHIP

How to Become a Millionaire

Chapter 11 - ON PARTNERS, FRIENDS AND RELATIVES

Who Needs Partners?

Chapter 12 - ON LEADERSHIP

Leaders are Made, Not Born

CEOs Can Strike Too

Dishonesty Pays, But…

Whose Fault Is It?

Chapter 13 - ON GOVERNMENT VERSUS BUSINESS

The Penalty of Success

What's So Bad about Inflation?

Government's Role in Creating Jobs

Run the Government like a Business, Mr.President

A Businessperson as President

Treat Business as Your Partner, Mr. President

Locating the Company in Paradise

Chapter 14 - ON TAXES AND BUSINESS

Taxes and the Businessperson

Small Business and the Capital Gains Tax

Small Business and Taxes

How a State and the Nation Can Beat a Recession

Chapter 15 - ON MORALITY AND RESPONSIBILITY

Approaching Middle Age

A Model for Poor Nations to Follow

Chapter 16 - ON RETIREMENT

Neither Borrower nor Lender Be

Social Security, The Big Deception

Chapter 17 – A SHORT BUSINESS STORY

The Mentor

About the Author

FOREWORD

BUSINESS NOT AS USUAL 2 is an unconventional business book in that

1)It's written directly from the writer's actual experience.

2)It's presented in a compelling narrative form.

3)Each essay describes a lesson learned as a result of failure or success.

4)Its openness, frankness and honesty are unflinching.

5)It deals with a wide variety of topics regarding operating a business.

As a unified work, it is a wide-ranging collection of autobiographical essays, written over a period of fifteen years that trace the story of a CEO from the founding of his company to the day it was sold nearly twenty years later. The essays further depart from the conventional business book by including the blood, guts, pathos, drama, comedy, tragedy, and wisdom involved in running a business today. It is therefore an all encompassing tale, with no punches pulled, of what it means to be a CEO, an employee, a customer, a government worker, a corporate executive, and a member of a community with respect to a company.

While BUSINESS NOT AS USUAL 2 will appeal to employees and executives of large and small companies as well as established entrepreneurs and those starting out, it will be of particularly interest to business schools. Since the essays deal to a large extent with the human side of business, indeed, promulgating that the essence of business concerns mostly human relationships, the collection is about life itself. As a result, the general reader would also find BUSINESS NOT AS USUAL 2 engrossing. Most people are employed by an enterprise of some sort and are fascinated by the workings of business at the highest level. BUSINESS NOT AS USUAL 2 addresses and fulfills that curiosity.

PREFACE

During the mid-nineties The Manager's Journal column of The Wall Street Journal published 18 of my iconoclastic articles on managing a business. They challenged American management to question traditional business practices. Now, Business Not As Usual 2 expands my thesis, hopefully offering a unique contribution to the business literature.

I draw upon my experience of twenty years as a CEO in the plastics industry. Despite two recessions, confiscatory interest rates, and an oil embargo which compromised the sources of our raw materials, my company expanded to a two state-of-the-art manufacturing facilities. Midway through the Reagan era, ready to retire, I sold the business in order to devote my time to writing.

The enterprise was a virtual management laboratory. Not satisfied to merely stay afloat, I experimented with a range of management techniques. Often the very survival of the business depended on my willingness to try innovative methods. In Business Not As Usual 2 I share my experiences, both those that were successful and those that failed.

This book is structured for the busy executive who can read any subchapter as an entity without having to know what preceded it. It will also inform the lay reader who wants to learn how business decisions are made and about the people who make them. Above all, I strove to present an honest portrait of a human, fallible, and resilient CEO. I'm no Lee Iaccoca or Jack Welsh, but neither are most executives. This book is about and for the rest of us in the business world.

ABOUT THIS BOOK

These essays were written throughout the mid-1990s and the early years of the twenty first century. A number of them were published in the Manager's Journal column of The Wall Street Journal after the first volume of BUSINESS NOT AS USUAL was published. Others were accumulated with the aim of being published at some uncertain future date. They were not composed as a continuum; they were simply a vehicle by which I could formulate my thoughts in reaction to what I read or experienced in so-called retirement. As a consequence, in some essays the reader might recognize aspects of the same situation in references to my former company and the events that affected it. For this I seek the reader's patience. I present each essay from a different angle so that it would stand alone, and hopefully give fresh meaning to what had already been established other essays or in the previous volume.

INTRODUCTION

From our company's beginning, with one employee and myself in a small garage with a dirt floor and a leaky roof, to its eventual sale in the comfortable seven figure range almost twenty years later, I learned much about business—what not to do and what was right to do.

I learned four important lessons: 1) a business depends on human relationships; 2) the bottom line is the truth, and it must be heeded with the least cost to human happiness; 3) nothing in business lasts, including the business itself; 4) and eventually the demands of a business exceed the capability of a CEO to meet them wisely.

Regarding relationships, everything that benefits them benefits the business. Failure to nurture those relationships, whether with employees, customers, vendors, banks, investors, the community, or the nation, damages the business. That fact wasn't obvious to us at first.

After selling my business, it never occurred to me that I had anything to say, that what I had learned from the experience would be valuable to others. I took our company's experimentation and achievements for granted. Only after The Wall Street Journal published my letter to the editor as a piece in their Manager's Journal column did I realize how unique yet universally applicable my experience had been. As the essays appeared in the column, the response from CEOs to executives, college professors and ordinary workers all across the country responded. And you, my readers, are most welcome to do the same.

Chapter 1

ON STARTING OUT

NO CAUSE FOR REGRET

A friend phoned with a dilemma. He wanted to sound me out on whether he should accept the offer of substantial advancement in the large corporation he worked for, or start a business based on a new idea that had been on his mind for some time. A family man in his early forties, he seemed to be calling not so much to ask for advice as to learn what he himself wished most to do.

He brought to mind my own dilemma almost thirty years earlier when I was his age. I was offered the chance of assuming a principal role in a large, successful organization in a field I knew well. At the time, I was running my own failing business. I had children, a house with a mortgage, car payments, and meager savings. My wife and I agonized over my options. When she said that she would go along with whatever my heart told me to do, I decided to turn down the golden offer. I knew I had to stick it out with my business regardless of the sacrifice.

My decision was the culmination of years of unhappiness and frustration working for organizations in which I felt little security due to mismanagement, the persistence of small dishonesties by my superiors, and especially the suppression of innovative ideas. Most frustrating was the inability to participate in decisions affecting my job. I longed for the opportunity to express myself and, at least to some extent, control my destiny. So I struggled. It took twenty years, but I proved to myself that I could succeed.

My friend's call was not the first of its kind that I'd received. When my daughter was about to enter her junior year in college, she was undecided about her career path. Should she aim for a good job and steady income or something less practical but more gratifying? I asked what her choice would be if she put aside practical considerations: money, prestige, security. Immediately she replied that she'd like to counsel people, to help them find the careers that best suited them. Voila! She knew what she had to do; she eventually got her PhD and became a psychotherapist. So decisions of the heart can lead to increased challenge and growth and may also lead to financial security.

After my friend had presented the pros and cons of his alternatives, I asked him the same question I had asked my daughter: in his heart what did he most want to do? Without hesitation he answered: start a new business. He said if he didn't do it then, he might never do it. For him the time was right. His decision had nothing to do with money, prestige, and security after all.

I learned that the season of a person's life is crucial to his or her major decisions. A young person starting out has time to correct a wrong decision. But a mature person may feel having no such opportunity. I learned how universal those feelings are at a business psychology course at Harvard.

We were a hundred executives, most of us presidents of our own companies, gathered in an auditorium early one morning. The professor entered, studied us for a moment, and asked how many of us between the ages of thirty-nine and forty-two had made a major change in our lives: gone into business or changed jobs, gotten married or divorced, entered an extramarital relationship, done something we had never done before. Looking about the room, I was startled to see that every person's hand was raised. Such a change applied to me, as I assumed it might to my inquiring friend.

I had gone into business at forty-two. It was very late, I thought then. When I was looking for a job at thirty, interviewers had said I was too old. At thirty-five, headhunters told me I was well over the hill, that I mustn't be choosy. By forty, I felt I had one last chance to make my mark. Forty-five would be too late, and fifty was out of the question. My drive and energy quotient were peaking. The choice was clear; it was time to act from the heart. The odds are that my friend will succeed. When we do a thing from the heart, we usually do it with determination and brilliance. If we fail, at least we have no cause for regret. For how could we know the outcome if we didn't try? And how much worse would it be if we never knew? It's the same whether we're twenty, forty, or sixty. In not trying lies the cause for regret.

TIME FOR A CHANGE

I was forty-one when I took over a tiny, failing plastics materials business, and sixty when I sold it for enough money to last my wife and me for the rest of our lives. I was often asked then why I decided to sell, especially because the company, which was owned and staffed with seasoned, loyal employees, was doing so well. The best time to sell a company is when it's succeeding, I would reply. On a more personal level, I added that it was time for a change. The business was beginning to bore me.

What I wasn't ready to admit was that I had become a weary, old warrior, fearful of the struggle that defines the competitive free enterprise system.

Some people remain in it until they die. The chairman of the company to whom I sold the business was in his mid-seventies at the time and raring to go. Though I didn't understand why he hung in, I had to admire him. Perhaps he had nothing else to go to, whereas I did: I wanted to write. I know a doctor who retired at my age and does nothing but manage his investments and read books and The New York Times. He doesn't understand why I spend my valuable retirement writing, and I don't understand how he can do nothing.

At forty-one I was raring to go. It's a critical age, when you appraise life realistically and feel that the opportunity to succeed—to realize what's left of your youthful dream—must be seized then or never. At this stage of life you may not have accumulated much in the way of tangible assets, so you haven't a lot to lose. Thus, starting a business is not only a challenge, it's fun.

You thrive on the knowledge that the business grows at the expense of the competition. When reversals occur, you shrug them off because the business is still small enough to be resilient; it hasn't become sclerotic with overhead and serious debt. Indeed, reversal only urges you to try harder.

But after a number of years of steady growth, the business tops out. The cause may be a recession or an increase in the number of competitors or the development of a new product superior to yours. You scramble to stay even, let alone forge ahead. Finally, with sheer determination and all the ingenuity you can muster, you overcome the adversity and regain your position. This happens time after time, and you come to understand that traveling the road to success is a jagged journey.

When you're forty to fifty, you travel the road eagerly, always feeling confident of winning. But as you win you're also aware that you have more to lose: a successful company saddled with substantial debt, and cars, homes, and a surfeit of personal assets. By sixty you dare not suffer losses, because you feel that you're too old to recover them. You may not have the energy and, worse, you may no longer have the imagination to ward off the reversals. You take every threat