Vampires in Space

Confession

Before Malcolm and Bob entered this room, we did not know what they were after. We did know every public thing (plus lots of private goodies) there is to know. Every classic trap they had fallen into. Crew plus Morgan plus Heather equals us knowing more about them than they do.

I tapped my lips with my forefinger as I mentally tried to assemble a politically correct way to say what I wanted to say. I think I probably failed, but went with it anyway. "Reframing this proposal. You want to partner on something. Anything. You need revenue growth to take a forty-year flat revenue line, no matter how massive that line might be, and juice it up. You were brought in as a turnaround artist, and you have pushed a lot of the usual buttons to try to grow the top line. Acquisitions. Layoffs. Product and team re-alignments. At the end of all the usual management machinations, the line won't budge. You are at more or less the same revenue line you were at when you started five years ago. The McKinsey Protocol has not worked. Not just because it is garbage either."

"Though it is." Heather inserted. Clearly, she was OK with me not pulling punches here. We may be worried about our business being looked at too closely, such that we took this meeting, but this was the reverse of that. Pointing out why their model is crap shouldn't get them interested in us because we are saying we are like we are because we are not only nothing like them, they do not want to be like us. Our way is good management and low margins.

I landed the next blow. "The next step in that playbook is to break up the company so it can focus on whatever it is Global or some activist investor thinks is its core business."

Bob visibly flinched.

"Your idea now, as your contract with Global comes to a close, is to look outside the box. Literally. Do things the company has never done before. Partner with us, for example. Try to get more business in space. You realize that the Earth market is saturated. That Earth cannot grow any faster than the population does, and the population is not growing for reasons that have nothing to do with you but everything to do with efforts at the global level to not over-strain the planet any further than we already have."

I watched Bob's face as I talked, and realized I was not only on to it, but I knew who told Malcolm the only places left to grow. I went on. "You can't take market share from us, because IE customers are fiercely loyal. We do not pursue them, but when they become an IE customer, we take care of them. You can't beat us at customer retention because our utter lack of interest in maintaining a large profit margin means we can spend resources taking care of customers. Making sure the products not only serve our needs but theirs. You can't go back into the Healthcare industry and get the customers you lost back. They don't trust you anymore. It's like Heather said: Go ahead. Try. We welcome you to get that good. You won't because you were hired to raise your profit. Raise your top and bottom lines. Increase revenues, and hopefully push the margins up a bit too. Keeping a customer like a hospital is a low-margin effort for you. You — that is to say, Global — don't do low margin. Anti-trust and monopoly regulations have never come after us because we make no effort to own a segment of the market. Sometimes, we do own a market. Usually, because we were there first, we invested first, and/or we have the better product and people. Every time someone like you — a turnaround artist who runs the same old playbook: sorry but you know it's true — comes in at Global with a brilliant reorganization plan, you help us. You not only lay off good people who did nothing wrong and did not deserve to lose their jobs, but your best people also start looking elsewhere too. We drain your talent pool not because we went looking or went recruiting but because you shoved them out the door. Once we have them, we spend a long time not only re-training them to be able to work on our stuff but also deprogramming all the expectations they have about their relationship with their employer. Again. We don't sweat margin so we have resources to take care of our people."

I had been unloading on Malcolm with that while watching Bob to see his reactions. That one finally got a rise out of him. "We have hired people from IE too."

"Oh. I know. I know every single person that left under my watch. I know why they left. Some are very Type-A. They think they can do better or go faster someplace else. Many leave to form start-ups but some come to head up various internal efforts you have. Many of them fail. Do you know why they fail at Global? I do."

I was looking at Bob when I asked that, and he answered. "They join to run a new project and come to find out they don't have the support of management, budget, and toolsets they had before. To succeed, they have to try to recreate the old environment in a place that does not support it. Our project timelines and delivery schedules do not allow for the idea of spending time and money re-baselining a toolset before moving forward. They run behind, over time and budget. They are viewed as failures. Internal management does not understand how they succeeded so well at IE to fail so spectacularly at Global. It's not universal, but the trendline is there for those who can see. More importantly for those who listen. Those who succeed at Global adapt to the idea that the project is the project, the timeline is the timeline, and they deliver something. Anything. It may arrive half-baked, but it makes the deadline."

"Exactly. We spend years tooling projects correctly, and all the way up. Project is queen or it would not be something we approved. It's how Global got the reputation a customer should never buy the first version of anything."

I paused and considered each man in turn. "Now I understand the turnaround dynamic. Why you two are the dynamic duo of company salvage. Malcolm goes in as the tough executive who makes all the hard calls. You bring in Bob to read the tea leaves and understand the realities and why things are not working. The question then becomes how you do anything about it. Here again, I think Bob pointed out to Malcolm there is nothing that can be done inside Global. Not in the time you have on your contract. Not as a public company either. Too many masters interested in the bottom line. You, Bob, pointed out the obvious. You can't take share and you can't grow outside your current size. Every time you try to get bigger you end up hurting yourself in the process. You need new markets and new ideas, and so you looked up. You saw the sky and the things we are doing and realized you know nothing about any of that. Other than we are profitable as we care to be, and we own 90% of the off-planet market."

Bob gave me a head tip to concede my read of the situation. Malcolm rotated his head in the opposite direction, but not because he disagreed. "You called it. We are here because we have no place else to go. Bob brought me the numbers years back. I have been fighting the good fight ever since trying to prove him wrong, but I know better. Bob looked at the books and the market and saw the reason we are stuck."

"You are yeast in the fermentor." I said.

"Probably not. Yeast makes beer when they are done." Heather told me.

"Analogy always breaks down, Heather. The yeast all die when they flood the fermentor with Alcohol. When they cannot grow any further. They can't grow, and all they are doing now is killing themselves and their good employees when they try to."

"Analogy accepted. Still. I like beer. I am not sure I would buy anything from Global. Sorry, you two, but that is true. Nothing you make is as good as what we have." Heather said to Malcolm. She, like me, saw that Bob is cut from a different bolt of cloth.

"No. That's true. That is our Hail Mary here. We can't beat you. You can't buy us and we can't buy you, for all kinds of reasons. Anti-trust chief among them but also you are not interested in us and as big as we are, we still could not leverage enough to buy you. Also, being private, you would just say no. Your stock is tightly held. Your stockholders are aligned with your business plans. That left us with trying to figure out how to partner on something. Anything." Malcolm was unusually forthcoming with that confession.