Chapter 5: The Gladiators

Posted: July 09, 2011 - 09:43:00 pm

Dexter had suffered through having makeup applied, and was waiting in the green room for the show to start. He felt weird wearing makeup, and had to resist the temptation to remove it. It wasn’t easy.

To say that he was nervous would be an understatement. The palms of his hands were sweating and he kept wiping them off on his pants. His stomach flipped each time someone had entered the ‘green room.’ He was convinced that the moment he stepped onto the stage that he would have to go to the bathroom. His four visits to the bathroom while he was waiting, had not produced much in the way of urine.

Ed was much more relaxed about waiting than Dexter was. He tried to tell Dexter a few jokes to ease the tension, but Dexter hadn’t responded to them.

“Dexter, listen to me. You’ll do fine out there. Don’t worry about it,” Ed said.

“I’m really not good at this,” Dexter said with a worried expression on his face.

“Just imagine that it’s a regular business meeting. You’ve sat through enough of those to know how to act,” Ed said.

Thinking back to all of the meetings he had attended, Dexter asked, “You mean that I’m supposed to nod my head like a bobble-headed doll, and agree with every idiotic thing he says?”

Ed laughed. “No. You’re job is to disagree with every idiotic thing he says.”

“That’s a change,” Dexter said.

Finally, the big moment arrived. Dexter and Ed were taken into the studio. They were seated across a desk from Phil Xander. After a final touch-up of their makeup, they were on the air. Phil Xander introduced the two men.

Phil said, “I must say that I’m pleased to be the first to interview the notorious Dexter James.”

“Notorious?” Dexter said.

Phil said, “You’ve got to admit that you’re kind of a wild man.”

“You think I’m a wild man?” Dexter asked getting irritated.

Phil said, “You’ve come out with a lot of controversial stuff over the past year. It’s a real pleasure to finally get you here, where I can ask you some serious questions.”

“Not for much longer,” Dexter muttered.

“What did you say?”

Dexter answered, “You’re not going to be pleased for much longer.”

“Why do you say that?”

“Let me ask this, Mr. Xander,” Dexter said getting a raised eyebrow by the formal address to the host. “I noticed that your program is called the ‘Phil Xander Show.’ Yesterday, you said that having engineers put their names on products was an idiotic idea. Why then did you name your program after yourself, if you consider that to be ... and I quote... ‘the epitome of narcissism?’”

“That’s different. I’m staking my reputation, here,” Phil answered.

Dexter asked, “Don’t you think an engineer should stake his reputation on every product he designs?”

“I guess he should,” Phil said.

Dexter said, “Yesterday, you said that it was stupid.”

“It just hasn’t been done,” Phil said.

Dexter said, “That’s wrong. John Deere did it. Henry Ford did it. Marconi did it. Westinghouse did it. I can go on all day about engineers who put their names on their products.”

Ed piped up, “I put my name on the whole company.”

“I’ll concede that point,” Phil said weakly.

Dexter said, “You also said that customers wouldn’t be served by having coffeemakers that lasted twenty years. Would you like to bet a steak dinner on that?”

“Sure,” Phil said.

Dexter turned to face the camera. He said, “I have a request to make of everyone who has had a coffeemaker fail on them this month, or wants the next coffeemaker they buy to be the last one they ever have to buy. I would appreciate it if you would send an email to the Phil Xander Show during the next commercial break.”

“Don’t suggest that,” Phil said looking horrified.

Ed snickered.

Dexter said, “You also said that a business that produced a product that lasted twenty years wouldn’t stay in business twenty years. I disagree with that. I think it will be an exceptionally stable business.”

Ed interjected, “After an initial flurry of sales, such a business would probably settle down to a consistent sales level every year. It would be a very stable business so long as it kept up its quality.”

“The stockholders expect growth,” Phil said.

“I strongly disagree with that. A nice stable company is exactly the kind of stock that a grandmother wants her retirement money invested in. She doesn’t want a stock that fluctuates every damned day and is liable to lose all of its value overnight. She wants one that produces a consistent return on investment, year after year,” Dexter said.

Ed said, “There are a lot of grandmothers who’ve lost their retirement moneys because of that ‘must grow’ mentality.”

“It’s a well known maxim in business that a company has to grow or it will die,” Phil said.

Dexter said, “Did you know that at one time people thought ice cream caused polio?”

“You’re kidding?”

“Nope. It turns out that there was a strong statistical correlation between sales of ice cream, and outbreaks of polio. Of course, the real reason for the correlation was because polio is a summer-time disease, and ice cream is a summer-time treat,” Dexter said.

“We’re not talking polio here,” Phil said.

Dexter said, “Perhaps the reason that so many companies have to grow or die isn’t a law of business, but is a consequence of introducing management structures and practices that sap a stable company of its stability.

“How many companies bloat their management staff once they get to a certain level of success? How many companies start emphasizing process over productivity? How many turn to the bottom line for every decision rather than placing emphasis on a product? How many companies have executives who suck every penny of profit out of the company?

“I think ... I might be wrong, though I doubt that I am ... that there are a lot of reasons why a company might have to grow or die.

“For one, I think that management fails to remember what made the company successful. I think they forget about customer need, customer service, and quality; in order to pursue a profit.

“I suggest that our business academicians might be better served to investigate those reasons, rather than prescribing a bandage that masks the true issues.”

“Everyone knows that a business has to grow or die,” Phil said.

Dexter said, “‘Everyone knew’ that stress caused ulcers. Now we know that ulcers are caused by bacteria. ‘Everyone knew’ the earth was flat. Now we know that it isn’t. Don’t give me that ‘everyone knows’ bullshit.”

Ed said, “We went through some growing pains in my company. There was a lot of room for expansion in the early days. Then we reached a point where the market was saturated. I had a choice of trying to grow by expanding my product line or accepting that my business was as large as it was going to get.

“I looked around at my options and found that I didn’t see any real business areas that made sense for me to expand into. I chose to accept that I had my share of the market, and that my job was to maintain that share. Much to my surprise, many of the companies in the injection molding business started to fail. My market share grew with each failure of a competitor.

“Now you might think that it was because the market was shrinking, but that wasn’t the case. The market was nearly stable, and growing only slowly. You see, a lot of my competitors chose to diversify, but failed in their expansion plans and went out of business. I focused on my maintaining my core business, and I survived.

“It took three idiots less than five years to drive a stable company to a point where it was nearly out of business. They bought into that whole ‘expand or die’ nonsense.

“For a couple of years they were able to play accounting games that made it look like the company was growing. What they were really doing, was lining their pockets, rather than serving as caretakers. They put into place idiotic policies ‘to save money’. They cost the company far more money than could ever be saved. The paper bill for all of the extra paperwork ate up a full ten percent of the profits.

“Dexter is right about there being reasons that some companies have to grow in order to survive. Of course, I think the biggest reason a lot of business executives feel that way, is out of greed. You can’t get a forty million dollar bonus, if your company only does forty million dollars worth of business. It’s got to grow until they can grab the big bucks. If it falls apart later, who cares? They got their money out of it.”

Phil said, “I disagree. If a small company doesn’t grow quickly enough, the large companies will put it out of business faster than you can blink. If they can’t do that, then they’ll buy it. The concerns of a large company have to change from the small company mindset in order for it to survive.

“There are a lot of factors that dictate certain business practices. Even the laws change once you hit certain levels of employment. Your arguments suggest a certain naiveté when it comes to the need for growth.”

Dexter replied, “I keep having this image of a giant bloated elephant, being swarmed by army ants. Sure, the elephant out masses any single army ant, but the number of ants overwhelms the elephant. I think a hundred small businesses, each of which is taking a small chunk out of a big business, will eventually put that big business, out of business!

“It starts with coffeemakers, then toasters, and can openers, electric griddles, blenders, and who knows what else.

“Each little company takes a little bite out of the big guy. At first, the big guy doesn’t feel a thing. Then there will be a little concern that sales are down a couple of percent, across the board. After a while, the company that once had a thirty percent market share will discover that it has a three percent market share.”

Ed said, “It gets even better than that. For the big company, it will look like the market is shrinking, because everyone who buys the well made coffee pot today, won’t be buying one next year or the year after that.”

“You’ve got a really good point,” Dexter said looking over at Ed.

“I think so,” Ed said with a grin.

Phil said, “Just think of how many people you’ll be putting out of work.”

“Just think of all the other things I’ll be able to buy because I’m not spending my money on new coffeemakers every year. I might get a new lamp or a set of golf clubs,” Dexter said. “I’m sure that those other sales will employ people.”

Phil said, “You know that those companies will start out like you say, but they’ll discover that it doesn’t work. The smart ones will grow and the dumb ones will go out of business. Before you know it, they’ll be big companies themselves and nothing will have changed.”

“You might be right about that,” Dexter said. “It may be inevitable that the greedy and incompetent will rise to the top of a company and then suck it dry, but I think there are a lot of smart businessmen out there who don’t feel that way.”

Phil said, “You make it sound like it’s a trivial matter to create a product that lasts a long time. We all know that it isn’t easy, and it isn’t cheap.”

Dexter looked over at Phil with an expression suggesting that he was looking at something disgusting, on the bottom of his shoe.

He said, “I know what engineers have been allowed to do, and I know what engineers are capable of doing. The difference between those two, is like the difference between night and day. American engineers can create products that will blow your mind in terms of styling, quality, and functionality.”

“I think that is a myth,” Phil said. “Everyone knows that American workers are productive, but the fact of the matter is, they are expensive. There’s no way that they can be productive enough to offset their high cost.”

“So you think the American Worker is the enemy of profits?” Dexter asked.

“To a certain extent, that’s true,” Phil said.

Ed said, “That’s wrong. My company grew because of good dedicated workers. These are folks who occasionally stayed a little late to fix some problem. These are folks who suggested ways to improve our business.

“You might get a guy on the production floor who makes a suggestion that saves you all of the money you’ll ever pay him, for the rest of the time he stays at the company. Effectively, he becomes free labor, because of that one suggestion.

“You don’t get that with slave labor. If you have slaves making your goods, do you know what you get? You get garbage made by slaves.”

“It doesn’t change the fact that American workers are overpaid,” Phil said.

“I’ll tell you something! You don’t know what the hell you’re saying! You can take away a million dollar bonus from one executive, and give a thousand employees a thousand dollar a year raise. Knock off ten million dollars of bonus money, and you can give ten thousand employees a thousand dollar raise,” Dexter said.

Phil said, “Those executives earn those bonuses.”

Now it was Ed’s turn to give Phil a dirty look.

He said, “The largest bonus I ever gave myself, as the head of my company, was fifty thousand dollars ... and that was the year that I retired. That same year, I gave the janitor a five hundred dollar Christmas bonus. That’s a reasonable difference between the guy at the bottom and the guy at the top.