NEED MORE IMPACT FROM YOUR NEW PRODUCTS?
PART I – SEISMIC SHIFT
Maggie Edwards sat in stunned silence with the rest of the shell-shocked executive team. It was 4:30 on a Friday afternoon and they were scattered around a conference table in the large, modern stainless and glass office of Doug Stanton, President and CEO of Barrister Industries—the office where J. Randolph Barrister III, the company’s third generation chairman and largest shareholder, had just dropped the bomb.
“Thank you all for coming, and let me get right to the point. Barrister Industries has just signed a letter of intent to sell the TerraGrafix division, your division, to a leading competitor. We will be announcing the agreement Monday and, barring unforeseen problems, we intend to close the sale to Globalgraf 30 days from now.”
Looking around the conference table at the rest of the executives, Maggie saw that everyone else had the same look of disbelief. Her mind was racing, so much so that she barely heard anything else he said. What’s going to happen to everyone I know? Why would they let go of one of the most profitable companies in the Barrister portfolio? How did they manage to keep this quiet? On second reflection, the division controller didn’t seem surprised at all and was instead looking down at his lap. He had probably been carrying this burden for some time, providing the necessary financial information required for due diligence.
The CEO took over from there. “Thanks, Randy. As you already know, this has been a difficult year for Barrister Industries. Several of our core divisions were heavily dependent on automotive, and I’m afraid that the recent downturn has been an enormous drain on cash flow.” Shaking his head with a genuine look of humility, Doug said, “Far worse than I could have ever expected.”
“While TerraGrafix has been a gem in the Barrister portfolio, I’m sorry to say that we are being forced to take this step to keep the entire company solvent. For the greater good, you might say–as little solace as that might be to all of you.”
It was all becoming clear now. Randy Barrister had been determined to take the company to a higher level than previous generations had ever dreamed. Initially, his acquisition strategy had gone well, but several underperforming acquisitions and mounting debt obligations had begun to unravel his vision. Now, with the economic slowdown, those obligations had become stifling. TerraGrafix was one of the only divisions performing well enough to provide the cash infusion needed. Barrister was selling off one of its prize cows to save the rest of the farm.
“The leadership at Globalgraf is committed to retaining as much of the staff as possible. Therefore, we will be setting up interviews in the coming weeks so that their integration team can get to know your people and their capabilities. While I can’t say for sure what that means for all of you as part of the executive team, I can reassure you that we have set aside a generous reserve for transitional retention and severance.”
There it was. The folks in this room weren’t born yesterday. They knew that many of their colleagues around the table and some of the people who worked for them would become ‘synergies,’ a euphemism the merger and acquisition trade used for firing people in redundant job positions.
After all, Globalgraf wouldn’t need another Manufacturing VP. No, there would be some sort of interim agreement where Maggie would help to transition products to the new facility, but eventually, she would be out of a job—with a severance package, but still out of a job. That was something Maggie hadn’t faced since she had graduated from engineering school, almost 20 years ago.
During the next 20 minutes, Doug went on to explain what would be happening in the next few weeks and how Globalgraf wanted to handle employee and customer communications. After taking questions, he adjourned the meeting. While the rest of the battered executive team exited the room, he pulled Maggie aside. “Can I ask you to stay for a few minutes longer?”
“Umm…Sure, Doug,” she replied. What could this be about?
As the last of the group filed out, Maggie stood in the small reception area outside of Stanton’s office, staring at a display of products from each of the divisions. Several minutes later, Randy Barrister emerged from Doug’s office, nodded uncomfortably in Maggie’s direction, and without making any eye contact, hurried down the hallway.
Doug stepped out to welcome her. “Come on in, Maggie.” Then, closing the door, he gestured toward two chairs at the corner of the large conference table. “Please, take a seat,” he said. After they were seated, he continued, “Maggie, first off, let me say that I feel just terrible about what we’ve had to do. I want you to know that we really appreciate all you’ve done for us over the years at TerraGrafix.”
Well, you certainly have an odd way of showing it, she felt like saying, but just smiled.
“In a growth industry, you’ve done an amazing job of delivering increased capacity year in and year out, as well as managing the addition of new capacity.”
Normally, she might have been flattered, but today was anything but normal. Where is he heading with this?
“As I hope you can appreciate,” he said, “I can’t get in the middle of things right now between you and Globalgraf, but I know you’re sharp enough to have already figured out that they may not need another head of manufacturing.”
She nodded. So my speculation wasn’t too far off.
“Well, their leadership is pretty sharp, too, so I expect that they’ll try to find some kind of position for you. But if they don’t have an opportunity that interests you, we should talk.”
“What do you have in mind?”
“Direct and to the point, Maggie, that’s part of what I’ve always respected about you,” he smiled. “While I’m afraid I don’t have a manufacturing leadership role that I could offer you, I’m going to need someone that could lead a product development push. I can’t really say too much more. Just promise me that you’ll come and see me if they don’t have a role for you after your transition obligations wind down.”
Unsure of what to think, but knowing that it was best to leave all her options open, Maggie agreed to stay in touch. She made her way out of the headquarters building and got into her car for the short commute home.
What was Doug smoking? she wondered as she accelerated out of the parking garage. I’m a manufacturing executive, not a PhD. What in the world do I know about creating new products? Besides, he’d just sold the division that she had spent years helping to build. Why should she want to help him? She shook her head, No, it’s not right to think that way. Doug was simply doing what he had to do in order to protect the company and save thousands of jobs in the other divisions.
Realizing she’d been driving far too aggressively, she took a deep breath to calm herself. As she entered the historic district where she and her family had recently purchased and begun restoring a rambling, old turn-of-the-century three story, her thoughts turned to how she was going to break the news to them…
The sale of TerraGrafix stormed ahead faster than anyone expected. In her usual style, Maggie was so busy and involved in ensuring a successful transition that she had nearly forgotten the CEO’s invitation to come back and talk with him. But as Doug Stanton had predicted, the Globalgraf team was sharp. They recognized Maggie’s talent and energy, and two weeks before the end of the transition period, George Malone met with her to offer her a new position.
“Maggie, Globalgraf can use someone like you, but I understand that you’re not interested in relocating to our headquarters.” Maggie swallowed, then nodded in agreement.
“Unfortunately, that means we can’t offer you a position heading up manufacturing. But, we still think that you can play a key role in our organization.” Maggie leaned forward, showing her interest.
“Globalgraf needs someone who can ensure that each plant learns from and applies industry standard best practices. We think you’d be a perfect fit.” He smiled warmly as Maggie waited silently.
“The position would be at your current level and would allow you to stay on without relocating. Of course, there would be a little bit of travel. You’d have to visit the various plant locations approximately three weeks out of every month.”
Three weeks is a little travel? I’d hate to hear what you think is a lot of travel, she almost groaned.
“So tell me, Maggie. What do you think?”
Searching for a way to buy more time she said, “It’s a very kind offer, George, and sounds like quite an interesting role. Of course, it would be a big change, so I’m sure you’ll understand that I have to talk it over with my family.”
Looking a little surprised, George said, “Oh yes, please take some time to discuss it at home.”
After they had said their goodbyes, Maggie sat down and reflected quietly in her office. This isn’t going to go over very well at home…
By the time Maggie helped her twin nine-year-olds, Luke and Leo, finish their math homework, it was time to send them to bed. With the twins settled, she stopped and said goodnight to her twelve-year-old daughter, who was finishing homework in her room while simultaneously engaging in a rapid-fire texting conversation. Sophia had always been a cute kid, with the same auburn hair and fair complexion as her mother and grandfather. But, she also had her father’s deep blue eyes, and Maggie realized what a striking young woman she was becoming.
“Don’t stay up too late, Sophia,” she said.
Of course, that elicited the slightest of eye rolls, as if to say, “Mom, I’m not a little girl anymore.” But, “Okay, Mom,” was the dutiful reply. She was getting to that difficult age, but she was still a good kid.
Finally, with everyone tucked in safely for the night, Maggie plopped into bed next to her husband, Jeff. Holding a glass of wine, she let out the faintest of sighs.
“Okay, Maggs, out with it. You’ve been distracted all night. What’s up?”
She smiled at how well he could read her. “Do you remember that conversation we had about my meeting with Doug Stanton at Barrister?”
He chuckled. “How could I forget? Hi. Your division has been sold. Don’t let the door hit you on the way out.” It was only natural that Jeff wanted to defend his wife. As her husband, he wasn’t exactly going to be sympathetic to Barrister Industries’ situation.
“Jeff, it wasn’t quite like that. Anyway, I’m referring to the part where he said that he was sure Globalgraf would try to create a role for me.”
“But Maggie, we already agreed that we’re not relocating. I have tenure in the school district, and with Sophia in middle school…”
“No disagreement,” she interrupted, putting her hands up in mock surrender. “Actually, they’ve offered me a challenging new position that allows me to stay here in town.”
“But…?” he coaxed, as if he was reading her mind.
“But it would include some travel. Well, actually lots of travel—as much as three weeks a month.”
“Is that really what you want?”
“Well, I really like the idea of helping all the different locations improve, and we do have a lot of expenses. But, I just can’t see how a life jetting back and forth between plant locations would be good for us.”
Relief seemed to spread across Jeff’s face for a brief moment before he asked, “What about your other options? Couldn’t you talk to some of other companies here in town?”
“Jeff, with the economy the way it is, most manufacturers are pulling back. Plus, when I step back and look at it, anything I did find would probably just be more of the same thing that I’ve been doing for years now.”
“Maybe you could take the Globalgraf position, just to stay busy while you look for something else.”
“Yeah, but you know me. I’m worried I’d get too busy and wouldn’t spend enough time looking outside. Before you know it, we’d be a year into living apart.”
“Yeah, I’ve seen that enough times before,” he smiled. “Maybe you could just take some time off and supervise the contractors here at the house.”
“That would be great, but you know what this is costing.” They had maxed out their credit line with a mortgage on the house and then a second for the authentic restoration they had always dreamed of doing. “Besides, at the least, I’d like to be able to send our kids to junior college,” she laughed, remembering the commitment they’d made long ago to make sure the kids got a top quality education.
“I’m sure the contractors will be relieved to hear that,” he teased.
“Hey! Take that back,” she said, punctuating the request with an elbow to his ribs.
Okay, okay… I know you’ll think of something, Maggs.”
And with that, she snuggled into his chest to think about her options.
The next morning, Maggie woke early, resigning herself to the fact that there was far too much weighing on her mind to sleep. Jeff didn’t stir as she put on her workout gear, but their rescue American Pitbull Terrier, Sweetie, opened up one eye and yawned as if to say, “Really, it’s not even light yet.”
After making her way down to the kitchen, her eyes took in the room and she realized for at least the hundredth time how much she liked the way it had turned out. While their goal was to do an authentic restoration of the old house, the kitchen was one of the first rooms they’d tackled, deciding they would detour from their plan by adding all of the modern conveniences, including a large center island. The result was a warm, cheery décor, which had turned into an inviting family hub.
Unfortunately, it was too early for the automatic coffee maker, so Maggie pulled on her running shoes and stepped outside with Sweetie in tow. When the now fully awake dog was finished with her business and had done a quick squirrel patrol, they took off on their run. She really enjoyed running in the cool morning air, with the muscular dog loping along by her side.
Forty minutes later as they made their way back up the driveway, Maggie realized that she didn’t remember any part of the run. That’s what she had hoped for—that focused feeling she got from running that automatically allowed her mind to go off and process things on its own.
As she stepped inside the house, she inhaled the aroma of freshly brewed coffee. The exhausted dog, recognizing that the smell wasn’t food, quickly laid down for a nap on the kitchen rug. Maggie tucked the morning newspaper under her arm and poured a cup of coffee in her favorite mug. It was the one Sophia had made in a craft class at summer camp back before her parents had become a point of embarrassment. If what her friends had all told her about adolescence was true, the next few years would feel like they were as long as the first twelve.
Maggie hopped onto the stool at the island counter. As she sipped the intensely dark brew, she was reminded of childhood: of coming downstairs early to find her father having dry toast and coffee before heading to his shift at the mill. As a steelworker, he’d managed to give them a good life, but it hadn’t been easy. As American industry struggled, he vowed his children would get the university education he didn’t have. Joseph Sullivan had beamed when his daughter Maggie graduated near the top of her class in engineering school and then again when she’d gotten her masters in business. He was especially proud because she had insisted on working at an assembly plant to help pay for the first two years of undergraduate school and had become a paid co-op student after that. He had died two years ago, and as she sat in the kitchen she still needed to pay for, she wondered what he would have thought about her situation.
As she sipped her coffee, Maggie finally realized that she had been ignoring the offer that Doug had made. “I guess it wouldn’t do any harm to talk,” she said aloud. Sweetie opened an eye to assess whether the remark was directed at her and, of course, whether it might be accompanied by food. As Maggie opened up the paper, she resolved to share Stanton’s offer of sorts with Jeff when he came downstairs. She knew he’d still be skeptical about Barrister Industries. But she also knew he’d agree that it couldn’t hurt to talk. It was time to hear what Doug had to offer.
“Thanks for fitting me into your busy schedule, Doug,” said Maggie as she took a seat again near the corner of the large conference table.
“Maggie, I’d almost given up hope that you would call. Can I offer you some coffee?” he asked, gesturing to the tray that his secretary brought in before Maggie arrived.
“Please. That would be great.”
After pouring two cups, he smiled and continued. “I thought that Globalgraf might have come to their senses and made you an offer that was too good to refuse.”
She wasn’t quite sure what to think about Doug, but she launched in anyway. “They did, but…honestly, I’ve already told them that I’m not going to take it. There was just too much travel involved.”
“I’m sure they’re disappointed,” he said with sincerity mixed with a tinge of satisfaction. “Up until now, I couldn’t say much because I had an obligation to let Globalgraf make you an offer first. But, it would seem that’s behind us now. Maggie, the reason I wanted to talk is that I have a real product development mess in the Dynamic Fluid Technologies division.”
With the sale of TerraGrafix, Dynamic Fluid Technologies was the second largest division of Barrister Industries. DFT’s core business was products for water treatment and filtration, ranging from small home filtration units all the way up to large municipal and industrial treatment and measurement systems.
“I need someone to help get new products moving again.” “Okay…” Maggie wasn’t sure where Doug was heading. She certainly didn’t have any experience in product development.
“Maggie, I think you’d be a perfect fit, and I’d like to offer you the position of Executive Vice-President and General Manager for the DFT division with a nice bump in salary and the next level in bonus, as well. Roger Huntley, the current VP and GM, is being moved to the position of business development where he will report to me.”
Maggie hadn’t really known what to expect today and had thought they might just end up kicking around some possibilities. She certainly hadn’t expected this.
“How’s Roger going to respond?”
“He’s had a year to act, Maggie, and frankly, his only response has been to crack the whip and place blame. We both know that doesn’t work.”
Raising his hand, he stopped her. “You’re going to tell me that you don’t have any experience with new products. I know that already, but I’m not concerned. I’m looking for a fresh perspective. I know you offer that. Not only that, but you know the ropes at Barrister. Most importantly, you have a track record that demonstrates your innate ability to improve processes.”
“But product development is more of an art, isn’t it?”
“At least that’s what the folks around here are always telling me,” said Doug. “Frankly, though, I’m sick and tired of hearing that we can’t ask for more—that increasing our organic growth and getting more out of our new products is going to require increasing our investment. At the other end of the spectrum, there are those on the leadership team who think it’s hopeless and would like to slash R&D spending or outsource it completely.”
Her radar went up. “You’re not asking me to swing the hatchet, I hope! That’s not what I’m about.”
“Easy there, Maggie…Again, I respect your directness, I really do, but that’s not at all what I was thinking,” Doug said, quickly putting her at ease. “No, there are two contradictory assumptions here. One is that we need to cut R&D costs to be more profitable. The other is that we need to get more out of our R&D investment. I want to see what we can do to prove the second one.”
Maggie’s curiosity picked up, “Well what kind of problems are you seeing?”
“Honestly, I’m not thrilled with the new product growth in any of our divisions, but the delays at DFT have become unacceptable,” he grimaced. “Not a single project is on time, every program is over budget, and less than half of their projects make it to market. And those that do, well they rarely meet their sales projections.”
“Doug, this sounds like quite a challenging opportunity, and I certainly appreciate the vote of confidence, as well as the increase. But initially, wouldn’t it be a better idea to make this a VP position?” It sounded like there were enough challenges without raising expectations and creating tension with Roger. Maggie might have an ego, but it was fed by accomplishment, not by titles or organizational power.
“No, Maggie, I want there to be no question. You’re here to make some changes, and you’ll have my full backing.”
For the rest of the hour, they sorted out the details. As they wrapped up, Maggie asked what J. Randolph Barrister III thought about the situation. “I have the feeling Randy might not be as gung ho as you are on this move.”
“You don’t miss much, do you?” he said. “Since you asked, I’ll be straight with you. Randy isn’t a supporter of this change, and I already told you there are members of his team pushing to cut heads. He thinks Dynamic is in a mature market and may not be able to recoup its R&D investment. He’s willing to let me try this, but I can’t guarantee you that he won’t pull the plug if he doesn’t see improvements soon.”
“Well, I appreciate your candor,” she responded, not sure that she knew what she was getting herself into. But, after a moment, she looked him in the eye, offered her handshake and said, “Alright, Doug, I’ll do it. I’m still not sure I know anything about new products, but I’ll give it my best.”
“I’m counting on it,” said Doug as he walked her to the door.
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