No. of Recommendations: 32
What do you think?
I think the number of people who started a business or ran it successfully for long periods of time - decades at least - had a better handle on success than latter day CEO’s who come in and demand cost cuts in an effort to save themselves rich.
Nardelli came in to Home Depot and cut costs left and right: less inventory, cheaper help in the aisles, and so on - almost wrecked the joint before he was cashiered. A couple of Welch devotees have crippled Boeing by trying to do the same thing in so many ways. (Luckily Nardelli landed at Chrysler, which now makes, uh, a minivan. Yep, that’s the entire product line. Probably doesn’t cost much to run it, tho, so that’s good, right?)
I am long retired from broadcasting, most of my time was spent in radio, with a little bit in television. Radio was, at one time, run by entrepreneurs who did wild and nutty things. Expensive jocks, crazy contests, and behind the scenes music research and costly programming. When the FCC deregulated and said corporations could own as much as they wanted the owners got out and the mezzanine guys came in and tried to “economize” and cratered the industry. We built Westinghouse/CBS Radio, and later HGTV (I was a bit player there) into gigantic businesses; they’re now being penny pinched into submission.
I’m not at all against watching costs, even watching them carefully. Sam Walton did it and was legendary for it, yet after he left they started squeezing the pennies dry until the company had multiple bad years in a row, with the excuse “We can’t get the product on the shelves.” Save a bunch of minimum wage box openers, though. (Luckily WalMart had such momentum that it could ride over that hump. Some businesses aren’t so lucky.)
There are exceptions both ways, of course, and maybe I’m giving a bad rap to Nardelli and company (no, I’m really not) but I am always skeptical when people who don’t know how a business runs decide it can do with 20% less just because. Maybe they’re right, but iff’n you want to bet I’d give even money that more often than not, they’re not.
