April 7, 2009 – Why Big Corporations Don’t Make Sense – Johnson Controls

The day started off where the previous one left off.  Scotch sent an email asking for information that he had already been provided.  I cut and pasted it into a new document, renamed it so I could track what went out when, and sent it to him.  He wanted to know severance terms and project assignments.  We agreed to talk at 2pm.  At 2pm it was again a rather short call.  Scotch asked if I had defined what an exchange of severance meant to my staff.  I told him they understood that this buys time, but that the intent is to divest Radiance.  If Radiance became self supporting again, then that would buy time, but that’s all. There would be no reprieve where Radiance remained a part of Purple. I also explained that once we have fully agreed to the time frame Gray will allow, that Radiance staff must all approve the agreement before it becomes official.  I ensured that the document I provided to Scotch indicating what Radiance staff would exchange was put together based upon prior discussions and was sound.  We’ve had three internal conferences to discuss this situation and I have specifically asked each person what they are willing to do.  Scott suggested that he was going to look at the numbers one last time and get back to me in the morning.

Instead of waiting on Scotch, I took the ball and moved it downfield by producing a 1/3 page document entitled “Radiance April 2009 – June 2009 Operating Plan”. It simply listed who would continue, one layoff, monthly budget amount, expected revenues, monetary value of severances and retention bonuses given up.  That was all.  I had a great economy of words – directly to the point.  What it did not include was any references to what-ifs, providing maximum wiggle room for whoever shall interpret it at a later date. What-ifs could have been missing our revenue target within a percentage or during a timeframe.  Instead, I pushed for a broad stroke of 3 months to make or break it,  even if it came down to the last day and some heroic effort to cross the finish line.  Of course that would skew the numbers making shutdown in April the most economical outcome, however, I was not going to give that fight up easily.  We had two out of the last three months with reasonable although insufficient revenue in this horrific economy. With spring and summer coming, our customers’ spending had always been healthier in spring than at any other time of the year, and I was focused on getting us through that period to give the firm a fighting chance.

With the current situation, one might think that all hands on deck and desperate measures were required. However, past cultural norms at Radiance, that were counter to our situational needs, arose once again.  A potential client agreed to a conference call during Ed’s one day off that he was wanting to take (he had reduced his vacation from one week two a couple days for a client, then to one day).  Now I really don’t mind people taking vacation, however, during this dire time I would expect people to be ultra responsive to potential clients. Taking 30 minutes out of a vacation day to talk to a potential client would seem like a minor inconvenience - if an inconvenience at all.  I just did not understand this rigidity towards time off, when, as a company, we were extremely flexible in allowing time off whenever and many times not even counting vacation days for afternoons taken to pick up children, run necessary errands, etc.  That was just another reason why when we hired new staff we required the “hell bent to succeed” mantra to be fully embraced.  That meant no excuses, pedal to the metal, 24/7, and holding people accountable for results.  Unfortunately, these driven to succeed mantras were mostly all foreign concepts to this coddled group, even our new hires, that were used to corporate nose wiping.

On the marketing and sales front we continued to be led through the depths of Johnson Controls long approval process. I told Chanel I needed no reminding of why I would never make it in a big corporation. I demand swift action, authority, and accountability at all levels. I could not believe that we were in the fifth month of trying to get Johnson Controls to approve two low level staff replacements (staff augmentation). They had likely spent more than half the $80,000 in the contract setting up meetings, justifying why this was necessary, and talking about the subject. Not to mention that the money we could have saved them on their projects, or revenues they could have earned from their clients were continuing to be pushed out by bureaucratic processes. This just continued to reinforce my belief that small firms are better for the economy because people actually have to perform some value adding function – whereas at large firms most people are there to support the monster and actually produce nothing that adds value to this planet.

Monday April 6, 2009 – Turning the Tables on Purple

Scotch came back from his day long vacation and we were supposed to talk about the “plan” again.  However, as I had learned, numbers and evaluation mean little.  Scotch had no feedback to offer on the information that was presented to him and he was not prepared to work on it right then.  So I reiterated matter of fact that remaining open via an exchange of severance and retention bonuses to buy 3 months on a reduced operating budget was the most economically justified approach.  Even though it might have seemed more prudent to close immediately, the numbers did not suggest this.  Besides, we still had active projects and could use the time to turn any remaining lemons into lemonade.  I assured him that I had beaten the numbers from every direction and that our staff was on board to give up something to get the extension.  He said he would send a couple questions to clarify a few issues.  I knew he was busy with other Purple matters, so I suggested we talk again tomorrow.

Instead of ending the conversation, Scotch changed tack and spoke about the Mukesh case. Mukesh was still employed by Dewey, Cheatham, and Howe, but DCH was not going to help him.  Scotch said Mukesh was perturbed by this, but mostly just wanted Scotch to make the lawsuit go away.  From the conversation with Mukesh, Scotch said none of the one of the “Paresh’s gone rogue” language came through into the conversation.  I suggested that instead of Mukesh helping our case if he turned on DCH and showed us where the bodies were located, it might be better to just continue to pursue him personally, since Mukesh was a SIGNIFICANT beneficiary of the earnout agreement with Purple.  I saw that pile of money was very direct and easy to recover from his sound financial state. 

After Scotch, my call with Jason was in just 30 minutes.  When we finally connected, the call went like this.  Yes, I’ve spoken with Scotch and we agreed that exchanges on severance and a brief time extension are the most economically justified approach.  Scotch is busy today but we will talk tomorrow and have a plan finalized by the end of the day tomorrow.  Jason then suggested that I not participate in the monthly managers conference call (I thought, hmm, will I be a major topic, or is he trying to shield me from something? Then I thought, thank God I don’t have to waste another three hours being bored by the talking head.)   Then Jason said, yep, sure, thanks, gotta go, bye.

In our Radiance sales call, we discussed the couple of project leads that we came across that were applicable to Purple.  I suggested to our team that in the past Radiance never received any credit for bringing these projects. I decided that we would instead take the Purple tactic of cutting the other firm out, and Radiance would maximize our involvement by inserting ourselves into the projects instead of turning over the leads to Purple.  To do this, I asked Chanel to produce a capital projects marketing piece and I – based upon my experience running these types of projects – would play intermediary and keep Purple out of our customer’s wheelhouse until Radiance had performed whatever work we could get paid for.  Otherwise, it could easily become the same old song and dance where Purple shoves Radiance aside because the big dollars are in construction not in engineering.

Saturday April 4, 2009 – Bringing Townes Closer and Trying to not Get Burned

Ed emailed me asking if I had time today.  Since when was I ever off the clock? Anyway, his first idea was to cut everyone’s salary to a maximum of $150k to match mine.  He said that was the fairest way…it also meant he took a small cut whereas Rod, who made the most in our firm, took a significant cut.  I agreed that it might make sense, but we were in a very precarious position and I thought de-motivating anyone, when we could have 3 more months to prove this out, was asking for trouble.  So I hesitated on this even though I thought it was a possible way to make the numbers work temporarily.  But was this penny wise pound foolish? Perhaps.  At the end of three months, I needed to have a dedicated crew of people that would follow me wherever we needed to go.  I didn’t need to find myself back in a situation where we were carrying dead weight because people were de-motivated.

The other idea Ed had was a good one.  It would guarantee our landlord that our parent would payout the lease if we went under, if he renegotiated a good rate for the last two years. 

Townes was back in the picture again and I gave him way too much information about Jason’s emotional state when it came to Radiance.  After this weekend I was also burned about the options available and now it was simply a matter of finding a way to transition the firm as quickly as possible – and keep mine and Chanel’s severances intact since we knew we would not make the transition into the next phase of the company.  I explained to Townes that our billings were half our burn rate the last three months and we could get some concessions from staff, but only if their downside risk (no job and no severance) was covered somehow.  I doubt any purchaser wanted to cover the severances.  I informed Townes that we had another smaller investor that might provide some cashflow, but only cashflow and not enough to buy the firm or cover severances.