Barbarians at the Gate
Once again I have been pulled out of bed by the inspirations of a book that is grabbing me. I’ve only just begun reading Barbarians at the Gate (buy it at Kalahari.net or Amazon.com) via a recommendation from a corporate advisor regarding a cross-section of what LBO’s (Leveraged Buy-Outs) are about. This book chronicles the momentous events that took place in late 1988 during the $25 billion take-over of RJR Nabisco – the quintessential American company that became a symbol of the greed and power-mongering of the “Roaring Eightiesâ€?.
Already there are a few thoughts I’d like to share with you but I cannot wait until I finish reading the book before I blog them in a book summary/review. So what I’ll attempt to do is blog my journey through the book real-time in the form of comments to this entry.
TmTd.biz (if you do not have a RSS feeder) has a funky new feature whereby you can subscribe via email to comments made to entries – just tick the box below the comments box. As I get pulled out of bed I’ll post new comments which you can receive if you so wish.
Let our journey begin …
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A Silent Gen shows himself as a Gen Xer
The RJR Nabisco fiasco began in 1931 when Ross Johnson, the consummate Barbarian, was born. Johnson, in 1988, prompted the take-over bid on behalf of RJR Nabisco’s management team. It was an outrageous move that stunned the Board, but considering the development of Johson’s approach to business was not surprising. Burrough and Helyar, authors of Barbarians at the Gate, describe Johnson (in my abridged version) …
Johnson’s life was a series of corporate adventures, in which he’d not only gain power for himself but wage war on an old business order. This order was slow and steady, managed by “company menâ€? – executives who worked their way up the ladder and gave one company their all by cautiously preserving and enhancing the company.
Johnson was the consummate “non-company manâ€? – he shredded traditions, jettisoned divisions and roiled management. He was of a breed of non-company men who came to maturity in the ’70s and ’80s.
As a young fan of Generational Theory, the story of Johnson interests me. Of course there are the people who display “cusperâ€? characteristics of adjacent generations, but it is seldom that I come across a person like Johnson: a Silent who could be mistaken for a Gen Xer (at a time when us Gen Xers were only being born!). Alright, Johnson was not the model of business ethics and integrity one desires to follow, but his ideas and approach to business were revolutionary and pre-eminent. Kudos to the man for boldly forging a path for us Xers and for reforming the generational paradigm of kids born in the ’30s.
Johnson spoke Tom Peter’s language!
Tom Peters in his book Re-imagine! (read my review here:http://www.tmtd.biz/2005/07/25/re-imagine-by-tom-peters/) proposes a new way of looking at our working spaces. His language is one that embraces words like destroy/rethink/chaos/revolutionise and wage war.
In his tenure at Standard Brands, Johnson waged war on specialization by reorganizing the company twice a year. Chaotic? Yes! To outsiders, this movement looked like movement for movement’s sake, but Johnson said, “You don’t have a job … you have an assignmentâ€?.
Again this Silent was an undercover Gen Xer: Tom Peters re-imagines the employment contract not as an employee-based agreement, but as a Professional Service Firm (PSF) where each employee becomes their own boss by viewing themselves as ME Inc. and every job as a set of WOW projects. The idea of the PSF is only now taking hold globally, but here we have a pioneer in the form of Johnson who began flattening the grass so that we could one day see the trail.
Perhaps Peters is guilty of plagiarism, for it seems that Johnson said, “If it aint broke, then break it!� first.
No wonder whymost M&A’s fail!
Have you ever seen a relationship, heading towards marriage, that you were sure was doomed to fail. Well, the merger of RJ Reynolds (the conservative tobacco giant) and Nabisco (the greedy cookie gaint) was doomed to fail from the start, and I cannot believe how the top guys did not see it to begin with. I am shocked at how often the future of a company (with thousands of employees and asscoiated families in tow) is decided by one bloke – nevermind the level of boardroom poltics that affect this process as well. This has surely got to be one of the biggest downfalls of capitalism: the space it allows egos to steer the economic process. Here are some examples of how the two cultures failed to marry:
What RJR brought to the table was red-tape: the establishment of ‘task teams’ to investigate the viability of any strategic venture – so much so that a small change to a cookie box required a task team, multiple sign-offs and weeks of delay. The Nabisco guys were used to changing their box’s as the need required – without the delay!
The shortfalls in the company cultures was also evident in how the CEO managed themselves: Wilson (the RJR guy) required that all top exec’s shared their schedules and in his own diary, every minute of his next 3 months was accounted for. Johnson’s (the Nabisco guy) schedule (if it could be called that!) was subject to change by the minute! And so from Nabisco’s side they brought agility.
How did these guys not see these cultural problems when they first began thinkiong of a multi-billion dollar merger?
R.J. Reynolds rode into Winston-Salem (the home of Winston cigarettes) in 1874 and a year later the RJ Reynolds Tobacco Co. was operating. RJ did not have an easy time: along with his business there were 15 competitors selling the same product, sourcing it from the same supplier and selling it at similar prices.
Sound familiar? And this was in 1875!
How did RJ compete in this industry? He distinguished himself through innovation by becoming the first in the one-horse town to make chewing tobacco sweeter.
Perhaps it was easy to innovate in 1875? Perhaps not. Perhaps there was a huge innovation space to be filled and to play in? Perhaps not. But the difference is that it was innovation that made the difference! I wonder about the ability we have in 2005 to innovate. The Ecclesiastical verse comes to mind: There is nothing new under the sun. The innovations I see happenign that distinguish businesses as leaders involve tweaking something that has already been tweaked.
Is innovation about tweaking, or genuinely being innovative?