RE: Fw: Back to Serfs and Royalty?

From: Robert J. Bradbury (
Date: Sun Sep 02 2001 - 06:04:42 MDT

Harvey wrote:

> This is exactly what my posting said. Cost-cutting alone is not enough. It
> must be followed by changes of working methodologies.

Harvey, I think you are being a little harsh with regard to the management
of large companies. The larger the company the more inertia you have
and the harder it is to turn-on-a-dime.

Take the recent example of Lucent. Once a great high-tech-company.
One whose managment failed to predict turns in their markets and bet
on the wrong development path. My understanding is that the
market for their primary product, telco switch exchanges, dried
up over a couple of years; and they bet that very-high-bandwidth
optical equipment would be a large market when everyone went
with intermediate-bandwith equipment.

Net result -- no sales and a big bloated manufacturing force.
Are you suggesting that they should have walked into their factories
a year ago and said "Today we are going to make lightbulbs"?
I think not.

Because of the market treatment of those misjudgements, the stock took it
on the nose and then the engineer bleed started because their options were
so far underwater that it made no sense to stay. The management at that
point is looking at having to take desperate measures or lose the guts
of the company.

Management's solution -- lay off workers until your manufacturing
capacity matches your sales and sell off assets until your capital
is sufficiently great that you can weather the storm.

The market looks for certain "signs" that management is doing something.
You can't make clear what your long term development strategy is without
giving the competitiors an edge. It looks to me like announcing layoffs
is one of the few "visible" tools that managers have.

Its quite a bit different from the situation in which you are managing a
private company or a startup where you can get all the shareholders in a
room and explain precisely what is being done.

And for the people who think the President of the U.S. makes $140K,
that's a very old number. As I posted in one of my other notes
its $400K. Thats a small amount given the headaches of the job.
Thought the retirement benefits are pretty good.


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