Customer Reviews

Mean Business: How I Save Bad Companies and Make Good Companies Great

5 star:		(12)
4 star:		(7)
3 star:		(1)
2 star:		(3)
1 star:		(15)

 

 

I read selective chapters of this book in advising a student's translation project. I'm not an expert in the business field but I found this book (at least the chapters I read) filled with over-simplified views on business activities.

Dunlap was laureated as the "Company turnaround specialist" by admirers. He described his experience of saving companies from bankrupting and making their stock prices climb. Here's my few thoughts about the ideas preached in this book:

1) Dunlap's ideas are nothing original. For example, he repeatedly emphasize in the book that the vital method of running a business is to "cut unnecessary cost" and "maximize efficiency" of the management team. One can find "insights" like these in any college business management textbook. Members of the former management team would look dumb if the their total efforts and wisdom added together didn't outweigh Dunlap's. Is it possible?

2) People are considered nothing more than "human resources" (resources basically, just happened to be human) utilized by the firm in profit-generation. That's Tenet One in Capitalist Management Ideology and I don't wanna challenge its moral basis. "Driving people to achieve their best through pushing and rewarding" is no discovery of New Continent to any CEO (or college kid). I was surprised when I read Dunlap, filled with self-complacency, described how he acted according to the above "insights" in carrying out "corporate resuscitation". But then, what couldn't be done if people are not treated as distinct humans but corporate consumables? In the eyes of people like Dunlap (people in sympathy with his views are everywhere), stock price or accumulation of capital rather than people in the first place are viewed as the primary goals. I beg to differ with this mentality.

3) The idea of Dunlap, whether flattered by the superficial media or explicitly self-boosting, as the savior of failing companies is strongly in doubt. The climbing up of a company's stock price after Dunlap took charge might not be simply the result of his "insightful leadership". Stock price is a multiple-factors controlled variable. It could reflect the actual value or the "perceived" value of a company. The latter could be hugely influential. Dunlap has become a brand-name, a commodity in itself. The association of a company with the brand-name would affect the expectations of speculators, and might boost its stock price. This phenomenon is not restricted in business. Any hype concerning celebrity, advertising or fake-medicine behaves similarly.

The public needs a hero and they make one for themselves, which makes failure easier to explain and more palatable. Mechanism of Hype production.

Save your time for things more meaningful. Life is too brief for wasting on books and ideas like that. Not recommended. I would rate it zero star if I can.

Self-serving, self promotional pulp fiction. It should have its name changed to "My Resume".

For a more balanced view read "Chainsaw" by John A Byrne.

I read this book when it first came out in hardcover, and was very impressed by Dunlap's beliefs and methods. Now that the smoke has cleared with Dunlap's fiasco at Sunbeam and the recent biography "Chainsaw", I find this book to be fairly shabby. For one thing, Dunlap only seemed to be concerned with the price of the stock, rather than the rate of return on the investment. He says that one should not cut jobs just to increase the share price, yet he boasted about improving the share price (which at Sunbeam, crashed after he was sacked). A share price should reflect the profit which a company makes, not by what type of actions the chairman makes. He sold Scott to Kimberly Clark for a fairly hefty sum, but now that buyout seems to have less value than originally anticipated. Rather than building up what's best in a corporation, he seems to cut them down to size (which speculatively increases their value) and sell them off while the going's good. Good value for him, provded that he sells off his shares, but for the long term shareholders, it's a rip off. Second, I admire the idea of corporations streamlining the management process, and thowing away the corporate toys. He feels that executives should not be excessively paid, and i admire the idea of executives being paid in stock, having to buy stock out of their own pocket, and accepting term limits and conflict of interest rules. However, according to "Chainsaw" he seemed to have many of the perks (like a bodyguard and room for his dogs at a hotel) which he claims an executive should be denied. He feels that executives should not be excessively paid, and I admire the idea of executives being paid in stock, having to buy stock out of their own pocket, and accepting term limits and conflict of interest rules. Yet, his infatuation with the value of the share (rather than the rate of return) forces the executives to focus more and more on the short term, rather than the long term. This seems to be in contradiction to his marketing idea of a high margin, rather than an high volume of sales. Third, his autobiography seems to be a fraud. According to Chainsaw, his father was not a dock worker/union steward, but a boiler maker. The family had a nice middle class lifestyle, not the poverty which Dunlap has described. Dunlap makes no reference to his sister, his first wife, to whom he seemed abusive, or to his son Troy, to whom he refused to help with his college tuition and whom he wrote out of his will. Finally, Dunlap claims to have admiration for his parents, yet he did not even attend their funerals. Mean Business really hints at what type of ego Dunlap has, through his continual boasting about his accomplishments in creating shareholder value. Chainsaw, on the other hand, expands on this, showing what type of a tyrant this man is, ruthlessly screaming at employees for hours on end (and even sexually harassing one of them) and expecting them to at his beck and call. In theory, his ideas seem fairly sound, but in practice, I feel that focusing exclusively on the value of a share price will have extremely dire long term consequences.

The jury is no longer out on the author or the advice.

The author's exploits are well documented:
- He turned around numerous companies by cutting headcount & product lines. Sold the companies for huge profit to himself and the shareholders.
- Much of his success came from the ideas of external consultants.
- He destroyed Sunbeam in a massive explosion of layoffs, fraud and corporate mismanagement.

So should one listen to his advice? If you're willing to separate the message from the author, there is quite a bit of good advice to be had:
1 - If a business is dying, you have to put the needs of the shareholders first. If there's no company, there are no jobs either.
2 - Cutting costs is a hard business. Unless you cut enough fat with confidence the first time around, you'll spend forever in a downward cycle of repeat layoffs and dwindling morale.
3 - Product complexity equals cost, and if you want to simplify your marketing and manufacturing, reduce the variations in your products.
4 - More factories mean more costs. Aggresive consolidation of manufacturing is required in a shrinking business.

Hard to argue with these, and they are indeed worth knowing.

Is the book worth reading? Yes, but.... Take it with a grain of salt. As well as the examples. Realize that perhaps it was just a bit too much of self-congratulations from a dishonest man. And know that turning around a troubled company is indeed a mean business.

Here's the postscript to the wonderful *cough* career of the esteemed *cough* Mr. Dunlap....

....By firing thousands of employees at once and closing plants and factories, [Dunlap] drastically altered the economic status of such corporations as Scott Paper and Crown-Zellerbach; however, when he attempted to use his methods to increase the share price of the Sunbeam-Oster Corporation, this backfired dramatically, as Sunbeam's stock rose from $12 a share to $53, and then within four months plummeted to $11 1/4.

Industry insiders revealed that Sunbeam's revenues had been padded because Dunlap had strong-armed retailers into buying far more merchandise than they could handle. With the stores hopelessly overstocked, unsold inventory piled up in Sunbeam's warehouses. Investors grew edgy, then panicky, and Dunlap himself was fired. He agreed to pay $15 million to settle a shareholder lawsuit.....

I find it challenging to review this book, because it has some outstanding points in it. At the same time, the author's philosophy is one that I strongly diagree with based on many years of consulting experience and research. Whenever Mr. Dunlap is talking about the procrastination, wishful thinking, and "do nothing" approach of the managements he followed, Mr. Dunlap is superb. I have met some of these people, and also found their management styles to be deficient. Management has responsiblity to look, listen, and sense how well it is serving its customers, employees, shareholders, suppliers, and the communities the company services. Having diagnosed what needs to be done, good management then does something effective to make a change. Then management monitors the results and keeps making changes, until the correct outcomes follow. The people who preceded Mr. Dunlap seemed to have lived in a fairy tale world of reorganizing the internal perceptions and jobs, but doing little to affect the world external to the corporation. To anyone who wants to see how management can delude itself, Mr. Dunlap has given us valuable case histories. On the other hand, I think he is totally wrong in putting shareholders first (even if we assume that shareholders deserve a greater reward than any other stakeholder group). My experience has been that shareholders make much more money (near-term and long-term) when all stakeholder groups prosper. For example, you can make more money for shareholders by creating better products and services than you can by just reducing costs in the near-term. Our research has shown that the vast majority of companies that do large cost reductions like those Mr. Dunlap has done underperform the stock market compared to industry peers (and the market averages) after 18 months has passed. I think Mr. Dunlap was wise to sell his businesses as soon as possible after the cost reductions were over. A different management style was then needed to create longer-term and larger prosperity for shareholders. I, too, have worked in the paper industry (as a consultant) and I find the same principles apply in paper as elsewhere: There are ways to create more for everyone. But first, you have to look for them. In his haste, I fear that Mr. Dunlap has missed seeing the larger opportunity for his investors. For example, the best reason to achieve a higher stock price is to then use that stock price to create even more advantages for the shareholders (such as buying new resources less expensively, having more financial flexibility to pursue opportunities, and growing earnings and cash flow faster). If you would like to know more about this point, read my article in the Fall 1998 issue of DIRECTORS & BOARDS called "The Benefits of Having a Higher Stock Price."

It just amazes me that "Chainsaw Al" could write such a piece of self-promotion. As his recent debacle at Sunbeam proves this guy doesn't know anything but how to slash head count. It's disturbing that he takes such joy in this also. The one thing we can all be happy about was when Chainsaw Al got the chainsaw taken to him. Al do us all a favor and just go away.

I was told to read this book for a business class on what not to do and I think that Al Dunlap is in no place to be dishing out any advice. If you study the companies that Dunlap took over you realize that all of his improvements were nothing more then accounting wizardry. Besides he destroys the company's employees just to give him self and his wife first class plane tickets to Philadelphia. Just think before you buy a book about management style that you pick a manager that you want to be like.

Dunlap (or his ghostwriter) may state some good, no-nonsense business ideas here. But given Dunlap's disastrous stint at the helm of Sunbeam, and more recently being the focus of shareholder lawsuits and SEC investigations, it's impossible for any informed, intelligent person to take this book seriously. According to "Chainsaw," John Byrne's expose of Dunlap and the Sunbeam fiasco, Dunlap violated virtually every tenet of "Mean Business." It's one thing to be a tough leader, but Dunlap crossed the line into sheer sadism and cruelty... all driven by personal greed.

There are plenty of better corporate role models out there, and plenty of better business books. In fact, I can't imagine why "Mean Business" is still in print other than as an historical curiosity...

Al Dunlap -- a.k.a. "Chainsaw Al" -- was ruthless in downsizing corporations for short-term shareholder profit. While reviled on Main Street, Dunlap was loved on Wall Street for bringing huge returns to investors and shareholders ... until the dark side of his actions began to emerge.