demand to see our investment plan before they’ll even consider giving any concession.”
He raises his eyes from the cloud and looks at me. “In our case I think that it is.”
“What is?”
“I think it is easy to answer that we should sell your companies. No, don’t get excited, let me finish. Look, you know our credit rating. You know that it’s almost at rock bottom.”
I know. We pay two percent above prime.
“Everybody is trying to cheer me up by the market upturn. But markets oscillate, the downturn will follow. The last downturn almost brought UniCo to its knees. We don’t have the reserves anymore to carry us through another down period, and I don’t think that we can count on gathering enough reserves in the current good period. Nobody knows how long it will last, and everybody is telling me that it won’t be easy to make money in this upturn, that pressure to reduce prices continues.”
I start to see his point.
“Alex, even if I forget my bosses for a minute, even if I concentrate on the interests of the employees of UniCo, I come to the same conclusion: we must sell some portion in order to protect the others. And the diversified group is the only choice; we have to protect the core business.”
“But why by selling it now? Why not accumulate profits as long as the market is good?”
“The timing has very little to do with Granby’s retirement,” Trumann answers my unspoken concerns. “It is the time that we can probably get the best price, when everybody is looking hopefully into the future.”
“We bought my companies under similar circumstances, in 1989 when everybody was expecting an upturn. And we definitely paid exaggerated prices.”
“Exactly my point,” he sighs.
“This is interesting,” he says after a while. “Where did you learn this presentation technique?”
“It is neat. On half a page you see the entire picture.”
“Right. The conflict hits you right between the eyes. You can’t ignore the real issue. It’s a powerful way to present.”
“It’s not just a presentation technique,” I comment. “This technique claims that you should not attempt to strive for a compromise. It advocates examining the assumptions under the arrows in order to break the conflict.”
“What do you mean?”
Jonah claims that any cloud can be broken, but he is wrong. If I could find a way to break this conflict, I wouldn’t have to sell my companies. Now, because of my big mouth, I have to defend his technique.
“Look, for example, at this arrow,” I say to Trumann. “ ‘In order to protect the interest of the shareholders, we must sell the companies.’ The assumption here is that the companies are not profitable enough. If we can find a way to make them more profitable, a way that will guarantee that they can sell many more products without increasing their operating expense, then the cloud is broken. We don’t have to sell the companies. We simultaneously protect the interests of the shareholders and the employees alike.”
“Do you know how to do it? Do you have an idea how to increase their product sales without increasing their operating expense?”
“No,” I admit. “I don’t see any way to do it.”
He smiles. “So even though in theory the conflict can be eliminated, in practice we have to live with it. I guess that there is quite a distance between nice theories and harsh realities.”
I must agree with him.
11
At first sight the cabs in London look strange, but when you enter one, it looks even stranger. In the back there is one seat, big enough for only two people. Two more shelves for sitting can be folded down from the wall separating the driver from the passengers. Even in a train I hate to sit with my back to the driving direction. In a cab, facing Trumann and Doughty, I like it even less.
We are returning from a meeting where we negotiated the sale of Pete’s company. Actually, this is not an accurate description. We didn’t
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