Wednesday, September 01, 2010

It seems like when a company gets a new CEO that person tries to change the image of the organization and make their mark. It’s probably good for new blood to be infused into companies, but this often leads to disaster and the end of the company. The same applies to mergers and acquisitions. Companies merge in order to gain a greater share of the market, eliminate competition or obtain financial strength and stability. I know little about business, but it seems from history that all these fancy business techniques are a formula for failure.

This week I went shopping with my spouse and I saw the above in action and it will be interesting to see the outcome. We visited a store called Restoration Hardware. It’s really not a hardware store, but it’s a place where they always had unusual gifts and gadgets. They had neat bathroom accessories including various sweet smelling soaps, lotions, towels and everything for the bathroom including fixtures. The bay rum shaving lotion smelled so good I wanted to take a swig from the bottle. Their line of merchandise included a wide spectrum of goodies. It was a great place to Christmas shop and buy interesting gifts that didn’t cost a fortune.

Restoration Hardware is now in the process of completely changing its image and line of merchandise. Maybe it’s because no one shaves with a razor anymore and don’t need things like bay rum shaving lotion. I suspect the reason for change is that they have a new CEO and Board of Directors with marketing degrees or interior design and other such things. Anyway, they are now primarily a furniture store selling oversized and overpriced pieces of furniture with trendy cushions and pillows in which the material looks like it was made from feed sacks.

Anyway, I predict the demise of Restoration Hardware. I read in today’s local paper about a company in our town that is about to be taken over by a larger one. Everyone has been assured there will be no job loses and this is being done to promote growth. Let’s hope so. Regardless of what I say, with my lack of experience, mergers and acquisitions will continue and so will business failures. My spouse and I recently reviewed the giant businesses that once lined the streets of downtown Houston. Hardly any of these are around anymore, but neither is downtown Houston.

From my view on the porch, I think that business folks might be bettered served by reading a history book rather than getting an MBA degree. A little knowledge of accounting, an ear for the customer and history may be all they need to guarantee a successful business.


Blogger jeff ludwick said...

It always amazes me why the new breed of CEO's insist on wrecking companies that have withstood the test of time. I suppose it has somthing to do with them being like first-cousins to Congressmen. No matter what they screw up or how much they screw it up they are going to make millions of dollars in salaries and even more millions in bonuses at a ratio directly inproportional to the amount of money their company loses. At least for the crooked/idiot CEO's their theft is out in the open for all to see where Congress does it by bribes/kickbacks/shady land deals, etc. etc......

7:54 AM  

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