IT CAME LIKE A BOLT OUT OF THE BLUE THAT FRIDAY. Rob Wylie, a defector to Cornelius’ humongous rival, Zip Athletic Wear, had called, offering Gan a "real" logistics job. For more money. Plus stock options that could actually mean something. And, probably the clincher, a chance for Gan finally to use some of the supply chain savvy diligently acquired at Penn State and in professional coursework since.
"Face it, Gan," Rob had said, "you’re wasted down there. I remember reading copies of your memos about how you guys could streamline your antiquated supply chain. Pretty damned impressive. But they all wind up in corporate hyperspace, right? Believe me, that won’t happen at Zip. We thrive on change. We’ll plug you in to our worldwide logistics team. We’ll even throw in a real office, not a Dilbert-sized cubicle like the one we used to share. You’ll see the Bay Bridge and the Berkeley Hills, not just smog and swampland."
That last crack was a reference to the drab location of Cornelius’ corporate headquarters—in an L.A. industrial park north of the airport, miles from the nearest Starbucks. A gratuitous comment, sure, but most of Rob’s shots had been dead-on. Gan had spent the weekend weighing the attractive offer while backpacking in the Santa Monica Mountains.
He’d promised his answer Monday. D-Day. This morning. He pulled on sweats and backpack and headed out for his three-mile jog to the office, thinking: How can I say no?
Gan McManus had logged seven solid, upwardly mobile years with Cornelius Footwear, starting weekends while still in college, en route to his current status as assistant manager, National Customer Service. He believed in the company product. For his money, Corn Dogs were the best darned running and walking shoes in the world. Which was why he was pounding the pavement with a well-worn pair this morning.
Zip, on the other hand, turned out glitzy and klunky athletic shoes—by the gazillion. Which meant it must be doing everything else right. Its speed-streak logo got splashed across magazines and billboards, stitched on the caps and shirts and shoes of superstar jocks. And the company kept right on expanding its global footprint, pushing competing brands off the retail shelves.
While Cornelius was sinking, day by day, into corporate irrelevancy. Gan had done his darnedest to turn things around. But his impassioned pitches, his long and detailed logistics memos, either got ignored or chewed up in departmental turf wars, just as Rob Wylie had said.
Oh, Gan had a few loyal backers. His immediate boss, Mary Ann Dugan, for one, but she lacked corporate clout. Ditto the traffic manager, Ed Combs, an ex-Army logistics officer now nearing retirement. Other higher-ups had privately expressed support, but somehow Gan’s ideas never culminated in anything.
Until Friday—and Rob Wylie’s phone call.
And Gan was overdue for a shakeup—for a challenge he could finally sink his teeth into.
Call him traitor. Call him sellout. Call him…
With this resolve, and huffing like a steam locomotive, Gan McManus jogged into the lobby of Cornelius’ low-rise office tower and up two flights to his office—okay, his cubicle—ready to give notice.
"YOU’RE WANTED UPSTAIRS, Gandalf, me boy," announced Ellie Rasmussen, peeking over the partition with her owlish glasses.
"I ask not, nor am I told. It is Mary Ann herself who summons thee hence."
"Speak English. Not Old English. And I’m not going anywhere till I shower and change."
"No, really, Gan!" Ellie’s tone quick-shifted from playful to serious. "They’re all up on six. They’ve been phoning your cell the last hour."
"Damn!" Gan had switched off his mobile phone after getting twice telemarketed in the mountains, never switched it back on. With a wave at Ellie, he ducked into the restroom, threw on a clean shirt and tie, and headed for the elevators. What would the crisis du jour be? Another customer complaining about a supply chain breakdown? Another national account threatening to dump Corn Dogs? More to the point: What kind of catastrophe would conceivably require Gan’s presence? Answer: None. Which is why he was about to jump ship.
On the sixth floor, beneath the atrium skylight, a matronly, silver-haired receptionist met Gan and escorted him to the oversized door of a conference room. "Go right in," she said, smiling encouragement.
The whole top command was seated around a long gleaming table, legal pads, cell phones and PDAs at the ready. Gan identified the directors of Sales and Marketing, Operations, Purchasing and Finance, IT and HR, Corporate Communications and Legal, along with their ranking deputies. At the near end of the table were Gan’s allies, Mary Ann Dugan, Director of Customer Service and Ed Combs of Traffic, with an open chair conveniently between. Presiding at the far end was their CEO, white-haired, ruddy-faced John Enright, who had glanced up at Gan’s entry.
"Mr. McManus, nice of you to join us. You’ll find coffee and muffins on the sideboard. After you settle in, we’ll get to some of your ideas. It has been quite a morning, as you can well imagine."
"Obviously," Gan said, totally clueless. It’s like my old school nightmare—getting to class late and being called on for an answer, not knowing the question.
SO WHAT HAD HAPPENED?
Gan scribbled this desperate query on Mary Ann Dugan’s legal pad after sliding into the empty seat. His angular, flame-haired boss scrawled a question of her own beneath his: "You really don’t know?" When Gan shook his head, she launched into rapid writing. Meanwhile, from her wheelchair halfway down the table, PR director Libby Skidmore was quoting media ad rates and dates.
From Mary Ann’s emergency update, Gan learned they’d had good news for a change. Terrific news, in fact. Yesterday, while he had been communing with nature and meditating career moves, legendary golfer Bigger Scott had come out of retirement to win the U.S. Open. Afterward, Scott had credited his comeback and victory both to Corn Dogs—"on network TV!" Mary Ann wrote and underlined.
The morning meeting, obviously, was all about brainstorming ways to capitalize on this windfall PR. Which explained why Libby Skidmore, whose budget was usually restricted to quarter-page ads in Runners World, was discussing major media buys. Even Gan, no golfer, knew the U.S. Open was a big deal. He recalled that Bigger Scott had won a lot of tournaments way back when, before being forced into retirement by a bad back.
"The main copy points," Libby Skidmore was saying, "are that Corn Dogs not only let Bigger walk without pain, but return to the PGA tour and, ultimately, whip all the young phenoms."
"And he’s definitely okay with us saying that?" Enright asked.
"Absolutely, John, and for free! He’s that grateful. It’s like having Oprah plug your book. It guarantees a best-seller."
Gan wrote on Mary Ann’s pad: When did we start making golf shoes?
"We don’t," came her answer. "The guy was using our old inserts."
A discontinued product! But the endorsement would still work, Gan thought, because the company’s entire athletic shoe line was based on those original shoe-insert patents.
"How many of you saw Bigger’s incredible hole-in-one and Corn Dog endorsement?" John Enright asked the table, "either live or on Sports Center?" Gan watched a few hands go up, then scratched his ear tentatively. "Well for those of you who missed it, we’ve got the tape," Enright said.
All eyes were riveted to the TV screen to watch Bigger Scott address the media throng surrounding him after his win.
"When I brought the club around for that shot on the second hole, it seemed so perfect, so peaceful. I felt better than I felt in years, the pain in my back was gone," Bigger told his audience. "And when the club met the ball at the strikepoint, I just knew, with all my senses, that the ball would end up in the cup. And it did. I knew I was hot, and I would stay that way all day."
"When I reached the last hole I wondered how and why I had played like I used to," Bigger continued. "Then it hit me. I was playing without pain because I was wearing Corn Dogs…"
Enright stopped the tape.
"A hole-in-one on the second hole, then one great shot after another," Enright said. "One flagging career resurrected—and, perhaps, the future of one flagging shoe company. It has to rank up there with all-time great sports comebacks."
"Like Jack Nicklaus’ Masters win in 1986," recalled Ed Combs. "Forty-six years old and he beat all those young hotshots. Except we can still miss this comeback opportunity."
Ed was right, Gan thought. They were a long way from paydirt. And the Oprah analogy only went so far. Before she recommended a book, Gan knew, her staff alerted publishers to make sure titles got shipped to stores in quantity, flooding the pipeline with product. Bigger Scott, on the other hand, had plugged Corn Dogs out of the blue. With its slow and rickety supply chain, could Cornelius react nimbly enough to capitalize on this media moment? Or would its product arrive on shelves long after demand had died—the classic failing of push logistics—leaving the company with millions of dollars in unsaleable inventory?
This question was hotly debated over the next half-hour—push vs. pull, reward vs. risk. Like everyone else, Gan took furious notes. What the hell am I doing? he wondered once or twice. This was supposed to be quitting day. But the issues were compelling, potentially linking every department in exactly the kind of cross-functional, integrated teaming Gan had persistently, and vainly, advocated. If Cornelius Footwear was to capitalize on this opportunity crisis, everyone would have to work together.
Sales and Marketing was gung-ho, of course, in the sizable person of Geoff Mullins, who oversaw both departments. He had been on the phone all morning with his reps in the field, all of whom were being flooded with orders for Corn Dogs. "A PR bonanza like this, John, it could create—what is it you call that, Gan?—a strikepoint for our entire product line. Like Razor scooters, only for adults."
"I’m a CEO, not a logistics expert. What the heck is a strikepoint?" asked John Enright, staring at Gan.
Gan gulped. "It’s, uh, just a logistics term I came up with. It’s the point at which our supply chain can handle maximum demand before it starts to implode." He paused, and leaned forward. "We have to move our strikepoint forward if we try and do this, or it could cause our company to implode as well."
"Sounds awfully iffy to me," cautioned Serge Saunders of Operations in his best schoolmasterish tone. He was flanked by his Manufacturing and Planning chiefs. "We can’t begin to fill this spiked demand from existing inventory and manufacturing capacity."
"So ratchet up production," Mullins said, slapping the tabletop. "Pay a premium if you have to."
"If we can find capacity and predict what kind of demand and manufacturing capacity we’re talking about." Saunders turned to a stocky, bronzed man on his left—Alex Ordonez, head of Manufacturing. "Please, Alex, explain the problem."
"We can’t just go out and grab suppliers," Ordonez said. "Zip has tied up shoe factories all over Asia, from Bangladesh to the Philippines, and has been stockpiling raw material. It’s gonna be a squeeze to make more Corn Dogs fast enough."
"And by the time we are able to gear up in our Asian plants," Saunders stepped back in, "and get product back to the States, our little window of opportunity will have closed. I hate to puncture your euphoric balloon, Geoff, but I’m afraid we’ll be taking markdowns just to cover the cost of the shoes."
"Worse," said Al Hirschorn of Financial. "We could mark down below cost."
"Serge, and you, too, Al, you both need to talk to my sales reps. They don’t see this as some passing fad. They’re telling me, the buzz is huge out there. It will last. Bigger Scott has put us on the map big-time."
"For how long?" Serge asked. "Suppose while we’re tooling up…"
"And investing a lot of capital," said Hirschorn.
"…Right, and then suppose next week some kid sinks a 40-foot putt. Suddenly Bigger Scott is old news. We end up like every outfit that gets to market too late chasing a retail craze. We get to eat our whole damned inventory."
"Forget about the guy winning another tournament," said Hirschorn. "What if Bigger Scott breaks his arm tomorrow and never plays golf again? After we go into debt financing all this new production?" This, Hirschorn suggested, would be comparable to a Joe Montana or Magic Johnson retiring suddenly, leaving companies with millions of dollars of signature helmets or basketballs kids no longer wanted. "Which actually happened!"
"You guys just don’t get it," Mullins argued back. "Bigger Scott can retire tomorrow. Doesn’t matter. His comeback is already a certifiable sports miracle. People won’t forget what he did—and what Corn Dogs did for him. Which is why he’s willing for us to use his name and endorsement, gratis."
"And from what I hear," put in Libby Skidmore, "potential sponsors are already bidding up his services."
"Which prompts a question," John Enright said. He turned to their Corporate Counsel, Holly Needham. "What endorsement deals does Scott already have?"
Holly checked her notes. "None. His previous sponsorships and marketing arrangements all expired during the years of his forced retirement."
"Good. I want this glorious offer of his nailed down in black and white. Fast. Before he forgets."
"UNDERSTAND, I’M NOT READY TO COMMIT US to any particular course of action," Enright said. "We’re just revving in neutral here. You’ve all made some excellent points, pro and con. Let’s dwell on the con. Tooling up will be an obvious problem. Predicting demand will be even more difficult, and estimating how sizable our window of opportunity really is…"
"Excuse me, John." Libby Skidmore leaned forward in her wheelchair. "But that’s the whole point of the media campaign I outlined—to keep Bigger and Corn Dogs in the public mind, to see that ball dropping into the cup over and over."
"And I realize that, Elizabeth. But it would also help if we had that advanced planning tool Mary Ann kept nagging me about…"
This got Gan a quick nudge from his boss. The lack of planning and scheduling software had been one of his pet peeves, which Mary Ann had relayed upward, to no avail.
"…But we don’t, alas, so it would be too late to help us in this crisis. Now we come to our domestic distribution problems—late shipments, bad fill rates, chronic breakdown in our WMS, inadequate shipment tracking, and, of course, our old friends at Zip taking up more and more shelf space in all the chains and discounts. Did I leave anything out, Mary Ann?"
"Probably. But isn’t that why we’re all here this morning, John? To reverse all the downward trends, to turn things around fast? I mean, if we aren’t the A-Team, who is? And if not now, when?"
"Noble sentiments, Mary Ann," Serge Saunders said, "but let’s not get carried away. I’m afraid the downside risks are just too great. I say we ship whatever we can in response to Geoff’s orders, and increase production incrementally, as demand warrants."
"Basically what you’re saying," Geoff shot back, "is forget scoring a touchdown. Let’s punt."
"Or," Mary Ann Dugan said, "since the maze is too scary, let’s just stay here and eat our dwindling cheese."
"Please!" Al Hirschorn of Finance lifted hands in supplication. "Not that moldy cheese metaphor again."
Then how about Shakespeare? Gan was thinking of classic lines from Julius Caesar: "There is a tide in the affairs of men, which, taken at the flood, leads on to fortune…" He kept his literary allusions to himself, but Geoff Mullins spoke for him:
"If you don’t like cheese, Al, pick your own metaphor. Personally, I like football. I say we play to win. Throw long. Seize the day, whatever. Build the business. That’s what Ike Boone is doing, and he’s whipping our and everybody else’s butt with his junky shoes."
There was a gap of silence, into which came the measured voice of Hal Matsuura: "We could take a page out of Zip’s book. Or, more specifically, from its web site. You know, where you can design your own shoes by size, color, trim and other options? We could create a Bigger Scott shoe, then offer it only on the Internet. We could mass-customize the basic shoe, then tack on individual options, and only finish and ship what customers actually wanted."
"That’s very cutting-edge, Harold," said Ed Combs. "And I like the mass-customization angle. But that virtual shoestore stuff, come on. If it’s not hypothetical, it sure as heck is marginal."
"I agree," said Geoff Mullins. "We’ve been pouring too many resources chasing this e-tail fantasyland stuff. And giving short shift to our real retail customers. That’s where Ike Boone and Zip are really beating us."
"All right," Enright said. "Cyberspace is definitely not going to solve our dilemma, not this year, not next." He looked over at his Traffic Manager. "What’s your opinion, Ed? Should we go after all this business with a crash-and-burn attitude—launch a Hail Mary pass, like Geoff says? Can we pull it off? Can we leverage what may be a fashion trend into solid, long-term growth? If so, how? Can we deliver?"
Along with everyone else in the room, Gan turned toward the grizzled ex-Army log officer who had been his principal mentor at Cornelius.
"Last question first," Combs said. "How do we do it? I don’t have a plan yet. Next. Can we do it, should we do it? Hell yes—to both. Is it impossible? Maybe. So was Desert Shield—and the penalty for failure there was annihilation. There we were, a bunch of guys with clipboards, setting up latrines and mess tents with a major chunk of Saddam’s Army dug in just across the border, ready to roll over us. Talk about logistics under the gun. But we did it."
"You guys had the best expertise available, right?" said Geoff Muller. "So why don’t we go out and hire a topflight consultant or a 3PL to come up with supply-chain solutions? Not to suggest that you couldn’t do it, Ed."
"No offense, Geoff. Outsourcing may be the best answer. But our window to implement is too small to select the right partner. And it happens we’ve got some expertise right here, which is why Mary Ann and I wanted Gan McManus here this morning."
All eyes suddenly shifted to Gan. He reached for his water glass. Wouldn’t this be a hell of a moment to tender his resignation?
MARY ANN WAS SPEAKING NOW.
"Some of you know Gan McManus—short for Gandalf, for those of you who read Lord of the Rings. A wizard, right? All of you, I think, have read his memos. And if you haven’t, you should have. He has a masters in business logistics from Penn State. He paid his way through by working nights and weekends at a nearby Cornelius warehouse. In the last year he has been instrumental in turning around our customer service operation—and saving the Tipton’s account. And he has been champing at the bit to tackle our supply-chain problems—all the stuff we’ve just been talking about."
"We get the general idea, Mary Ann." John Enright looked directly at Gan. "I’ll ask you the same questions I just asked Ed. Can we, should we, and how the hell do we?"
"It can be done, Mr. Enright," Gan heard himself say.
"Call me John. And don’t use that third-person tone on me. I wasn’t asking a hypothetical."
"Sorry." Could they really pull it off? The nay-sayers had been just as persuasive as the gung-hoers, but Gan felt he had to answer "yes," if only out of loyalty to Mary Ann and Ed. And, of course, he was excited by this opportunity crisis—its risks and rewards. It was exactly the challenge he had always coveted. They had to go for it, like Geoff Muller said. That’s what life was all about. That’s why he had been ready to quit today—and why now, suddenly, he wanted to stay on. Gan cleared his throat:
"In my opinion—yes, we can do it."
Ed thumped him on the back.
"And your plan?"
Gan stared down at his scribbled notes and ideas, some of which might impress, but all of which seemed to blur en masse. He cleared his throat again…
"Give us one day." The voice was Mary Ann’s, rescuing him. "I know time is critical. But if you could give Ed and Gan and me till tomorrow morning to draft a preliminary strategic plan…"
"Call it a crisis-management plan," Ed said.
"Okay, right. A plan to go after all this potential business while avoiding disaster. Till tomorrow morning. And, of course, we would welcome any and all input."
Enright looked around the table, got some nods. "Fair enough. You’ve got till tomorrow at eight. Everybody back here. You all heard Mary Ann’s request. Please give her and her team the benefit of your best ideas. All agreed?"
More nods, a few chair scrapes.
"There’s one more item on the agenda, so don’t anybody leave quite yet. As most of you are aware, Ike Boone has at various times expressed interest in acquiring the Cornelius brand." Gan, for one, had not been made aware and found the news shocking and disorienting. Was Enright going to announce a takeover? But that made no sense in light of what they’d been talking about—or Rob Wylie’s offer to hire Gan.
Enright went on: "Recently, with our ongoing financial doldrums, Ike’s offers have been getting more frequent and, frankly, less attractive. But this morning, on the phone, he complimented me on the Bigger Scott endorsement and sweetened the pot considerably." Enright paused. "His offer was $33 a share." There was a collective intake of air. The figure was nearly double the current stock price. Even Gan, with his paltry options, would stand to make several thousand dollars. Others at the table must be contemplating real windfall profits—and weighing that certainty against the possibility of long-term earnings.
Why was Ike Boone offering such a premium? Obviously he was confident he could sell the heck out of Corn Dogs with the Bigger Scott endorsement.
Enright regarded them over steepled fingers. He still wasn’t finished:
"There’s a catch. It seems we’ve got 24 hours to accept, or the offer is withdrawn. Which neatly coincides with your deadline, Mary Ann. So let’s restate your assignment: You and Ed and your protege have until eight tomorrow morning to convince me, and the rest of us, why we shouldn’t sell the company."