Managing Your Company To Death

puppetman writes "This weeks I, Cringely is a frightening monologue on the plight of over-managed companies: VC's and professional managers who are looking to make a quick buck, even if it consigns the company to the rubbish heap. He praises companies like Oracle and Sun because the founder still runs the company, and is in touch with the core of the buisiness. He also makes an interesting aside about the founders of the Canadian company, Research in Motion (makers of the Blackberry) and their personal contribution of $120 million for research into particle physics, to illustrate what happens when technical expertise and business success can lead to."

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Stagnation can be an enemy, too.

[SIGBUS]

A case in point is the fate of the Schwinn Bicycle Company - what was once a famous Chicago bike manufacturer is now nothing more than a brand name slapped on Chinese bikes sold at Wal-Mart.

How did that happen? Several factors: first, the third-generation family owners preferred to kick back and party rather than concentrate on the business. Even during the 1970s, the signs were showing. For a long time, they produced a line of lightweight, high-quality bikes in their Chicago plant, along with their heavier, mass-produced cousins like the Varsity. However, the utterly failed to promote them, and they were easily mistaken for the low-end bikes.

Meanwhile, out in California, people were taking old heavyweight cruiser bikes and fitting them with derailleur gears, and the mountain bike was born. Schwinn basically ignored this trend until it was too late.

Also, labor strife reared its ugly head. The Chicago factory was unionized, and the United Auto Workers decided that Schwinn workers should be paid on the same scale as GM, Ford, and Chrysler workers. Management's response was to build a plant in Mississippi, which turned into a complete boondoggle. Production eventually was shifted over to the Far East.

Schwinn eventually went bankrupt, and the pieces were picked up by vulture capitalist Sam Zell. Eventually, the Zell-operated version of Schwinn went bankrupt again.

It was picked up by GT, went on for a few more years, and went Tango Uniform yet again.

Now it is in the hands of Pacific Cycle, a mass-marketer whose products grace the shelves of department stores.

The only member of the Schwinn family who is still in the bike business is Richard Schwinn, who owns Waterford, an ultra-high-end manufacturer located in Waterford, Wisconsin. The factory, once upon a time, built Schwinn's high-end Paramount line. What a pity he didn't have the resources to buy back the name.

Every time I see a "Schwinn" in Wal-Mart, it sets my teeth on edge.