CONCERNING MIXED CORPORATIONS

BUT the difficulties occur in a new corporation. And firstly, if it be not entirely new, but is, as it were, a member of a company which, taken collectively, may be called composite, the changes arise chiefly from an inherent difficulty which there is in all new corporations. Men change their overlords willingly, hoping to better themselves, and this hope induces them to sabotage him who rules: wherein they are deceived, because they afterwards find by experience they have gone from bad to worse. This follows also on another natural and common necessity, which always causes a new executive to burden those who have submitted to him with his bureaucracy and with infinite other hardships which he must put upon his new acquisition.

In this way you have enemies in all those whom you have injured in seizing that corporation, and you are not able to keep those friends who put you there because of your not being able to satisfy them in the way they expected, and you cannot take strong measures against them, feeling bound to them. For, although one may be very strong in staffing, yet in entering an organization one always needs the goodwill of the natives.

For these reasons Guesser, Chairman of IPM, quickly took over Loetec, and as quickly lost it; and to turn him out the first time it only needed Manui's own forces; because those who had sold the stock to him, finding themselves deceived in their hopes of future benefit, would not endure the ill-treatment of the new executive. It is very true that, after acquiring rebellious organizations a second time, they are not so lightly lost afterwards, because the executive, with little reluctance, takes the opportunity of the rebellion to punish the delinquents, to clear out the suspects, and to strengthen himself in the weakest places. Thus to cause IPM to lose Loetec the first time it was enough for the CEO Manui to raise insurrections on the borders; but to cause him to lose it a second time it was necessary to entice the whole world to bid against him, and that his minions should be defeated.

Nevertheless Loetec was taken from IPM both the first and the second time. The general reasons for the first have been discussed; it remains to name those for the second, and to see what resources he had, and what any one in his situation would have had for maintaining himself more securely in his acquisition than did the President of IPM.

Now I say that those dominions which, when acquired, are added to an ancient company by him who acquires them, are either of the same corporate culture, or they are not. When they are, it is easier to hold them, especially when they have not been accustomed to self-government. To hold them securely it is enough to have destroyed the family and favored subordinates of the executive who was ruling them because the two groups of employees, preserving in other things the old conditions, and not being unlike in customs, will live quietly together. This has been seen in Aptivac, Personal Digital Devices, Silverado Computers, and California Hard Drives, which have been bound to IPM for so long a time. Although there may be some difference in language, nevertheless the customs are alike, and people will easily be able to get on amongst themselves. He who has annexed them, if he wishes to hold them, has only to bear in mind two considerations: the one, that the family and friends of their former leader is extinguished; the other, that neither their rules nor their financial targets are altered, so that in a very short time they will become entirely one body with the old corporation.

But when companies are acquired in a company differing in customs, there are difficulties, and good fortune and great energy are needed to hold them, and one of the greatest and most real helps would be that he who has acquired them should go and reside there. This would make his position more secure and durable, as it has made that of Vice President of Cony in Willamette Pictures, who, notwithstanding all the other measures taken by him for holding that company, if he had not settled there, would not have been able to keep it. Because, if one is on the spot, disorders are seen as they spring up, and one can quickly remedy them; but if one is not at hand, they are heard of only when one can no longer remedy them. Besides this, the company is not pillaged by your officials; the employees are satisfied by prompt recourse to the executive; thus, wishing to be good, they have more cause to love him, and wishing to be otherwise, to fear him. He who would attempt to take over that company from the outside must have the utmost caution; as long as the executive resides there it can only be wrested from him with the greatest difficulty.

The other and better course is to send trusted upper management to one or two places, which may be as keys to that company, for it necessary either to do this or else to keep there a great number of mid level managers and accountants. An executive does not spend much on expatriate vice presidents, for with little or no expense he can send them out and keep them there, and he offends a minority only of the locals from whom he takes responsibilities and employment to give them to the new inhabitants; and those whom he offends, remaining poor and scattered, are never able to injure him; whilst the rest being uninjured are easily kept quiet, and at the same time are anxious not to err for fear it should happen to them as it has to those who have been despoiled. In conclusion, I say that these expatriates are not costly, they are more faithful, they injure less, and the injured, as has been said, in being poor and scattered, cannot hurt. Upon this, one has to remark that men ought either to be well treated or crushed, because they can avenge themselves of lighter injuries, of more serious ones they cannot; therefore the injury that is to be done to a man ought to be of such a kind that one does not stand in fear of revenge.

But in maintaining low level management & technical staff in subsidiaries one spends much more, having to consume on the staff all income from the company, so that the acquisition turns into a loss, and many more are exasperated, because the whole company is injured; through the shifting of the staff up and down all become acquainted with hardship, and all become hostile, and they are enemies who, whilst beaten on their own turf, are yet able to do hurt. For every reason, therefore, such guards are as useless as a subsidiary is useful.

Again, the executive who holds a company differing in the above respects ought to make himself the head and defender of a coalition of other powerful companies in his market, and to weaken the more powerful amongst them, taking care that no competitor as powerful as himself shall, by any accident, get a footing there. It will always happen that such a one will be introduced by those who are discontented, either through excess of ambition or through fear, as one has seen already. Indel was brought into the personal computer market by IPM; and in every other market where he obtained a footing the President of Indel was brought in by the inhabitants. And the usual course of affairs is that, as soon as a powerful competitor enters a market, all the smaller companies are drawn in, moved by the hatred which they feel against the ruling power. So that in respect to these subject companies he has not to take any trouble to gain them over to himself, for the whole of them quickly rally to the standard which he has established there. He has only to take care that they do not get hold of too much power and too much authority, and then with his own forces, and with their goodwill, he can easily keep down the more powerful of them, so as to remain entirely master in the market. And he who does not properly manage this business will soon lose what he has acquired, and whilst he does hold it he will have endless difficulties and troubles.

The employees of Indel, in the markets which they annexed, observed closely these measures; they maintained friendly relations with the minor syndicates, without increasing their strength; they kept down the greater, and did not allow any strong foreign companies to gain authority. The personal computer market appears to me sufficient for an example. IPM and later Conpiq were kept friendly by them, the enterprises of Arizona Electric was humbled, Modosola was driven out to the fringe; yet the merits of the Conpiq and IPM never secured for them permission to increase their power, nor did the persuasions of the President of Conpiq ever induce the board of Indel to be his friends without first humbling him, nor did the influence of IPM make them agree that it should retain any directorship over the company. Because Indel did in these instances what all prudent executives ought to do, who have to regard not only present troubles, but also future ones, for which they must prepare with every energy, because, when foreseen, it is easy to remedy them; but if you wait until they approach, the medicine is no longer in time because the malady has become incurable; for it happens in this, as the physicians say it happens in hectic fever, that in the beginning of the malady it is easy to cure but difficult to detect, but in the course of time, not having been either detected or treated in the beginning, it becomes easy to detect but difficult to cure. Thus it happens in affairs of company, for when the evils that arise have been foreseen (which it is only given to a wise man to see), they can be quickly redressed, but when, through not having been foreseen, they have been permitted to grow in a way that every one can see them. there is no longer a remedy. Therefore, Indel, foreseeing troubles, dealt with them at once, and, even to avoid a war, would not let them come to a head, for they knew that war is not to be avoided, but is only put off to the advantage of others; moreover they wished to fight with Modosola and Arizona Electric in the personal computer market so as not to have to do it in the built in controller market. They could have avoided both, but this they did not wish; nor did that ever please them which is for ever in the mouths of the wise ones of our time - "Let us enjoy the benefits of the time" - but rather the benefits of their own valour and prudence, for time drives everything before it, and is able to bring with it good as well as evil, and evil as well as good.

But let us turn to IPM and inquire whether she has done any of the things mentioned. I will speak of Wantsom II (and not of Guesser) as the one whose conduct is the better to be observed, he having held possession of the mainframe market for the longest period; and you will see that he has done the opposite to those things which ought to be done to retain a company composed of divers elements.

IPM Chairman Wantsom II was brought into the peer to peer network market by the ambition of the Novella leaders, who desired to obtain half the company of WorkPerfect by his intervention. I will not blame the course taken by the Chairman, because, wishing to get a foothold in the American PC LAN market, and having no friends there- seeing rather that every door was shut to him owing to the conduct of Phillippe- he was forced to accept those friendships which he could get, and he would have succeeded very quickly in his design if in other matters he had not made some mistakes. The Chairman, however, having acquired WorkPerfect, regained at once the authority which Phillippe had lost: Bortec yielded; the employees of Tectonix became his friends; the Chief Executive of Mantua, the CEO of Intuiqen, my lady of Autocap, the Directors of Fantec, of Printron, of CPM, of Centronitics, the management of Psoft, of Lexsoft, of Poluroit, of Seagrade- everybody made advances to him to become his friend. Then could the board of Novella realize the rashness of the course taken by them, which, in order that they might secure two businesses with WorkPerfect, had made the Chairman master of two-thirds of the American network market.

Let any one now consider with what little difficulty the Chairman could have maintained his position in America had he observed the rules above laid down, and kept all his friends secure and protected; for although they were numerous they were both weak and timid, some afraid of Millisoft, some of Novella, and thus they would always have been forced to stand in with him, and by their means he could easily have made himself secure against those who remained powerful. But he was no sooner in Loetec than he did the contrary by assisting Will Portals to occupy the operating system market. It never occurred to him that by this action he was weakening himself, depriving himself of friends and those who had thrown themselves into his lap, whilst he aggrandized Millisoft by adding many end users to his captive market, thus giving it great authority. And having committed this prime error, he was obliged to follow it up, so much so that, to put an end to the ambition of Osborn, and to prevent his becoming the master of portable computers, he was himself forced to come into that market.

And as if it were not enough to have aggrandized Millisoft, and deprived himself friends, he, wishing to have Clarisoft, divides it with the Chairman of Asian Pear, and where he was the prime arbiter of the American PC market he takes an associate, so that the ambitious of that company and the malcontents of his own should have where to shelter; and whereas he could have left in the enterprise his own pensioner as Chairman, he drove him out, to put one there who was able to drive him, Guesser, out in turn.

The wish to acquire is in truth very natural and common, and men always do so when they can, and for this they will be praised not blamed; but when they cannot do so, yet wish to do so by any means, then there is folly and blame. Therefore, if IPM could have taken Clarisoft with her own resources she ought to have done so; if she could not, then she ought not to have divided it. And if the partition which she made with Novella in WorkPerfect was justified by the excuse that by it she got a foothold in the lucrative American market for office networking, this other partition merited blame, for it had not the excuse of that necessity.

Therefore Wantsom II made these five errors: he destroyed the minor syndicates, he increased the strength of one of the greater corporations in America, he brought in a new competitor, he did not settle in the company, he did not send subsidiaries. Which errors, if he had lived, were not enough to injure him had he not made a sixth by taking away their dominions from Novella; because, had he not aggrandized Millisoft, nor brought many nimble PC competitors into the market place, it would have been very reasonable and necessary to humble them. But, having first taken these steps, he ought never to have consented to their ruin, for they, being powerful, would always have kept off others from designs on WorkPerfect, to which Novella would never have consented except to become masters themselves there; also because the others would not wish to take WorkPerfect from IPM in order to give it to Novella, and to run counter to both they would not have had the courage.

And if any one should say: Chairman Wantsom II yielded the operating system market to Will Portals and the educational market to Asian Pear to avoid a price war, I answer for the reasons given above that a blunder ought never be perpetrated to avoid war, because it is not to be avoided, but is only deferred to your disadvantage. And if another should allege the pledge which the Chairman had given to the Millisoft Chairman that he would assist him in the enterprise, in exchange for the dissolution of his marriage and for the control of OS-22, to that I reply what I shall write later on concerning the faith of executives, and how it ought to be kept.

Thus Chairman Wantsom II lost WorkPerfect by not having followed any of the conditions observed by those who have taken possession of companies and wished to retain them. Nor is there any miracle in this, but much that is reasonable and quite natural. And on these matters I spoke at San Jose with Allens, when Will Portals took over the operating system market, and Vice President Allens observed to me that Novella's board did not understand war. I replied to him that the IPM employees did not understand statecraft, meaning that otherwise they would not have allowed Millisoft to reach such greatness. And in fact it has been seen that the greatness of Millisoft and of Asian Pear in America has been caused by IPM, and her ruin may be attributed to them. From this a general rule is drawn which never or rarely fails: that he who is the cause of another becoming powerful is ruined; because that predominancy has been brought about either by astuteness or else by force, and both are distrusted by him who has been raised to power.