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The Real World:
The World Is Not EnoughMillennium Merger Mania

Janine Waclawski
W. Warner Burke Associates, Inc.

Same Time Next Year

Greetings, dear readers! Today is January 3, 2000 and unfortunately I am back at work. Yes it's Y2K and the computers are still computing, the banks are still banking, and all is well with the world of work and otherwise. So much for my much-needed and wished-for Y2vacation. Worst of all, this means I will have to deliver on my next installment of this column. Don't take this the wrong way, but writing this column is hard work! Not that I have anything against that, but sometimes I do wonder what I have gotten myself into. Seriously though, I really shouldn't complain, as this has also been an awful lot of fun. If you are wondering why I am getting so reflective here, there are two reasons really: (a) the usual new year introspection of who am I, where am I going, why am I going, should I be going stuff and (b) this column marks Year 2 for me of producing quarterly installments for SIOP consumption. All in all, I feel pretty good about the past 2 years of working on this column for TIP. After all, it has really been a great opportunity and no one has threatened me with any bodily harm yet, so I guess I am ahead of the game. And speaking of bodily harm, that reminds me of my first job and how I got downsized.

New York's Boldest

One of the topics I had always planned to write about in this column was downsizing. During the late 1980s and early 1990s, this was an issue of great concern to our nation and one that received a great deal of media attention. Disturbing movies like Roger and Me, stories about Neutron Jack (Jack Welch, the CEO of GE, who was so named because after he came to GE the buildings were still standing but the people were gone), and newspaper headlines about massive reductions in force, which read "Happy New YearYou're Fired," put downsizing at the fore of the American consciousness. However, as usual, my motivation for writing about downsizing did not emanate from these more lofty sociological phenomena but from my own base insecurities stemming from my own insignificant personal experience. As any good narcissist can tell you, sometimes all you really need is an N of 1. So, since I was downsized from one of the first serious jobs I heldit was personal! In case you were wondering, no it wasn't my job as a deli clerk. As my former boss at the deli used to say, old deli clerks never die, they just end up in the soup. And no, I wasn't let go from my job as a waitress either. It was from a job that I had working for the City of New York. Following is my tale of woe.

At the end of my first year of grad school I was hired by the director of training of the New York City Department of Investigationmore affectionately know as the DOI. The DOI was a city agency whose objective was to investigate the rest of the city agencies and ferret out corruption. Needless to say we were very busy at the DOI! My boss was in charge of making sure that all of the DOI investigators (who were civilians as opposed to police officers) had the proper training to investigate crime and corruption within the city government. This was no small task as each city agency (e.g., the Department of Corrections, the Department of Housing, the Department of Welfare, etc.) had its own investigatory office. This meant that the DOI was highly decentralized as each agency had a DOI counterpart that was watching it. My job was to help the director determine through a series of interviews what the current training needs were in each of the investigatory offices and, in the process, do an organization development diagnosis.

As a result, during my brief but illustrious tenure as an intern at the DOI, I had many experiences that I will never forget. Among other more mundane
I-O related aspects of the job, I had the opportunity to experience a number of things that for most of us fall outside the purview of daily life. For starters I got to meet many interesting peoplethe kind that seemed like they had come right out of NYPD Blue. Further, I toured each and every jail in New York City (including Rikers Island) with my own prison guard escort. Beyond that, I had the opportunity to sit in while investigators interrogated incarcerated suspects awaiting trail. And finally, I even got to go out on surveillance jobs, and attend a course on criminal case management at the John Jay College of Criminal Justice. All in all, it really was a fascinating job. The jail tours were really something else especially since the prison guards were all unarmed except for the nightstick and cuffs that they were allowed to carry. This is why they are known as New York's Boldestbecause they have to walk a jail unarmed. Personally, I thought they should have been called New York's Dumbest, but I digress. So there I was, a petite, 21-year-old blond female in a business suit touring NYC jails knowing that the only thing between me and a overcrowded prison full of hostile inmates was a fat, middle-aged guy with a stick. What a rush!!

Anyway, back to my story as it relates to downsizing. About three-quarters of the way through the project, I was informed by my boss that the city was going into a "cost containment" mode and that I, along with a slew of other interns, was being let go. Yes, my $10 an hour salary (or whatever it was) was just too much for the taxpayers of New York. Sure, it was okay that our mayor (David Dinkins at that time) had just been written up in the paper for having purchased an $11,000 headboard for his bed, but my salary was going to drain the coffers of NYC as dry as a bone! So, in order to save the Big Apple from certain financial ruin, I quietly left my post. Now, 10 years later I can rest assured that occurrences such as the recent revitalization of Times Square and the overall prosperity of the city are due in large part to me.

Rabbits for Pets or Meat

While my story of being downsized did not really have much of an impact on my life (other than being able to fill a page or two in TIP with the previous and hopefully pithy anecdote) I knew this was not the same case for others. And although I am not the most sympathetic person in the world, I was somewhat disturbed by the seemingly endless list of companies that were slimming down. However, it wasn't until I saw Michael Moore's film Roger and Me that I fully appreciated the devastating effects of downsizing, not only on individuals, but communities as well. For those of you who haven't seen the movie, it was a documentary about the massive downsizings at General Motors in the late eighties which resulted in the loss of 30,000 jobs and had a profound impact on the surrounding community of Flint, Michigan. The movie was replete with scenes of downsized employees being evicted from their homes and having all of their earthly possessions being literally ripped from them, juxtaposed against clips of executives and their spouses idly playing golf at the country clubs of Grosse Point (and the surrounding environs) saying how life was grand. Overall, not your typical "feel good" movie. One of the most disturbing parts of the film was a segment about a laid-off worker who was reduced to eking out a living by selling rabbits for either pets or meat. She was shown alternatively petting them with much adoration or breaking their necks and gutting them depending on which type of clientele she was dealing with.

All of these things left me with the idea that one day I would write up a piece that somehow attacked the idea of downsizing and all its resulting ills to humans and animals alike. In particular, I always questioned the role of the I-O psychologist in the downsizing process. As you can tell, I think there are some ethical considerations here. Unfortunately, I never had the time to write up the piece and since, as they say, timing is everything, I missed the boat. So, now here we are in 2000 and downsizing, like most things, ain't what it used to be. In fact, today we are faced with the exact oppositemerger mania. Hence my topic for this column.

Shaken Not Stirred

As you all probably know by now, the recent $350 billion AOL/Time Warner merger marks the largest media merger in the history of Planet Earth. This is not an insignificant factoid when you consider the implications of such a merger. Specifically, world's Number 1 Internet provider (i.e., peddler of e-tail goods) will own the nation's Number 1 cable provider (with instant access to 20 million homes). In short, AOL now owns Time, CNN, Turner Broadcasting Systems, Turner Network Television, Warner Bros., HBO, Entertainment Weekly, and Looney Tunes, just to name a few. Being the cynical pessimist that I am, I immediately saw several downsides to this situation: (a) I kept the voice of Bugs Bunny saying "You've got mail, doc" every time I logged on to AOL and (b) I was disturbed by the monopolistic undertones of the thing.

Given my penchant for relating real life events to movies, it all reminded me of the second Bond film that Pierce Brosnan didTomorrow Never Dies. For those of you who didn't see it or don't remember it, it was the one about the megalomaniacal media mogul Eliot Carver (a thinly veiled British version of Ted Turner) and his plot for total world domination through media control. Basically, his plan was to get exclusive broadcasting rights in China to complete his global communications empire and then to start WWIII by getting the British to think that the Chinese were launching a nuclear attack on them. Thus, simultaneously providing his network with fantastic viewer ratings and him with the ability to not only cover the news, but to create it as well. So I think it is safe to say that a reasonable person (not that I am one) could see the similarities between art and life in this case. Of course in the movie Bond saved the day, so there was really nothing to worry about. Unfortunately, real life is not so simple.

As an aside, have you ever noticed that there are four and only four essential elements to a good Bond flick (a) James Bond must be sexy (e.g., not Timothy Dalton), (b) James Bond must have good toys (e.g., a nice new BMW), (c) James Bond must have hot babes (e.g., Terry Hatcher), and (d) James Bond must be fighting a villain with a demonic and completely implausible plan to take over the world (e.g., not just any old bad guy). If any one of these elements is missing, forget itif you don't believe me just think about this for awhile.

Freedom of Choice

Anyway, back to the AOL merger. I recently read an online piece in the Columbia Journalism Review titled "Conglomerates: Does Big Mean Bad" (Goldstein, 1998). The gist of the paper was that journalists inherently fear that large media corporations will misuse their powers to either shape the news to conform to their corporate values or as propaganda tools. I would argue that journalists are not alone in this fear. According to the 1987 book Media Monopoly by Ben Bagdikian, when CNN was just starting out, 50 corporations controlled more than half of the media outlets in this country. By 1997 (the book's fifth edition) Bagdikian found that the number of corporations with this control had been reduced to 10. The implications of this are somewhat disturbing when you think about them. For example, according to Bagdikian, "The new communications cartel has the power to surround almost every man, woman, and child in the country with controlled images and words." Thus giving the media "the ability to exert influence that in many ways is greater than that of schools, religion, parents, and even government itself." Pretty scary stuffI wonder if Bagdikian was a screenwriter for the Bond flick?

On a more serious note, all of this got me to thinking about the impact of mergers and acquisitions on consumer or customer choice. Other events, like the recent highly publicized Microsoft trial (in which it was under scrutiny for monopolistic practices) and megamergers like Mobil and Exxon and Pfizer and Warner Lambert, have put the issue of the impact of big corporations in the forefront of the minds of the American people. Closer to home for some of us (i.e., in the world of professional services and consulting), mergers are also commonplace. What were for many years known as the "Big Eight" accounting firms were reduced to the "Big Six" and are now the "Big Four," with PricewaterhouseCoopers being the largest in terms of both size and name. On the upside, these consolidations are often exceedingly profitably for partners and stockholders and good for clients who want to be able to do one-stop shopping (e.g., get their organization change consulting from the same firm that does their auditing). Conversely though, taken to their extreme, these deals can lead to the creation of immense, monolithic monopolies (i.e., the "Big One") which can adversely impact customers in a number of ways.

Specifically, in a recent cover story from BusinessWeek online, questions were raised about the need for antitrust regulators to take a look at what the "megamerger boom" is doing to the economy. In support of this argument, they went on to delineate three potential problems stemming from megamergers. First, "as concentration increases, it's easier for remaining players to raise prices. In the copper industry, the prospect of consolidation helped drive up prices by more than 20% since the middle of last June." Second, "dominant players can potentially squeeze their suppliers as well. In farming, the continued concentration of agribusiness is putting pressure on independent farmers." Third, "the absorption of smaller, less bureaucratic companies into larger more rigid ones can potentially choke off innovation."

Moreover, as I see it, the resulting megafirms created by these megamergers may curtail customers' choices or variety as well. This would occur in two primary ways: (a) by reducing the total number of competitor firms that customers could choose from and (b) by reducing the types of products and services provided by the new singular entity which inevitably results from integrating the systems and processes of the new merged organization. So, for example, if all the consulting firms that do 360-degree feedback were merged, we would most likely end up with one process for implementing 360. At the very least we would see a large reduction in the types of 360 offerings available to the consumer. If you believe to any extent in the principles of capitalism, this would not be a good thing. As one of my coworkers at Burke Associates said to me the other day, "at the rate these mergers are going, one day we will all be working for one big company that consults to itself." I think this is not far off.

 

Some Mergers I Would Like to See

This got me to thinking about what some companies could do if they capitalized on the recent merger mania. Especially those who merged with organizations outside their industry such as the AOL Time Warner deal. Below are some of my demented brain children:

 

Company A

Company B

New Merged Company

Sample Products and Services

Starbucks

Citibank

Starbanks

Upscale coffee drinks while you wait at all bank locations.  24 hr. ATMs that dispense cappuccino.   

Mc Donalds

Preview Travel

McTravel

Coupons for 99 cent Big Macs with every airfare purchase of $400 or more.  Try our new Supersize Travel Meals includes 2 hamburgers, supersize fries and beverage, one RT ticket to anywhere in the continental US.  Please check in 1 hr before departure for domestic flights.

Columbia House

Columbia University

Columbia House University

Automatically get 10 CDs every month for a low discount price when you enroll as a student for the semester.  No minimum GPA required.

3M

M&M Mars

3M&M

Post it peanuts or Post it plain in new neon colors.  Melts in your mouth not in your hands.

Pfizer

Kaiser Permanente

Pfizer Permanente

Discounted Viagra prescriptions with your health insurance policy.  Heythis one could actually happen!

 

 

Merger Factoids

Finally, before I leave the topic of mergers forever, I thought I'd leave you with a few tidbits on the subject, hence the following merger factoids.

Did you know?

  • There are 20 pages of results listed for "mergers" on BusinessWeek online.
  • Europe is seeing a burst of mergers that are on a par with the U.S. at
    $1 trillion per year.
  • The merger with AOL happened exactly 10 years to the day after Time Inc. merged with Warner Brothers in a deal that at the time created the world's largest media conglomerate.
  • Leveraged buy outs can earn bankers even better fees than mergers. On a typical $1 billion LBO, the merger portion of the fee is only about $4 million, but the LBO finance fees approach $18 million.
  • According to Mercer Management Consulting, about half of all mergers end up being bad for shareholders.
  • Over the past century, literally hundreds of automobile manufacturers were founded, most of which went out of business or disappeared in mergers. In the U.S. alone, the number dropped from 253 in 1908 to today's Big Three.

And Now for Something Completely Different

As you may have guessed by now, I get easily irritated. Recently, I have received proof of this fact. A few months ago, Robert and Joyce Hogan came by our office to pay a visit and to ask some of us at Burke Associates to take their Career Builder Personality Assessment. Being the completely self-involved, self-proclaimed narcissist that I am, I readily agreed. As I always say, never pass up an opportunity to learn more about yourself so that you can discuss it ad nauseum with anyone in sight who will listen. So I completed the instrument and anxiously awaited my scores. To my delight, they arrived rather quickly. I greedily opened my envelope and poured over my report. In terms of my profile, to make a long story short, I scored very low on being even- tempered, agreeable, and conforming but scored high on being ambitious, inquisitive, and for continuous learning. After reading through the report several times, I decided what it was basically telling me was that I was a competitive, rude, confrontational, anxious, pain who asks a lot of questions and then argues about the answers. In short, it was accurate. Besides, I am from New York, so what else would you expectI can't help it. So, with that said, I figured that it would be okay for me to share with you all some of the things that agitate me! I figured that for those of you who want some kind of picture of what thoughts go through the mind of someone with a profile like mine, this would be helpfulfrom a clinical perspective, that is.

Specifically, I was recently very irked by something that I saw in an issue of the New Yorker. I came across two ads that were both striking in their similarity and in their offensiveness to my noneven-tempered being. The first was a full page ad for the Dennis Miller show with a picture of Dennis sitting on the Lincoln Memorial with a caption that read "I rant, therefore I am." Whoa, wait a minute here, Dennis. Not only did you bastardize Descartes in a not too clever way (I think therefore I am) but what does Lincoln have to do with it? Was this some stupid misattribution? Does Dennis or the advertising wizards who came up with this copy think that Lincoln said I think, therefore I am? If not, I don't get it. Then, weirdly enough, two pages later was an even worse ad for Lexus which simply said "I pursue, therefore I am." I was beginning to wonder why there was all this sudden interest in ripping off philosophers to sell TV shows and cars. Why not "I lack original thought, therefore I am?"

This made me wonder what other great philosophers' words of wisdom could be exhumed in the name of creating a snappy slogan in pursuit of the almighty dollar. How about Patrick Henry (not a philosopher, I know, but stay with me on this) and "Give me liberty or give me death." Geez, you could use that to sell just about anything. For example "Give me a Lexus or give me death" or "Give me free checking or give me death" or how about my personal favorite "Give me Pokmon or give me death." This is good stuff.

Parting Words

Finally, before I go, I wanted to share with you something that has been annoying me for years; something that has just really stuck in my craw as the saying goes and may be a better example of the thought processes of someone with my personality type.

Specifically, I have an issue with proverbs. You know those common-sense, folk, psychology-oriented kernels of wisdom advising you about how you should live your life. Is it just me or have you ever noticed that for just about every preachy proverb that exists, there is a contradictory proverb that advises you to do just the opposite? For example, "haste makes waste" but then again "he who hesitates is lost." See what I meancontradictory to the core. Normally, life's little contradictions don't concern me much, but the proverb thing really does. How are you supposed to know how to conduct yourself with all these opposing pieces of advice floating around in your head?

So, to formally label my annoyance, I have devised a new law. Not a legislative, one mind, you but more like an axiomlike Newton's laws of physics. Newton's third law states that for every action force, a reaction force exists, which is equal in magnitude, but opposite in direction. Therefore, in the vein of Dennis Miller and Lexus, I have decided to call my axiom Waclawski's third law of semantics which states that for every proverb there exists a reaction proverb which is equal in magnitude but opposite in direction. To prove my axiom I have listed some examples below.

Proverb Reaction Proverb

 

Proverb

Reaction Proverb

Haste makes waste

He who hesitates is lost

Better safe than sorry

Nothing ventured, nothing gained

Practice makes perfect

If it aint broke dont fix it

The early bird gets the worm

Better late than never

Only the good die young

Life begins at 50

Its easier for a camel to pass through the eye of a needle than it is for a rich man to get into heaven

You can never be too rich or too thin
Or
Its better to rule in hell than serve in heaven

Waste not want not

You only live once

An eye for an eye, a tooth for a tooth

Turn the other cheek

Every dog has his day

Its a dogs life

Theres more than one way to skin a cat

There are two ways to do things the right way and the wrong way

Think (IBM)

Just do it (Nike)

Strike while the iron is hot

Fools rush in where wise men fear to tread

Love is all you need

Money makes the world go round

You never get a second chance to make a first impression

Alls well that ends well

It not whether you win or lose its how you play the game

Nice guys finish last
or
The ends justify the means

Love thy neighbor

Thou shalt not covet thy neighbors wife
or
Good fences make good neighbors

Neither a borrower nor a lender be

A friend in need is a friend indeed

Respect your elders

Theres no fool like and old fool

Money cant buy me love

Every man has his price

A penny saved is a penny earned

Penny wise and pound foolish

Stop and smell the roses

Wake up and smell the coffee

The devil makes use of idle hands

All work and no play makes Jack a dull boy

A bird in the hand is worth two in the bush

The grass is always greener on the other side

It is better to have loved and lost than never to have loved at all

Whats love got to do with it

A coward dies a thousand deaths, a brave man dies but once

He who lives to run away lives to fight another day 

As ever, thanks to AHC for his comments and help. If you have any feedback for me, please feel free to contact me either by email at J9151@aol.com or at W. Warner Burke Associates, Inc., 201 Wolfs Lane, Pelham, NY 10803 (914) 738-0080 (tel.), (914) 738-1059 (fax).

 

References

Michael J. Mandel, Businessweek online, October 18, 1999 www.businessweek.com/1999/99_42/b3651011.htm

Bagdikian, B. H. (1997). Media monopoly. Beacon Press.

Goldstein, T. (1998). Conglomerates: Does big mean bad? www.cjr.org/year/98/5/goldstein.asp

 


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