Matters Column

Skin in the game: big business decisions versus small business

November 13, 2015
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An experience buying a new notebook computer caused me to wonder who makes the big decisions in big business. I went from anger to wonderment at the methods they will use to increase sales.

I needed to cut down on the hardware I was toting back and forth between Grand Rapids and Cheboygan. I had a laptop computer, a camera and an iPad. I went to one of the Big Box stores and presented my dilemma. They had a perfect all-in-one solution.

As presented, the item offered seemed perfect. The basic capabilities were excellent and were able to do the work of both a laptop and an iPad. There were additional features, too. It had a keyboard that was part of the cover and a stylus that gave me the capability to write on the screen. Wow.

It exceeded my budget, but with its camera capabilities, the product replaced three items. When I got home and opened the box, there were three things missing. Absent was the keyboard and the stylus — and, to my surprise, there was no manual. I went back to the store and presented my confusion.

They said the keyboard and stylus did not come with the computer. I said the TV ads and the salesman demonstrated the product with the accessories without mentioning they weren’t included.

I asked about the manual and they explained how their technicians were a substitute for the manual. There was, of course, a charge for that service — I believe it was $100 a year. The keyboard was $130, and I didn't even ask about the stylus.     

Selling that computer without the keyboard is like selling you a car without a dashboard. I could not use the pop-up keyboard that came on the screen when prompted. I don't believe any serious user could effectively use the computer without the detachable keyboard. There were a bunch of annoying claims that proved to not be quite accurate, such as the fact that it uses the same aps as Apple. There are similar aps but not Apple aps, and there is a quality differential.

Don't you wonder who the geniuses are who come up with these ideas? I actually believed for a long time that big organization people are smarter than small business people.

I grew up in Flint, where big business was the way. In Grand Rapids, some of our small businesses have become big business but still retain small business values.

My father was a Buick executive and he thought the book about being promoted beyond your level of competence explained a lot of GM's problems. The Whiz Kids’ concept was that a business’s primary purpose was not to make a product or a service, but money. When my father protested that quality and desirability were key issues, he was branded a dinosaur who could not adapt.

The Whiz Kids were a group of Ivy League graduates who came on the business scene after World War II. Robert McNamara, who at one time was president of Ford Motor Co. and Lyndon B. Johnson's Secretary of War during the Vietnam War, was the most famous of the group. You know how that worked out.

Look at the trouble caused by big business decisions in recent years. GM had an ignition system that killed people. They hid the problem until government investigators and litigators discovered it. Then Volkswagen breaks the law with its deliberate installation in millions of vehicles of inaccurate pollution-measuring computer chips. Big banks and Wall Street defraud the American public of billions of dollars and, because of their Washington connections, are allowed to keep their stolen money.

Willy Sutton robbed banks for 40 years. It is estimated he stole around $2 million. He spent half of his life in prison, mostly at Attica in New York. The Wall Street bank thieves were relegated to a life of champagne and lobster tail in the Hamptons. Willy just didn't understand the value of Washington connections.

In big business, the decision makers are employees. The stockholders own the company. The board of directors is often ineffective because they spend too little time on company issues.

In small business, the owner is the executive and board of directors. The owner often has personally guaranteed the debt of the company. The owner of a small business has his or her posterior on the line, whereas the decision makers in big business are insulated from the liability and the responsibility of their acts by layers of bureaucracy and lack of skin in the game. 

It is not that I dislike big business. My mother's father worked at Buick from 1918 to 1952. My father had a 40-year career there as an engineer and executive. It is just that I see the risk, responsibility and effort that go into a small enterprise if it is to survive, grow and prosper.

At GM, employees met somewhere and decided the death of a few customers was not as important as a few bucks in profit. Employees at my new computer’s manufacturer decided to display a product without telling people it comes in pieces that dramatically affect the price. The Volkswagen employees who came up with the brilliant idea of tampering with the pollution-measuring computers have done damage not only to their company but also their country. Wall Street bankers did things a college bookkeeping student would have considered too risky.

Owners of small businesses are responsible for everything — and that’s the challenge. We will probably never know who made the actual choice of action at GM, Volkswagen or the big banks.

If you want to seek accountability in small business, knock on the door. 

Paul Hense is the retired president of local accounting firm Hense & Associates and past chairman of the Small Business Association of Michigan.

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