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Gerry Schwartz does
something special: He makes damaged or downright doomed companies look so
attractive that some larger entity just has to buy them.
This didn’t happen
with Celestica, the chunk of IBM that Big Blue spun off. Schwartz bought it,
and now the thing just keeps making money.
But it happened
with Canadian Airlines, and it happened with Chapters. As soon as Schwartz
expressed any kind of interest in either company, some other corporate
entity just had to thwart him, or try. That kind of transferable cachet, a
kind of Midas touch, is something marketers ought to figure out. If there
were some way to harness the envious acquisitive frenzy Schwartz’s mere
interest in a property arouses on an individual consumer level, stuff would
practically sell itself.
Actually, there is
a name for that. It’s alchemy — turning lead into gold.
Take Canadian
Airlines. You might think Canadian’s shareholders would have been eager to
see Schwartz buy the company, that they would have taken his interest as a
sign of hope in a dark time: an opportunity for the gimped hulk to soar,
instead of flapping pitifully along on a wing, a prayer and several banks’
worth of hyperextended credit.
But all Schwartz’s
interest did was arouse Air Canada from its slumber long enough for it to
lean on the federal government to look the other way while it bought its
competition.
Everybody knew this
country couldn’t support two real airlines. Laker and Wardair proved that.
Greyhound was the punchline to an old joke about air travel — “an airplane
is a bus with wings” — that started as a bad idea and became a bizarre mix
of the medieval and the Soviet. (“We’ll get you from Toronto to Vancouver in
24 hours...or your next trip is free.”)
Thanks to the Air
Canada-Canadian debacle, we don’t even have one airline. We have a lumbering
monument to inefficiency, stupid corporate arrogance and bad, almost
criminally mendacious advertising; Air Canada’s 180-day commitment was the
best campaign Via Rail ever had.
At least this time,
it seems, shareholders won’t make the same mistake twice. Canadian Airlines
may have been unsustainable in its pre-purchase incarnation, but at least it
didn’t bend the spine of the entire civil aviation industry in Canada before
it was swallowed.
Chapters managed to
drive numerous perfectly good bookstores out of business (Britnell’s and
Lichtman’s in Toronto, Duthie’s in Vancouver). It also acted as a kind of
black hole for publishers and authors; if Chapters was unlikely to order a
book, its chances of getting published evaporated. The company’s Pegasus
distribution unit is its own special nightmare — an M.C. Escher-like optical
illusion into which books get shipped, aren’t paid for, and from which they
get returned to publishers without ever having been in a retail outlet.
Chapters Online is
even stranger: an e-business where every dollar of sales costs $1.12 to
produce. Who — even in the daffiest depths of e-tailing e-diocy of 1999 —
could have looked at that model and thought it made sense? Larry Stevenson,
apparently, the same guy who was trying to persuade Chapters shareholders
that a big-box appliance retailer (Future Shop) made a better prospective
owner than a book retailer.
The Chapters board
kept warning shareholders about “risk” and “uncertainty” and all kinds of
other bad stuff about the Trilogy bid. Each dire warning from Chapters
reminded me that people in the publishing business never moaned and bitched
about Indigo the way they did about Chapters. And I never heard consumers
talk about buying books at Indigo as being a baffling ordeal the way they
said it was at Chapters.
In a brutal twist
on Robert Fulghum’s saccharine bromides of a few years back, it seems all
you need to know to make a name for yourself as a corporate titan you
learned in kindergarten — being a selfish, greedy brat in a sandbox. No toy
is worth a second look until one of your little playmates grabs it.
There are probably
about eight different, worthwhile and immediately applicable pointers in
that weird saga that would improve corporate management and marketing
techniques. But if they’re collected into a book, you’d better hope Chapters
is out of business, or you’ll never be able to buy it. |
