Philadelphia Reflections

Help for the Failing Business

"Waitress, would you mind bringing my guest some more corn muffins?"

We were back in the Union League, my old friend and I, and just about the last people in the dining room at lunchtime, as we usually were. The members of the League throng into the club for lunch, often a thousand of them at peak times, but the stroke of two o'clock empties out the place as if a silent alarm had rung. It was unthinkable for the waitresses to show any annoyance about members who stayed past the magic moment, and indeed I have occasionally stayed three or four hours with a guest who had important business to transact over the table. Somehow, the all-seeing head waiter gives the necessary whispered orders, and the "help" just melts away. It is, of course, inevitable that the help will grumble about staying past the usual time, but never so the member can hear it. To have to go back four times for special orders of corn muffins, was another thing which must upset them a little, but it was not permitted to show. Anyway, the wizened little old man who was a guest of a member might well have been somebody Real Important. His unfailingly courteous manner apparently led to the assessment that he was "cute".

"You know, George, it is a great pleasure to have lunch with you in public. So many of my friends are afraid to be seen with me, for fear it means their business is in trouble."

"Well, you see, for a number of years I have sort of made a profession, you might say, of helping failing businesses. I guess it's because I hate social work."

"Good Heavens, what's the matter with social work? I have social workers in my family, and the Haddonfield meeting seems filled with social work."

He smiled broadly and nodded pleasantly, but I had to wait for an explanation until a corn muffin was painstakingly buttered a thoroughly chewed. "Well, you see, I think it is much better to take a business with thirty or forty employees and save it from bankruptcy. That way, you don't have to have social work, and you don't have to invent useless jobs for them to do. A business can only be successful if its employees are doing something that people are, you know, willing to pay for. Well, anyway."

Experience had taught me that "Well, anyway" was his signal that maybe we were talking about a subject which ought to be dropped, but which he would continue if I persisted, and I usually did. But forewarned. Warned that although he didn't want to have a flight about it, he held strong views which he wasn't going to abandon. Prolonged chewing of a muffin served as the same kind of signal, I suppose, but muffins were almost too important to be used as conversational props.

As the conversation went on, it turned out he had been involved in the failures and near-bankruptcies of milk businesses, airlines, housing developments in Pittsburgh, a movie studio, lots of very interesting things. Maybe the most interesting was a string of funeral parlors in Brooklyn. Funeral parlors in Brooklyn? How does a Philadelphia Quaker help them?

Although the movements were completely silent, his shoulders shook and he looked for all the world as if he were gleefully saying "Hee, Hee, Hee!" And he then related how he had automated the embalming process by establishing one central factory to embalm the customers. The undertakers would ship the corpses from their sales offices to the central facility, and then return the completed products to their displays rooms. Greatly improved the efficiency, cut costs nicely, and lots of otherwise threatened undertakers were able to continue to provide a livelihood for their families. It was certainly ingenious, and I suppose it was better than social work. At least, it appeared to have been fun, and social work is never fun. Indeed, letting all the social workers I have known run through my mind, I couldn't offhand think of one who had any fun on the job.

"So you are a business doctor?" I was immediately sorry I asked because to answer, "Yes, I guess you could call it that", he had to finish chewing the corn muffin and hastily swallow it. It was the last one, and the waitress was nowhere to be seen.

I was also sorry I said it because I knew his father, mother, brother, daughter, and cousin were all physicians. On the wall of the Pennsylvania Hospital where brass nameplates have been transferred from the rooms of interns after completed training, there are at least six Nicholson names, probably another ten names of relatives by marriage. The very first name is that of Jacob Ehrenzeller, who was the first intern in an American hospital, 1773, and must have been present when the British used the hospital for barracks during our "insurrection". With so many distinguished physicians in the family, Joe's failure to go into medicine might well be a sensitive point, who knows. Rather ungraceful of me to make allusion to a business doctor. As I remember, the mild quip was indeed followed by several minutes of silence.

"Well, Joe as you know I'm very interested in the economics of hospitals, and someday I'd like to see if you have any ideas about how we could make those damned places any cheaper to run. Right now, they are making so much money they don't welcome ideas from strangers, but I suspect their time is coming. Any thoughts?"

He nodded, considered the matter seriously for a moment, and then backed off by remarking that you have to get inside the place and learn every aspect of the business before you can venture an opinion. A courteous and considerate man knew that you offended people by telling them how to run their business. It was insulting to walk into a stranger's world, and before taking off your hat tell him that the solution to his impending bankruptcy childishly did that with their patients, but the patients don't warm to it either.

"Well, tell me. Are there some general principles that are usually of value in approaching a new problem business?"

"Ah, certainly," was the immediate response. "The first thing you do is fire the purchasing agents are crooked. They should be replaced once a year." I gulped. That sort of uncharitable generality was not like him.

"And then," he raced on, "You replace the auditing firm. The outside auditor is only concerned with one thing, which is being invited back by management to do the audit next year. He doesn't want to make waves. He wants to send his trainees to do the work, and so he doesn't like to go to a new business; repeat visits to old friends are the thing. Since it is the auditor's job to tell the owners or trustees about the mistakes that management has made, it is in management's interest to have a comfortable relationship. So, the owners are the last to know what's going on."

For a man whose normal speech was excruciatingly slow and careful, he was roaring into overdrive. "And next, you go after the receivable. Most businesses are too slow and careless in collecting their bills. But if you don't collect your money quickly you never get it. Many businesses have huge amounts of money which they call "accounts receivable" but as a matter of fact they are often nothing at all."

"And then, you get rid your losers. There is no slogan in business more pernicious than the idea of the running of "full service" business, or a full line of products. Inevitably that means your profitable products have to subsidize a whole raft of unprofitable one which is just there to seem complete. If people aren't willing to pay the price you have to charge for something, they are telling you to stop selling it. Meanwhile, you have to jack up the price of your profitable products to pay for this nonsense, and so a full line of products eventually becomes a full line of unemployment."

All of this was pretty exciting, and the ring of intense conviction from a man of experience was convincing, indeed. But, as usual, I had stayed too long at lunch with him, and I simply had to go. Where he was going after lunch was unknown to me, but it was a new idea that people wouldn't want to have him be seen going in their door.

Originally published: Wednesday, October 03, 2018; most-recently modified: Tuesday, May 21, 2019