... more specifically, the financial aspect of the show (with references to Martha Stewart and general cheap shots at wrestling thrown into the mix to spice things up!) :
TOO LEAN A MACHINE
By CHRISTOPHER BYRON
CURRENT events put me in mind of a time some years ago when a fellow named D. Edward Deming burst upon the scene, proclaiming what he called "just in time" inventory management to be the new elixir of business.
Mr. Deming's theory, which took root first in Japan and is now taught in B-schools everywhere, seems an apt subject to ponder these days. From a management point of view, it offers a useful perspective on those disturbing weekend reports that elements of U.S. forces in Iraq were running low on gasoline and were down to one meal a day.
Demingism may even help us understand the smackdown that may be due this week for shares in Stamford, Conn.'s, troubled World Wrestling Entertainment.
Though you might not think it, WWE is a media company with more than a few intriguing parallels to a company that would seem its polar opposite in every way: Martha Stewart Living Omnimedia Inc. One does not readily associate the Queen of White-Bread Living with stupid men on steroids who prance around in bathing shorts and pretend to try to kill each other - yet the parallels are there. Both companies are media-based, both went public to much hype and hoopla 31/2 years ago - on the same day, Oct. 19, 1999 - and neither stock has again reached the heights it attained during its first few minutes of trading. Both now trade for barely $8 per share.
More importantly, though both companies like to talk about their diversified activities, the two businesses are fundamentally one-trick ponies. Martha herself is of course a lifestyle stunt. And, as everyone knows, the World Wrestling gimmick involves the marketing of pretend violence.
Martha's company is already reeling from its struggle to escape the taint of its namesake's legal problems. And now a different set of pressures, which we may call the margin-worshipping obsessions of Demingism, are bearing down on the WWE.
The latest problem: The company's biggest and financially most crucial event of the year - its annual pay-per-view cable event, called Wrestlemania, which took place over this last weekend - may well have turned out a flop.
All your favorite meatheads were of course set to appear, grunting and snarling through all your favorite fake moves. Unfortunately, viewers may well have been elsewhere, tuning to cable TV's all-war-all-the-time news channels to behold real-life killing, with real blood and real fear.
We'll get more deeply in a minute into what this now means for World Wrestling Entertainment, which increasingly has come to count on this annual "just in time" event to buoy its business in a climate of declining viewership and weakening top-line revenues. But first, a thought or two on Mr. Deming and his theory of business management.
AT its narrowest, "just in time" inventory management seems an unexceptional concept, suggesting, basically, that you shouldn't buy something until you actually intend to use it. Applied to the management of a manufacturing company's inventory, it means reorienting one's thinking to regard the trucks that deliver the parts to the factory as being nothing more than warehouses on wheels.
But Demingism isn't really a theory of inventory management so much as it's a way for cash-starved companies to wring the last nickel of profitability out of their activities by pushing every cost possible onto somebody else.
As such, Demingism has long since leaped the bounds of business itself, evolving into an increasingly elaborate philosophy for managing nearly everything Americans now do, from running our largest companies all the way down to deciding what goes into the kitchen fridge.
Squeezed from every direction by the pressures of slowing growth and cheap foreign labor, we've become a nation of Deming lemmings. Last week, Charles Schwab & Co. joined the rush, announcing that the company will no longer be making matching contributions to employee 401(k)s.
Yet the truth is, Schwab was behaving no differently from countless millions of American housewives, who have learned to stretch their family budgets by stocking just enough food in the fridge to tide them over until the next frantic dash to the store.
Our national fuel tank is being managed the same way. With a record low 74-day supply of oil now in inventories, vs. an 84-day supply in Europe, we're keeping not much more gas in our tanks than it takes to drive to the station and buy some more.
Put simply, we've re-engineered American life to run everything we do at its leanest and most efficient, with the least backup and system redundancy possible. And we've become so accustomed to doing things that way, the cult of Demingism has become as ubiquitous and transparent as the very air we breathe. So we've lost sight of the fact that efficiency at the expense of redundancy makes any system more prone to failure.
REMEMBER all that ad vice from the Federal Emergency Manage ment Agency about having canned food in the basement to survive a germ attack from al Qaeda? It seemed hilarious at the time, but in a way it's entirely sensible. In millions of homes all over the country, there's simply nothing to eat.
From which I suspect may have flowed the notion that seems to have captured Defense Secretary Donald Rumsfeld and certain of his DOD acolytes - that one could launch a war 6,000 miles from home by means of what is now being called a "rolling start." A single suicide bomber knocks out a single fuel truck, and the whole supply system begins to quiver.
Now I am sure all this will work out well in the end for U.S. forces in Iraq, and that Saddam Hussein and his nutcase son will get what's coming to them.
On the other hand, I suspect Demingism may have a less hopeful fate in store for those "just in time" investors who've been clinging to their World Wrestling shares for a payday that may never come.
WORLD Wrestling En tertainment has been around as a sports business for 20 years, but only for the last 31/2 as a public company. And, save for a brief and painful foray into something it called "extreme football," along with a restaurant and retailing complex in New York, the company really hasn't done much to move beyond its basic bit of arranging for shaved-down muscle men to smack each other around in the ring.
The company rightly and quickly dropped the football idea when it proved an obvious flop, and it's now in the process of shutting down the New York retail complex as well. But so far there seems to be nothing new on the horizon except the same old same-old. And that dog just won't hunt no more.
Revenues for the company peaked in 2001 at $456 million, and are now running at an annualized rate of $412 million - the third straight year of decline. The company recently offered some even gloomier numbers for the year ahead, suggesting that revenues may fall to $375 million. Meanwhile, the bottom line slipped into the red in the October quarter for the first time, and moved deeper in January.
The company's cash flow looks good, and the balance sheet is strong, so there's plenty of room to try something new. Yet Demingism is in the air, at WWE as well as elsewhere. So nothing much in the way of big new plans is likely to develop - especially when one can always fall back on the annual Wrestlemania, which caps a quarter that routinely brings in 30 percent more top-line revenue than any other quarter of the year.
This year, alas, the company and its investors alike may be disappointed - a painful reminder of how suddenly and disruptively "just in time" can turn into "not in time" - in war and business alike. The best laid plans?
* Please send e-mail to: firstname.lastname@example.org
(edited by Alessandro on 3.4.03 1342)
Alessandro "Hercules" Boondy
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The Mean Green
I make the examination of this shipment, he pleasant true altitude of the enamel, hard give to return to this feminine line lateral and posts he in the right its donkey of the sugar refinery! If odore he, of who the cook of the form of the cliff!
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|#2 Posted on 4.4.03 1207.19 |
|OK, our author wants to bash on Deming's just-in-time management philosophy -- a laudable goal. But he hauls in brief, inapplicable references to WWE & Martha Stewart to garner some readership who couldn't care less about the central topic. Uhhh ... dumb.|
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|#3 Posted on 4.4.03 1222.34 |
|Obviously Mr. Byron did not hear that Mr. Goldberg is coming to save us all!!! :)