I recently called and old friend to wish him and his family a Merry Christmas and a Happy New Year. We were friends and colleagues for almost two decades first with a company called ATL Ultrasound and then with PHILIPS Medical Systems (the famous old Dutch electronics firm).
In the years before PHILIPS acquired ATL in 1998, the company's management style was quite progressive, fair and supportive (which was the management norm in the 1990s). After PHILIPS acquired ATL, the management style slowly reverted to a 1950s style of top-down management by fear and intimidation. We were frequently reminded that we should be thankful just to have a job while our workloads steadily increased and our salaries steadily decreased.
PHILIPS management behavior is quite typical of a Mergers and Acquisition (M&A) firm. They buy profitable companies, drive out competition, and then start making draconian cuts and disruptive changes all while managing with an iron rod in order to quickly recoup their investment and earn double-digit returns for their shareholders.
For PHILIPS, making a profit wasn't even the issue, it was how BIG of a profit they were making, and it was how quickly they could recoup their investment. And they lived up to the old Dutch stereotype of being penny-wise, pound-foolish, and big cheapskates! Their motto back then was, "Sense and simplicity." We used to sardonically say that PHILIPS' motto should be, "Senseless and stupidity!"
As progressive as they might seem, the Europeans are actually notorious for their hard-nosed, winner-take-all, profit-at-any-price management style. To PHILIPS employees aren't even human beings with hopes and dreams and families they’re trying to support, they're just easily replaceable resources, cogs-in-the-wheel, units-of-production, or line-items on a spreadsheet. The managers and employees who thrived at PHILIPS probably had some degree of psychopathic tendencies without an ounce of compassion or empathy for others.
ATL made state-of-the-art, top quality, and highly reliable ultrasound systems that lasted years (many of them are still in service today). Most of their manufacturing, including electronic circuit boards, was done here in the United States. After PHILIPS took over, most of the manufacturing slowly shifted overseas to China (they only assembled the final products here in America); the circuity, cabling, and structure were not as durable or as reliable as they used to be; and they released products long before all the hardware and software bugs were all worked out. The results were quite predictable: their quality and reliability declined precipitously. As for us field engineers, there weren't enough hours in the week to keep up with the high demand for repairs.
Similarly, the big three American automakers rested on their laurels for years as their quality and reliability declined. It wasn't until they started getting more competition from the Japanese automakers when they finally started to focus more on building better automobiles. Competition works better for the consumer, while industry consolidation (i.e. M&A) and oligopolistic practices only hurts the consumers.
Recently, I ran across an Internet advertisement for quality professionals at PHILIPS. Frans Van Houten, the CEO of PHILIPS, has a video where he talks about the need to improve quality at PHILIPS. His punch line at the end of the video was, "The ultimate cost of not being focused on quality is that we have no future." Well Duh Frans! My colleagues and I were raising the red flag about the declining quality of PHILIPS' medical equipment years ago. Why didn't you and your fellow executives in Holland listen to us then? You don't have to be a well educated genius to figure out that you'll reap whatever you sow. If you plant weeds you can't expect flowers to grow. It's nice that PHILIPS is finally starting to focus on improving the quality of their products, but I can assure you the only reason is because their poor quality has probably caught up to them and has begun to seriously affect their bottom line!