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Chapter Thirteen

1983 to 1988 - The small companies

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By 1983 AWA had fallen into the hands of "modern managers". While Sir Lionel Hooke was alive, the mission of the company was to provide all the electronic research, design, manufacturing, and service capability which would make Australia independent of foreign suppliers. When I joined the company it had an unbroken history of providing for the nation whatever electronic technology was needed from the first beam wireless built in 1913 to allow instant and direct communication with England, through to special-to-type electronic systems for military application, aircraft instruments, aviation navigation aids, transmitters and receivers for military communications, scientific experiments and commercial radio and television broadcasting, two-way car radios, telephone equipment, microelectronics including the first heart pacemakers, provision of television sets for hire by patients in hospitals, and nationwide services such as communications services for ships at sea. It was a great place to work and one could be proud to be contributing to the nations well-being.

When Sir Lionel died, his son John took over the leadership of the company. He had been educated as an engineer and had been given experience in all aspects of the business. It seems he didn't actually understand the mission because he assembled around him staff who convinced him that getting into Australia's top 100 companies list was the more important than making things. He made decisions solely to increase the company's market capitalization and forgot that it takes a short time to lose a particular capability but a long time to build it back up.

After I left AWA, but while I was still in touch with what was going on, the "Great Forex Scandal" unfolded. In January 1987, the company half year report revealed that all the operating activity of the company had resulted in a $50 million loss which had been offset by a $50 million gain on foreign exchange trading. This was something of a slap in the face to all the people who had continued to do what they did so well but only managed to make a gigantic loss. It seems that the company had felt a need to hedge against foreign exchange losses and had appointed a young management trainee in Head Office to do the necessary foreign exchange trading. He had apparently been wildly successful and the CEO, John Hooke had taken personal charge of the management of this activity, cutting out anyone who would advise him. That August, there was a delay in releasing the Annual Report and when it eventually came out it revealed that the half year report had not been accurate. Indeed, the operating divisions had made a profit of $50 million for the year while the foreign exchange trading had made a $50 million loss. It seems that the young foreign exchange trader had been playing fast and loose with the companies money by rolling over deals to hide his lack of success. He had been involved in an accident which put him in hospital and all the deals had come unravelled. There was a great deal of recrimination at the Annual General Meeting. It was revealed that the company's bankers had strongly advised against the forex activity as had all the senior staff at Head Office. The final wash up of the scandal was a fine of $12 million for the company's auditors, the sack for the foreign exchange dealer, but no significant penalty for John Hooke who continued to inhabit the board rooms of some of Australia's top companies.

I became aware that the company was going to become less fun to work at and decided to put my accumulated knowledge and skill at the disposal of a small company which wanted to grow. The one thing I didn't realise was that I had no skill at picking winners in the small company struggle. I worked for a company called Digital Electronics which had been started by three Tech lecturers to build electronic equipment for tech colleges. They had grown into a company making computers for business using all imported electronics with the only home-grown stuff being the enclosures. They called themselves the Australian Computer Company and could have been a success but weren't. In my nine months with them I had three bosses as each one of the partners in turn tried to run the company. None of them was successful and I left before the inevitable crash came.

There are lots of bad memories from my time at Digital Electronics but one story stand out in my mind. Boris was the boss at the time and he came in all excited about a new technique he had discovered at a seminar called "Just In Time". I asked him to explain it to me and I realised that it wasn't remotely applicable to our situation. The secret apparently was to bring material into stock only when it was immediately needed. The result was supposed to be a tremendous reduction in stock with a resultant decrease in costs. I listened politely to his explanation and them asked him to come with me to the store. I asked him what he could see and he said there was all sorts of stuff gathering dust just as he had expected. I remarked that he hadn't seen the one rack which had no dust and no stock. This was the location of all the stock being used in our current products. Because of credit restrictions, I was buying in each month what stock I could get is quantities just enough to satisfy the most urgent orders. This stock would remain in the store foe a few days while the products were being assembled and then we would wait for next months deliveries. I asked him if we could get any more "Just In Time" than that. We didn't talk about "Just In Time" again.

Many years late I read a book about Taichi Ono, the inventor of "Just In Time". He was responsible for all Toyota's manufacturing and had been tasked to change the manufacturing process so that the company could deliver any car, any colour, any option set, within eight days of order. He devised a system of holding most stock off site, generally at the parts manufacturers' factories, and of ordering stock to be delivered every day in just the right quantities and just the right mix to build that days orders. He had always been puzzled why his system was being touted as a stock reduction technique because he had had to increase total stock considerably in order to achieve the short delivery cycle.

At year end, I was instructed to do a stocktake and was given a dollar figure I had to achieve. I said I would do an accurate count of all stock and that the accounting system would determine what the stock was worth. In the event, they achieved the desired figure without difficulty because all the dusty stock was still there from the previous stocktake and they had not written down the old stock valuation it in the light of its uselessness; to do so would have resulted in a dramatic, and perhaps fatal, loss in the year end books.

In need of a new job I answered an advertisement by Aristocrat Industries, a poker machine design and manufacturing company run by Len Ainsworth who was, at the time being tried on a charge of corrupt practice because he employed people who set themselves up to be independent consultants giving unbiased advice to clubs planning to install poker machines. The interview was quite surreal because both he and I realised within a few minutes that I was never going to accept a job working for him and he was never going to offer me a job anyway.

Still believing I could make a contribution to a small but growing company, I found a new job with a company called Time.Office Computers. This looked to be a much better organisation as it was developing new products and had good orders and high quality staff. I should have realised from the idiosyncratic name that there was something not quite right. I soon learned what when the boss decided to stop production of the existing product line to concentrate all efforts in the design of the new product which he had sold to the Taxation office. The inevitable happened with no income and high outgoings, the company went broke. I discovered the particular skill of the boss when it was revealed that he had sold all the assets.\, except the cash which he kept for himself, to the bank so he didn't go bankrupt but the company went under anyway.

I had some interesting experiences at Time.Office Computers. I was given a brief to design a keyboard. There was no real specification but there was already a set of moulding tool to make the body and all the keycaps. Porsche Design had been given the brief to design an "ergonomic" keyboard so they produced some very sexy drawings of a keyboard. The tools had been made to fit these drawings but nobody had given much thought to the mechanism. There was a vague idea that an inductive sensor would fit in the space available but no-one had thought about the feel of the keys which is probably the overwhelmingly important contributor to an "ergonomic" design. I decided to copy an existing capacitative keyboard design which had the right feel and set about reproducing all the parts using local materials. We succeeded in getting everything right except for the compliant pads which carried the active element and also provided a soft landing for the key. I discovered that we couldn't achieve the required tolerance on the material and the keys were not entirely reliable. Years later I was to visit the maker of the keyboard I had used as my model and, in a quiet moment, asked the engineer how he achieved the require tolerance. He admitted that he didn't know that the tolerance was critical because he just used material that he was able to buy it from a guy down the road.

Before I left I redesigned the keyboard using American key switches which worked and fitted in the body we had made. All the spiffy Porsche design went out the window but at least the thing worked.

When I had joined Time.Office Computers, I found that the QA Manager was a guy I had worked with at AWA. He was then a QC person and had not impressed me with his grasp of what made for a good quality assurance system. I was able to help him put a set of procedures in place which passed the necessary audit and the company was accredited. The boss decided to reorganize the structure of the company and I found myself working for this guy. His promotion convinced him that he knew better than me and he no longer accepted my advice or help. My previous boss had asked me if this new organisation was going to work and I said it would as long as my new boss didn't interfere with my work. His lack of interference lasted a short time but one day he called me in to his office and told me to sack four of my six staff. As all of my staff were specialists in different disciplines, I asked him which third of the work he wanted us to do. We agreed on the most pressing tasks and I nominated the four candidates for the sack. He didn't accept this recommendation and told me to fire four guys that he nominated. I said I would but that the work we could do would not be the work we had agreed on. I sacked the four guys, told the other two what had happened and suggested that they would be wise to seek new jobs too, as I was planning to do. A month later the seven of us had a dinner together to celebrate our new jobs and our escape from the madhouse.

Some years later I had a phone call from a senior manager from Wormald with a request for a reference for this guy. I enquired why I was being asked for a reference as I knew he wouldn't have listed me as a referee. The Wormald guy said I was right but that one of my bosses from AWA had suggested that he seek my views. I said it wouldn't be proper for me to provide a reference because I had had a run in with the guy and my reference wouldn't be fair. He begged me for my thoughts anyway and I gave an honest opinion at some length. When I had finished, my caller thanked me for my thoughts and said that, far from being biased, my reference matched those provided by the other referees.

I found a job with a small company, JNA, which designed and built specialized digital communications equipment. This was a good place to work and I was pretty happy there for two years. I only left because my boss had moved to Ausonics and had poached me. I was pleased to go as the thought of working for the General Manager with whom I had a very strained relationship was not inviting.

One fascinating experience I had at JNA concerned the procedure for setting up manufacturing orders. When I arrived to take charge of the design support of all the existing product, I found that the Production Manager was setting up work orders on his own initiative. I recall that he decided to make 100 off of one new little specialized product. We sold 2 and the other 98 sat in stock for ever. I urged him to have the Sales Department order product from the factory as they were in a position to know roughly what the market wanted but more importantly, they needed to be responsible for selling everything that was manufactured and making them "buy" the stock from the factory would set up the right priorities. Everyone thought I was being pedantic but I was eventually successful in changing the process with beneficial results. I believe the new system fell into disuse when I left as I had only won the battle and not the war.

There was a common thread running through all three of my employers since AWA. Each of them had received a $1,000,000 grant from the State Government. Both Digital Electronics and Time.Office Computers had used up the money and then gone broke. JNA were asked what they had done with their grant and, to the great relief of the guy from the State Government, they said that it was still in the bank.

Ausonics, a manufacturer of ultrasound machines, and my next employer was quite the worst place I ever worked. I was once again responsible for the design support of all existing products. I had a hard time getting anyone to do things in a professional manner. When the American FDA booked a visit to confirm our accreditation to make therapeutic devices, I prepared for the visit by checking out all of our processes. There were many areas where our procedures were inadequate but one particular area seemed to me to be likely to lead to deregistration. I didn't find any evidence that we measured the energy intensity of the ultrasound in the body. This was explicitly limited by regulation with one level for normal examinations and a lower level for foetal and optical examinations. I asked around and was told to talk to the original designer. He told me that they had done some calculations when they had designed the machine and shown that the limits would not be exceeded. I asked if they had ever measured the energy density and he said that they didn't know how to. In the event, the FDA didn't notice the problem and we went on making and selling therapeutic devices with no assurance that they were safe to use.

My boss from JNA, for whom I had moved to Ausonics, decided to leave. When I got to work on the Monday following his departure, I discovered that all my colleagues and our boss had had a weekend meeting to decide what management changes were needed. They had decided that all my fellow managers were to take joint responsibility for managing the engineering department with me working for all seven of them. This lasted a couple of weeks until even Blind Freddy could see the complete stupidity of a seven-headed monster manager. The new Engineering Manager was a rough as guts pragmatist who didn't have too many clues about the manufacture of anything, much less therapeutic devices. I survived until I found a new job.

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Created: 29/1/07 and last revised 6/2/07
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