Free At Last

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Life in the business world is full of surprises. Had anyone suggested to us a few years ago that we'd be better off putting our small-but-growing venture in the hands of a former oil company executive, we'd have probably answered, right, and who should we get to handle the long-range financial planning, Alan Greenspan?

Yet that's exactly what we've done. Eleven months ago, after recalling all the horror stories about company founders who bring in top management from the outside and live -- sometimes barely -- to regret it, we took the plunge and hired a chief executive officer for New Moon Inc. Of all the decisions we've made in business, individually and collectively, hiring someone to manage the company might just be the most liberating. It certainly is among the most logical.

Not that seeking experienced counsel was anything new to us. Since its inception in 1978, our company has often profited from the worldly advice of outside experts, and with good reason. One of us (Randi) was a college art major who turned to making futons -- nonrigid Japanese-style mattresses -- when she could not find a high-school teaching job. The other (Michael) had been a carpenter, farmer, and acupuncturist before accepting the challenge of running a burgeoning manufacturing business.

Our inexperience in business did not hinder the growth of the company, whose revenues reached $4 million last year. From manufacturing futons in a fifth-floor Chinatown walk-up to retailing, wholesaling, and marketing them by mail order and, more recently, to launching a line of futon-compatible furniture, we helped guide New Moon into areas that exceeded all initial expectations. But our success also taxed our limited expertise. At first, New Moon benefited from such programs as Boston College's Small Business Development Center, which supplies free consulting help to young enterprises like ours. Later, once we had the money, we routinely hired the horsepower: book-keepers, computer-systems analysts, retailing experts, you name it. "Consultant" was never a dirty word around our office.

Still, it's a long way from commissioning an inventory-control analysis to telling a near-total stranger, in effect, come work for us and get a percentage of our company. Don't do anything we wouldn't do. And please do it with us, not to us.

What brought us to this step? A combination of factors. On a practical level, New Moon had expanded to the point where managing two retail stores and a manufacturing plant grew difficult for us. Planning was impossible, because no two months ever looked the same. And inventory control became a major headache. If we weren't overstocked on one item, thanks to a new supplier coming in to undercut the market price, we were ow on something else -- and facing a 120-day lead time on new orders. Running the business in this kind of crisis-control environment wasn't much fun. A miscalculation on inventory not only threatened the financial health of our company, it terrified us personally. Responsibility for the company and its employees rested entirely in our hands, and the tension was taking its toll. At best, we were living with an unlivable amount of stress. At worst, we felt completely out of control.

We were trying to keep our retail concept fresh, we were discussing regional distribution centers for the wholesale business, and we were dealing with foreign suppliers. Unfortunately, some of the day-to-day details of running the company were slipping through the cracks. As managers, we could ask our employees to work that much harder, to put in longer hours; as parents, however, we couldn't justify taking that kind of personal time away from our son. New Moon was no longer a mom-and-pop operation, and Mom and Pop themselves were getting stretched a little thin -- not to mention Noah Young, age eight. For his sake and ours, we even discussed selling the company. And that proved divisive too: Noah's father was burned out and ready to call it quits; his mother wanted to hold onto the business -- though not if it meant managing New Moon by herself. Physically and emotionally drained, we struggled with that issue as hard as we'd struggled to build New Moon in the first place.

But the larger principle at work was really the Peter Principle: everything the two of us could reasonably hope to accomplish on creativity and energy alone, we'd already accomplished. If we wanted New Moon to amble along at a slow-but-steady pace, fine. But if we wanted it to roll out new product ahead of our competitors, or to weigh a public offering as a means to finance future growth, then we needed a level of experience and contacts that we simply did not have. It wasn't a question of not knowing where we wanted the company to go; we had the vision, the blueprint, the dream. It was a question of how to get there -- and quickly. To do that, we didn't need a marketing guy, or a financial guy, or an organizational guy. We needed someone who could be all three. And you don't normally attract someone of that caliber without giving up some serious control.

So, in looking around for yet another hired gun to advise us on what to do, we asked ourselves a few questions. For instance, how would we go about implementing any recommendations he or she might come up with? And how much decision-making control were we prepared to delegate? Meeting Norman Klas -- a former Texaco Inc. executive and the president of a consulting firm that specializes in start-ups and growing young companies -- for the first time, we were impressed with his understanding of both the company's needs and our personal values. We cared about all our employees, from the managers to the production people, and so, it seemed, did he. The chemistry was instantaneous. Also impressive was his pitch to us that we needn't sell the company in order to see it reach its full potential. In checking Norman's references, we asked two former clients of his what, in hindsight, they would have done differently. Both answered: hire him full-time ourselves. That seemed encouraging.

So were his credentials. In addition to having been through Texaco's corporate training program, Norman had bought (and grown) his own oil-distribution company and helped some dozen start-ups get off the ground. Though his experience working for a Fortune 500 firm had relevance for us -- like New Moon, Texaco is as much a distribution company as it is a manufacturer -- it was his work with smaller companies that convinced us to bring him in last December.

To be honest about it, not everyone at New Moon felt as we did about the hire. By mid-1987, our company had 52 employees on the payroll; many were used to doing things their own way -- indeed, we encouraged them to -- but in at least a few instances, lack of supervision equaled lack of performance. Suddenly, this sloppiness was getting noticed, and that made some folks uncomfortable. Power centers were shifting, too. In all, three of our middle managers decided to leave, two of whom we probably would have let go anyway.

We've had to make adjustments, too. No longer does every mundane decision get routed through us. One morning we arrived at the office and discovered, to our surprise, that New Moon was the owner of a new delivery truck. That was a shock. A month or two before, we could not have imagined the company making such a purchase without one of us authorizing it -- or signing the papers ourselves. But that's part of giving up control. Sometimes you're going to feel like you're standing outside, nose against the glass, looking in at your own company. Sometimes you're going to wake up in the middle of the night thinking, who's really in charge here? And where does that leave me?

There's no doubt, however, where the change has left our company. Sales are up 85% over the first three quarters of 1986. Employee morale has never been higher: people are coming in earlier, staying later, cheerfully working on weekends. There's a whole new level of motivation and excitement. After years of anxiety about coping with growth issues, they appreciate the professionalism that Norman has brought in with him -- appreciate it to the extent that some have even confessed to us that they feel that old sense of nervousness overtaking them whenever the new CEO isn't around. Such personal issues as pay raises and power loops, once depressingly common among our staff, have gradually given way to a newly shared sense of purpose. We could hardly have hoped for more.

We also have people on board who would have never joined us otherwise. Our acting chief financial officer, for example, is a former Wall Street financial strategist with years of experience in orchestrating initial public offerings. Similarly, our new director of retail is capable of thinking nationally -- and has the track record to support it. Could we have attracted this type of person on our own? Probably not. Though we'd often made the right decisions managerially, we'd made them all on hope. That wouldn't work at this stage in New Moon's growth. Even we wouldn't trust ourselves to make those kinds of decisions today.

While we've given up a lot, we've gained a lot, too. Michael is taking a more circumscribed role in the business, partly to pursue other professional interests, partly to devote more time to our son. Randi remains the company's style-and-concept overseer, doing everything from buying accessories and designing fabrics to determining the high-end/low-end marketing position for New Moon furniture. In other words, doing what she wanted to do with the business in the first place.

Has hiring outside management made all the worry go away? Not on your life. Is there hope on the horizon? Shining like a new moon.