Theoretically, there was nothing wrong with a decision to change Advent's distribution system or to build a one-piece TV. Department stores and one-piece sets worked just fine for RCA, as Sprague points out. But Advent didn't have the money for the advertising support needed to spur department store sales. And Kloss thought a one-piece set was the wrong product for Advent. "Everyone else had one. It was a very elaborate mechanism with a lot of extra switches, more complicated than a small manufacturing organization should have tried to do." But Sprague was no longer interested in Kloss's idea of Advent. And Kloss, convinced he was right, left in October 1976.
As Kloss predicted, the strategic shifts failed to produce the desired results. Neither the one-piece set nor the profits materialized on the schedule Sprague had in mind. In May of 1977, Sprague asked Lamond to resign and appointed himself Advent's third president. But Sprague continued to concentrate on mass distribution and a one-piece TV. Observers began to note "a hiatus of product development," says Frank Reed, who was then vice-president of sales: "Management did nothing to maintain involvement in cutting-edge electronics." Advent declined to license a new tube Kloss offered, and turned down a new lens designed by a major supplier, U.S. Precision Lens, in Cincinnati. Quality control fell apart. Advent's own employees didn't support the company's new directions, and it was hard for outsiders to tell what the operating strategy was. And in Sprague's search for new markets and big numbers, Advent lost its focus on what had made it special -- its ability to incorporate technical advances like a new tube or a new screen into its products before the big companies did.
Advent did make money the first year Sprague was president. Prices on most products were higher, and sales of TVs increased 42%. Net income was $2.3 million on sales of $35.9 million in fiscal 1978, nearly three times the previous year's. But in fiscal 1979, the cost of a concept that didn't fit the company showed up on the bottom line: Advent lost $2.6 million.
In spite of all the problems (which included a very expensive and disruptive move of manufacturing operations to Portsmouth, N.H.), most suppliers, retailers, and industry observers continued to support the company's efforts to pull through. And Sprague finally bowed out of the president's office in April 1979 when he hired William Anderson, former executive vice-president of Sharp Electronics, to be Advent's fourth president.
Meanwhile, the video industry was growing up. GE, Sony, Toshiba, and Hitachi had picked up the new lens that Advent had declined, and Henry Kloss had started Kloss Video with his new tube. About 50,000 large-screen TVs were sold in 1979. And Advent, which once had dominated the market, sold just 10,600 of them. In fiscal 1980, even speaker sales fell off.
Enter the marketing superstar. Wearing a three-piece, pinstriped suit and smoking a pipe, Bernie Mitchell was dreaming bigger dreams about what Advent might become. Through most of the '70s, Mitchell had been convinced that he was a genius; that while he was president of the company, Pioneer had grown from $2 million to $230 million in sales because he was so bright. It wasn't until he looked at the industry more carefully, at the end of 1979, that he realized that he was only a little brighter than some people, but that he had "grabbed hold of the tail of a kite just before the wind blew, and it took me right to the stars."
In 1980 Mitchell was looking for the next kite. The Japanese parent of U.S. Pioneer wanted to control further expansion from Japan, and Mitchell felt he'd taken U.S. Pioneer as far as the parent was going to let him go. He wrote to Sprague at the end of December 1979 that he was convinced the 1980s would bring a revolution in the audio/video industry, one that would create "the biggest economic opportunity the industry had ever seen." By 1983, he said, the major household purchase would be not a stereo or a TV, but a "home entertainment system" consisting of a big-screen TV, a video disc or cassette player, an audio amplifier, and a pair of high-fidelity loudspeakers. And he thought that with enough money, Advent could build on its respected name and product line, and become not just a participant in this revolution, but the leader. He thought it could be a $156-million company by 1985.
"It was all very exciting," says Sprague. "If you're an investor in the company, and this guy says he can build a quarter-of-a-billion-dollar company in five years, you say sure. If Bernie could have pulled it off, we would have given him a gold medal along with a lot of stock options."
The dream that Advent would lead the video revolution had worn thinner as it was repeated by each of the four previous presidents, but coming from a man who had just realized that dream for another company gave it new life. On February 1, 1980, Sprague installed Mitchell as vice-chairman and chief executive officer of Advent, leaving Anderson as a figurehead president.
The week Mitchell joined Advent, he ticked off the three major problems as capital, capital, and capital. But it wasn't long before he began to add to the list.He says now he didn't know the real status of the financial base Advent was working from, that he thought the company had three projection television sets to sell -- two in production and a third that had been in development for three years and was almost ready to go into production. But he learned very quickly that "of the nine products in the Advent line, two could be built for another three months at most, and four had negative profit margins. We had three profitable products. That's just not enough.
"We had to go from a longer-term, skillfully drawn strategic plan to a short-term plan that we called 'stepping stones in the water," Mitchell complains. "We had to hit every single stone very carefully to make it to dry ground. 'Normal' was losing three to six hundred thousand a quarter. You can't tolerate normalcy very long at that rate. So the problem became how do we fix normalcy and begin to do things that will restore this company to some level of importance with its potential customer base." And the task wasn't particularly wellsuited to Mitchell's expansive, salesman-like temperament.
