Who's In Charge Here?
Billy Ladin is short and wears bow ties. Paul Frison is tall and does not.
Ladin dashes wherever he goes -- through the office, around his stores, to the car. Frison runs marathons out-of-doors.
Ladin talks everything out. Frison wants reports and memos in writing.
Ladin wants it now. Frison would rather wait until you're sure you've got it right.
Ladin is spontaneous and doesn't make plans. Frison is organized and does.
If they weren't so different, they probably wouldn't be able to work together. But then, if they weren't so different, there wouldn't be any point to their working together. Where one is weak, the other excels. What one dislikes, the other prefers. Where one has no experience, the other is expert.
As a complementary team, Ladin and Frison make perfect sense. Every business could use one. There is just this single, small peculiarity about their relationship.
Day to day, Ladin works for Frison, who is president and chief executive officer of ComputerCraft Inc., an expanding, Houston-based chain of 62 retail computer stores (at the moment). Ladin, his employee, is executive vice-president of marketing and acquisition. But Ladin is also the founder of the company, its majority stockholder, and the man who hired Frison. Once a quarter, they turn things around, and Frison works for Ladin. These reversals occur when Ladin dons his chairman-of-the-board hat.
A bit of confusion about who's who at any given moment is just one of the costs of keeping this odd-couple team intact. For Ladin, it is a trial, an experiment, to see whether he still can contribute value to ComputerCraft's growth even after it has grown beyond his own management capability. "It's no shame to me that I can't be a great CEO," he says. The question is, can he be a great employee?
A friend describes Ladin as the "Fourth of July." He gives that impression. He can't sit still. If he isn't talking, he is listening -- energetically in either case. You never know when he will shoot off a new notion. And impatient? Whether it is a cup of coffee or the answer to an inventory shortage problem, he wants it right now. He thinks in broad concepts; small details elude and bore him. He is just the sort of person you would expect to be on his third major business start-up, which is what ComputerCraft is.
Alongside Ladin, Frison seems calm, deliberate, cool, and polished, his rough edges smoothed by 21 years of jostling through the management ranks at American Hospital Supply Corp. and later at Lifemark Corp., a hospital management firm where he became president. He is friendly but circumspect, much more cautious about what he says and to whom. He is briskly efficient and predictable -- not explosive. If he isn't remarkably inspiring, he is very reassuring -- just the sort of person you would expect could bring order to a high-flying start-up business that has more dreams than plans, more energy than organization, and more dedication than discipline. "The first thing we're going to do," he told Ladin when he became CEO of ComputerCraft, "is get control of this company. No more acquisitions until we've grabbed the reins." But it was worse than he thought. "For the first few months," he says now, "we couldn't find the reins."
What brought Frison to ComputerCraft is the familiar story of the rise and demise of the entrepreneur: Man (Ladin) starts company, runs it till he can't, brings in manager (Frison), and retires to board. Only this time, Ladin rewrote the plot. He had fashioned the concepts of his first two companies -- Lifemark, the same company later headed by Frison, which Ladin started in 1969, and Mobile Communications Corp. of America, a beeper and automobile-telephone company he started in 1973 -- and then left the execution of the concepts to others. Lifemark achieved annual sales of $600 million before being merged with American Medical International Inc. in January 1984. Mobile Communications's sales were $48.7 million last year. Ladin takes pains to be sure that his listener understands that he is not criticizing the people who ran those companies, but, he says, "I have the chutzpah to believe they would have been better companies if I had stayed involved." That is why he is putting everyone at ComputerCraft through all this bother.
A good deal of the bother, of course, had nothing to do with Ladin's staying. It was the normal response people have to getting a new boss, to any major change. Worried senior executives had to be reassured that Frison wasn't going to clean house -- at least not for 90 days. Some old-guard/new-guard antagonisms developed as Frison began hiring his own brand of manager. The good old days improved with age. Senior vice-president Armand Shapiro recalls when "the culture here was not to worry about who screwed up, but just getting it fixed and getting the job done." Now, he says, people worry first about covering their own backsides.
Ladin's staying on as a vice-president has compounded some of these usual problems, and added some unusual new ones. Because he is still in the company, and chairman of the board as well, Ladin is a magnet to anyone unhappy with new procedures or rules. "People have come to me and said, 'Do you know what Frison is trying to do now?' If I react at all, I've undermined Paul." And there is often confusion about which hat he is wearing at any given time -- especially in the minds of the troops. Executive vice-president Dennis Reaves, a recent arrival, was talking about closing a classroom in a downtown store to save room. "And somebody," says Ladin, "asked me how I would feel about that. I said, 'God, I think it would be terrible.' Word got back to Dennis that Billy said you can't close the classroom. If I weren't chairman of the board and largest shareholder, nobody would give a damn what I said about classrooms, because it isn't my area. When am I passing down corporate policy, and when am I the vice-president of marketing? That's what they have trouble remembering." Other vice-presidents, he says, sometimes hold their tongues at meetings. "They're scared to fight, and that's real hard on me, because all I want to be is one of the guys out there working in my area."
These problems and others -- for example, Ladin dares not comment on anything when in a ComputerCraft retail store lest he throw the manager into a panic -- will pass in time, however. Reaves says he isn't afraid to take Ladin on, and frequently does. Anyway, those aren't the issues on which Ladin's experiment will succeed or fail. Sometimes Ladin may want to be one of the guys, but he can never really be just that and he, and Frison, know it.
There is only one relationship in ComputerCraft that is crucial to the company's growth and survival, and that is the delicately balanced and terribly vulnerable relationship between founder and CEO. The experiment Ladin and Frison have undertaken will succeed only if they can remember who is wearing which hat, if they can protect their own egos from deliberate or inadvertent bruises, and if they can live by the commitments each has made.
The Ladin-Frison partnership resembles marriage after a lengthy courtship. The big issues -- whether to have children, where to live -- have already been settled. For this odd couple, it is the little issues -- who sits at the head of the table during department head meetings and who talks to the press -- that need dealing with constantly.
Frison, with more than 20 years' management experience, joined ComputerCraft's board in early 1983 just as Ladin was getting ready to take the company public. By December 1983, when they started talking seriously about his moving into the CEO slot, Ladin and Frison already knew that they agreed on the company's goals and the strategies for achieving them. What they didn't know was whether they could work together day in and day out. They needed techniques for dealing with minor clashes that could escalate to board-level confrontation, since there was no getting around the fact that to Frison, Ladin would be employee and employer.
As the pragmatist, Frison was the most skeptical. "I told Billy, 'You're a very disorganized person, and I tend to be pretty demanding of myself and of others in that respect. You also own half of this company. Do you really want somebody to take over as CEO? Do you know what a CEO is? You say you want to be chairman. The chairman can't vote unless there's a tie, and with the number of directors we have on our board, it's impossible to have a tie. So you never get to vote. Are you willing to take no for an answer when you really believe you're right? You're aware,' I said, 'that you'll have the reality of knowing that I can walk up and fire you anytime I choose to. . . . Can you be subordinate within this organization?" Ladin, Frison says, gave him all the right answers.
They acted out the roles for hours at a time, trying what-ifs on one another. What, for example, if one of the old guard came to Ladin and said, "Did you know that Frison is doing such-and-such?" (The correct response, they decided, was for Ladin to say, "That's between you and Paul.") If that sounds like a trivial game for men to play, better to work out the answers while it is a game than to risk the business over trampled real-life feelings.
Attorney, merchant banker, and former Texas International Airlines Inc. president Howard Wolf, a ComputerCraft director, insisted that if push ever came to shove on an operating issue -- not a strategy question that clearly fell to the board to debate, not whether to skin the cat but how -- Ladin would have to defer to Frison. And Wolf exacted a promise from Ladin that "if it didn't work between him and Paul, and if Paul was doing a good job" Ladin would leave the staff. It has not come to anything quite so dramatic as that yet. The drama is elsewhere -- in the internal changes the past year has brought to ComputerCraft.
A year ago, before Frison, nobody knew what holidays the company observed, because it had never occurred to Ladin to prepare a schedule. Before Frison, many of the stores used their own systems for reporting sales and inventory. Now they have uniform systems for all stores. Before Frison, salespeople in different ComputerCraft stores earned different commission rates, reflecting the policies in effect when their respective stores had been acquired by the company. Before Frison, there was no clear definition of organizational responsibilities. "They didn't need [an organization chart]," he says, "since everybody reported to Billy."
A year later, that has all changed, and Ladin isn't embrarrassed to admit that the changes are good. "At one point I was right for this company. Today I'm not. Does that make me a bad person? I wonder how Paul would have done with a little tiny ComputerCraft in 1977."
In the role-playing they did, says Ladin, he and Frison tried to anticipate as many specific problems as they could dream up, but they crafted a general solution to cover the unanticipated. "We decided that most of the information I get and most of the things I do as chairman will go through Paul. Say, for example, I want to know what our receivables are. As vice-president of marketing, that's none of my business. So I go to Paul and ask for it, and I don't go to the accounting department even though that's what I'm used to doing. You can't imagine how closely Paul and I have had to work to allow me to stay on here without undermining his organization and his authority, and anyone who knows him knows he is the CEO here."
Even as the vice-president of marketing, however, Ladin gets special handling. When Frison was thinking of hiring Dennis Reaves, he called Ladin into his office. He said he knew he didn't need Ladin's permission, but he was about to make a major change, and he wanted to let him know. "I treat Billy as what he is, the number one shareholder. I'll tell him to close the door and take off his employee hat." But it also works the other way. "We've been in a room with other people," says Frison, "when I've had to say, 'Billy, this is not a shareholder meeting. You're just the vice-president of marketing, so let's get back on the track.' He takes it very well."
The objective of this whole experiment, of course, was to see whether it would improve the company's performance. From 33 stores and $70.5 million in sales in the last fiscal year before Frison's arrival, ComputerCraft has expanded to 62 stores with sales through the third quarter, ending January 26 of this year, of $104 million. Start-up costs for ComputerCraft's expansion have depressed earnings to a level that Dooley McSweeney, an analyst with Rotan Mosle Inc., calls disappointing. But he supports Ladin's view that expansion has to come before earnings performance, even if shareholders aren't happy about it. In this "excessively Darwinian environment," McSweeney says of the computer retailing industry, "it's clear that ComputerCraft will be a survivor."
ComputerCraft hasn't changed dramatically to its customers or its vendors. But changing the face of the company was never the point. If there is a change worth nothing anywhere, it is in Billy Ladin. He is still the dreamer, schemer, and conceptualizer. He has a new productivity-enhancing idea he wants to try out. He wants to look into computer rentals, used-equipment sales, franchising, trade-ins, and catalog sales. And he wants to think about buying a couple of software stores, too.But for years, he was a man who never returned a phone call and often missed appointments. He wasn't rude; he just never wrote them down. He was a man who rarely knew where he would be in an hour, in a day, in a week. He wasn't irresponsible; he just couldn't plan that far ahead. But now, on his desk, there is an appointment book that he picks up and marvels over, as if he can't quite believe it is his. "Paul has one of these on his desk," he notes. "Now I have one on my desk. He didn't tell me to do it, but I'm trying to learn. I've got every appointment for next week, and for next month. That's amazing."
If Ladin's experiment works over the long run, it will be for one reason only: because Ladin himself wants it to work. He may be the chairman and he may own most of the stock, but he is the one who has to make most of the concessions and compromises if he wants to stay a part of it.
"Every once in a while," he says, "I get it up to here. Anybody would. And inside I say, 'Why am I putting up with this crap from Frison?' Then I stop and I think. Do I want to be the CEO? Hell, no. Do I want to get rid of Frison and take a step backward? Absolutely not. It's such progress."