And that wasn't the end of it. Late one night a few months later, the data-processing manager broke through a computer security code and gained access to the financial records of the business and the dental practice. Within days the rumor mill was churning again, but this time at an even more furious pace.
If they'd gotten the facts right, it might have been less painful. But the stories were loaded with exaggerations and lies. A consultant who was working on their computer repeated the tales to the Costellos -- and he had heard them at a party. One report was that Costello was paying himself $250,000 a year. Another was that the couple was shifting Accu Bite's assets into other companies they owned, with names like Utah P & L and Tucson P & L. In fact, Costello was drawing no salary at all; Betsy, working 25 hours a week, made $6,000 a year. And those "other companies" were utilities in which the Costellos owned stock. They fired the data-processing manager, but the damage had been done. By now, even loyal employees wondered what the Costellos were up to.
The computer incident put Costello into a deep funk. "It's not something I want to relive," he says. Betsy, who's more open, remembers that "he climbed into a shell." He stopped jogging. At home, Betsy and the children tiptoed around him. And he thought seriously about going back to full-time dentistry. In the end, though, he decided to dig himself out. He didn't know how, but he'd give it a try.
You couldn't see any big changes right away, but beginning in the middle of 1985, Bill Costello started doing things he had never done before. Craig Kear, the former marketing manager, remembers the time when Costello mentioned something he had read by management guru Peter Drucker. Kear took note of it. "You could tell he was trying to come to terms with what was happening."
The truth was that Costello was doing lots of reading. During nights and on weekends, he would slip away to the business-school library at Michigan State and become a student again. The readings -- by Drucker, psychologist Frederick Hertzberg, and many others -- gave him insights into the problems he'd been fumbling with. He read about "activity traps," "expectation gaps," and "leadership vacuums" and saw himself and his company reflected there.
Employees realized something was afoot when Costello put some of his favorite articles in two-inch binders, which he gave to several of his managers. And he didn't leave it at that; the playbook, as they called it, became the basis for weekly meetings -- an introductory course in management, complete with written quizzes. People at the company gave Costello a lot of credit for his change in attitude, for taking the initiative, and for encouraging them to learn about business. "It was a major step," says Robert Stuberg, who was a salesperson and is now advertising and product manager. "It showed that Costello wasn't just dabbling -- that he really was interested in making things better."
Over the next year or so, there were many more signs of Costello's newfound interest in the company. He cut back on the dental practice and spent more time on the business. In January 1986 he hosted the first of four weekend retreats for his managers. People started out pretty skeptical of the whole endeavor. And in the beginning they spent their time rehashing all the problems -- the lack of organization, the lack of leadership, and Costello's part in the whole debacle. But before long, they were talking about the future and what they wanted to accomplish.
Betsy, for one, as head of the accounting area, was fed up with all the guesswork. If they were going to get anywhere, she said, it was time to keep tabs on the numbers and learn what they meant. "There had never been a budget before," she says. She began spending more time with the company's accountants, sorting out what systems made sense. It was the first step toward generating monthly operating reports and making better use of the computer.
In the marketing area, Kear began pushing for big changes as well. He didn't like the haphazard way the company latched onto its products -- a process he likens to "throwing blobs of paper at the wall and seeing what sticks." He wanted to study market research, to be more scientific. Other managers pushed for better training and internal communications, for more enlightened approaches to selling. But they didn't just talk about it; they created goals and action plans, and individuals took responsibility for sorting out the options. Nobody pretended to have final answers. But for once, they were defining the problems. "The great thing about all this," says Betsy, "was that we didn't have to know everything. We were creating systems, and we were all going to school together."
One of the biggest changes at Accu Bite has been the realization that there are ways -- some simple, some less so -- to identify problems before they explode. For instance, now that the computer is up and running, monitoring inventory levels and forecasting cash are part of the regimen: tools for understanding the business and for getting control. Over the past couple of years, employees have become more confident in their own abilities and in the company. "There's more interaction between people," says Stuberg. "We're tracking things and investing the resources into areas that generate results."
At the heart of the changes is a new policy of sharing information. Every month employees see operating numbers, and no details are omitted. The elaborate charts and graphs give them a complete picture of what's happening in every aspect of the business. In addition, the numbers drive a brand-new bonus system. Responsibilities have been defined, and people know that if they reach their goals, they share in the rewards.
Costello admits that the decision to open the books was scary at first. Nothing he had read suggested sharing this kind of information with employees. But in light of his unhappy earlier experience, it seemed the only way. "I wanted everyone to know how we calculated things," he says. If he didn't, he was afraid his employees would fill in the blanks for themselves -- but with the wrong numbers.
And where has all this brought Costello? A long way from where he was. For one thing, the business is doing better than ever. In the year ending October 31, 1988, sales nearly doubled to $5 million, and profits were up by more than 50%. Currently, the company has 38 full-time people. More than three-fourths of its revenues come from recent additions to the product line.
Today Costello feels so good about the company that, once again, he's cut back his involvement in Accu Bite to about 25 hours a week. But this time, his confidence is built on a healthy respect both for what it takes to grow a company and for his employees. "We've all been on a learning curve," he says, including himself among the students. Then, on reflection, "Actually, it's felt more like a fast-moving escalator."
