'It must be every entrepreneur's fantasy: you and your spouse spend years building a fast-growth, INC. 500-level company. As the business matures, you go out and recruit a management team capable of handling most day-to-day details. Satisfied that the company can finally get along without you, you reward yourselves with a long-deferred vacation.
And it must be every entrepreneur's nightmare to be out in the middle of nowhere when disaster strikes. Everything that could go wrong has gone wrong. Your company's reputation -- if not its very existence -- is on the line, and where are you? Several thousand miles away, hoping what you're hearing over the telephone is all a bad dream.
In the case of Computer Specialists Inc. (CSI), fantasy and nightmare converged on a mid-August Wednesday in 1985. At that point, the company, my wife, Pat, and I had started was half a decade old and doing $2.9 million in sales. Our employees (computer programmers, systems designers, a whole range of data-processing professionals) mostly work under contract at third-party sites. One of our major clients, a well-known bank in western Pennsylvania, had brought us in early on to help write programs for their MasterCard and VISA applications. We considered the bank to be a leading organization in our marketing area, the type of customer every service company wants -- and needs -- to attract other business.
The importance of this one client's business to us may be measured by the fact that out of 60 programmers on the CSI payroll in mid-1985, 18 worked full-time on this bank's account -- including one woman rated by the bank as one of its top CSI programmers for two years running. Overall, our record with the bank was extraordinary: in 154,000 hours of programming, we'd never had a glitch. Not one.
Imagine my shock, then, when I called in from the road that Wednesday morning. The three of us -- Pat, her mother, and I -- had just pulled into Yellowstone National Park, four days into our long-planned four-week trek to Alaska and back. We had already been through the Badlands, gazed up at Mount Rushmore, and kicked back at a dude ranch run by Buffalo Bill Cody's great-grandson; life in Pittsburgh seemed a world of cares away. Now, we were getting ready to watch Old Faithful erupt. Pleased that I'd gone one whole day without contacting the office, and calculating that we had about 15 minutes till geyser time, I headed for a pay phone.
From the moment my secretary answered, I knew there was trouble. Big trouble. In five years with us, she had always managed to sound upbeat, no matter how bad things were. Now, all I got was dead silence on the other end of the line. "I don't think you want to talk to anyone right now," she said weakly. Then she transferred me to our marketing director. Somewhere in there, Old Faithful blew its top. I watched it go off in a daze.
As best as I could piece it together, the story I heard went like this: exhausted after working more than 45 hours that weekend, our star programmer -- the same one, you remember, who had been cited for excellence by the bank itself -- had entered the wrong set of instructions into the bank's computer. Whether the mistake was due to human fatigue, software error, or some other factor, we still don't know. What was known then, and had been since Monday night, was that roughly 500,000 MasterCard and VISA cards had been wrongly invalidated. Several thousand of these cards had already been confiscated by automatic teller machines. The bank was blaming us, it had evicted the programmer from the premises, and the press was having a field day.
To put it bluntly, the situation was a public-relations debacle for our client. By 6 o'clock Monday evening, every local television station had run stories on the credit-card snafu. Senior bank officials, including the president, were running around trying to put out the brushfires. Having half a million customers out there with potentially invalid cards was clearly a worst-case scenario for them.
Even worse, by my reckoning, was our own company's response. Faced with some tough decisions, my management team had elected to go into a totally reactive mode. It was now three days after the crisis had surfaced, and nobody at CSI had done anything to get to the root of it. Our director of human resources, who normally handles any staff problems that arise, had decided not to get involved because a) he knew no one at the bank personally and b) our closest ally at that institution, a senior manager who knew our track record well, was also, ironically, on vacation. My marketing director, who should have been down at the bank right behind the director of human resources, had no technical grounding in the client's data-processing system and no desire to step into this mess. On Tuesday, when it all hit the papers, she went off to West Virginia on a sales call. OK, maybe it took some time for them to realize CSI was directly involved, but hey -- if you run a service business and your major customer has a problem you have the remotest chance of being involved in, you pick up the goddamn phone and ask what's going on. That's rule one. Rule two? You don't let one very distraught employee sit at home, ignoring her phone calls. You let her know immediately that you stand behind her 100% -- especially when six more of your programmers still work in her department at the bank. How are they supposed to know they're not on their way out too? By giving her the cold shoulder, you've created a problem with both the client and your other employees.
If neither manager had the slightest understanding of how serious this problem was, they sure as hell did by Wednesday morning. At 10 a.m. -- three hours before I called in -- they were summoned to an emergency meeting at the bank. Not only was it made clear to them that the bank blamed us for the fiasco, but officials there also expected CSI to reimburse them for their "PR damage control" effort. Plus we were to make financial concessions by way of apology. My managers' response? "We can't do anything about meeting those demands. The boss is on vacation and can't be reached." Oh, boy.
Pat and I did some quick soul-searching. The trip meant a lot to all of us, and we'd been looking forward to it for a long time. Furthermore, to cancel parts of it abruptly would mean some serious money down the drain. But what ultimately convinced us to keep traveling was our conviction that all the damage had already been done. Our programmer had been removed from the bank and her contract terminated (she immediately moved to a neighboring state and took another job there). Whatever had gone wrong with the bank's computer system had been easily fixed. The media were losing interest in the story. Our guy at the bank was on his way back. Why not enjoy the rest of the vacation and pick up all the pieces once we got home?
In retrospect, we might have made the wrong decision. What we didn't realize at the time -- largely because we never do business this way ourselves -- was that our chief competitors, all of whom we'd taken sales from, were seizing on every opportunity to run our name into the ground. Inside the bank and out, they were spreading the word that Computer Specialists was totally responsible for the systems problem. It finally got so out of hand that the bank told them to stop. Eventually this negative marketing produced a back-lash effect on them. Had I been there in the first place, though, I doubt it would have ever gotten rolling.
But I wasn't there. I was on vacation, and it was a completely depressing experience. My mind was everywhere but where it was supposed to be. Looking at snapshots of the trip weeks later, I realized there were whole sections of the journey -- a spectacular sunrise over Mount McKinley, for instance -- that I had no memory of seeing. Driving back across Canada, en route to Pittsburgh, my stomach was in knots.
So what happened when we got home? Four things I'm very proud of.
1) We held a meeting to announce that the only priority for CSI was rectifying this problem. New accounts, employee hassles -- they all took second place. As soon as the meeting ended, we were all down at the bank. We saturated the place. We became so visible around there, we practically became pains in the ass. I took people out for meals -- bank executives, CSI programmers, secretaries, everybody. If one of us was downtown on other business, he or she walked through the bank lobby, smiling and saying hello. Message to everyone: we will not duck the issue or hide our heads in shame.
2) I called a meeting with bank officials and told them they weren't getting a dime. Hard line? Maybe, but if our position was that the whole thing had been blown out of proportion -- which it was -- then giving them major concessions would only make it worse. Instead, I offered them a deal. One programmer free for six months. The next programmer at $7 per hour less than regular rates. The next one at $6 per hour discount, and so forth. Result? We wound up increasing our presence with that client. Good-bye, innuendos about our screwing up the account.
3) We overhauled our management structure. Our human resources director left shortly after we got back, for personal reasons. Our marketing director was gone within four months. Never again would we put someone in that position with no technical experience or training. In fact, we're committed to promoting manages solely from within. That way they have the requisite background, and we have the confidence they know how to react -- correct that, proact -- in a crisis mode.
4) We followed through on plans for a big Christmas party, as originally scheduled. It was risky at the time, given all that had happened to company morale. And it was expensive. But it also sent the right signal. Better to give a party no one comes to than to cancel it out of embarrassment. Attendance was huge, and it finally proved that our goal of putting the crisis behind us by year's end had been achieved. Pat and I were the last to leave. At 2 a.m., we were drinking champagne and reflecting on the fact that no one had mentioned Black Monday.
She and I have learned four things from all this. One, that you can run a business by the book, hiring qualified management to assume many of your duties, and still your problems aren't all behind you. Two, that even if major mistakes occur, it's never too late to take aggressive action toward correcting them, provided you give them your undivided attention. Three, that it's important to make sure your spread your business base adequately by not allowing one client to account for more than, say, 15% of your business.
Oh, yeah. And four: take that trip you've always wanted -- maybe hop a cruise shop bound for Acapulco, by way of the Panama Canal -- which is what Pat and I did in 1986. Only be sure you buy some cancellation insurance.'