Maverick LLC Practice Leader’s Inside Look at CMPD

BY WILLIAM R. STARK

Special to the Observer

charlotte-cmpdIn September, several days of riots broke out following the Keith Lamont Scott shooting by a Charlotte-Mecklenburg police officer. The first reports on social media said Scott was a disabled man, shot four times, while carrying a book. The facts would later prove he was carrying a gun (unlawfully, as he was a felon in possession of a firearm) and that he was commanded many times to drop his weapon before one police officer, also a black man, shot him. My purpose in bringing up the story is to remind you that our perspectives and opinions are colored by such events, and existing biases either confirmed or tested.

I had unusual access to CMPD after my firm presented a pro-bono seminar to its command staff (lieutenants to then-Chief Rodney Monroe) entitled In Extremis Leadership (leadership when an individual perceives that his life is in imminent danger). As a management consultant researching the state of training for police officers around the country, I was cleared to ride with as many officers as I wanted, where I wanted and the shifts I wanted. I had unfettered access to roll calls, personnel and facilities. I had one-on-one meetings with a dozen or more command staff officers and conducted another dozen or more interviews with patrol officers and sergeants.

I rode shotgun for more than 100 hours with CMPD officers. My full shifts were always at night and always out of the divisions with the highest crime rates and in the poorest areas of Charlotte. Unlike the readily accessible ride-alongs that most Charlotteans over 18 can sign up for (and I encourage you to do so), I was not required to stay in the patrol car when we arrived at the scene of a call. During my shifts, we handled routine traffic stops and vehicle stops for suspected drugs and guns. I was on stakeouts for drug busts with special CMPD units. We responded to domestic violence calls and calls for shoplifting, burglaries and robberies. I witnessed CMPD officers under stress, usually with their adrenaline flowing, treating suspects with surprising restraint, dignity and respect. As long as suspects didn’t fight or struggle to avoid arrest, the officers used as little force as practical. I saw not a hint of racism or bias with any of the cops I rode with (black or white).

It’s easy to arm-chair quarterback any police department’s bad outcomes. It’s easy to criticize the actions of a bad cop or two. But what most of us don’t see are the thousands of interactions between CMPD and Charlotte’s citizens each day that go smoothly and the acts of bravery and kindness that many officers demonstrate each and every day that you’ll never see on social media.

From the unique access granted me, I believe that the vast majority of CMPD officers are doing a great job under difficult and stressful circumstances. They risk their lives for you and me, at a starting pay commensurate with an assistant manager at a 7-Eleven.

William R. Stark is the practice leader at Maverick LLC, a global management consulting firm based out of Tampa. Subsequent to the author’s research within the CMPD, Maverick retained the services of a CMPD command staff officer to help the firm develop a more advanced and innovative set of police training curriculums. Maverick has not had and does not currently have a fiduciary relationship with CMPD. To avoid even the appearance of a conflict of interests, Maverick will not work with CMPD on a paid basis.

Link to Charlotte Observer Op Ed Piece

Really, Trump Didn’t Start This Fire (About Rigged Voting Machines)

DBD voting terminalSure, there are a lot of assertions (mostly false) from Trump about rigged elections, particularly about touch screen voting terminals that will be (his words) rigged against him (but only if he loses). But the fact is, we don’t have Trump to blame for creating this problem about rigged voting machines and elections.

Wally O’ Dell, who as (former) CEO of Diebold, Inc. closed on an acquisition in 2002 to buy the Canadian based Global Election Systems, Inc. Subsequently, in 2003, he wrote in a fundraising letter to Ohio Republicans that he is “committed to helping Ohio deliver its electoral votes to the President.” He meant, George W. Bush, as O’Dell was a major republican fundraiser for the GOP.

With that letter, and given that so many experts at the time were accusing Diebold of manufacturing elections hardware and software systems that could be readily hacked, O’Dell’s words resonated. Ultimately, a number of investigations into Diebold were launched, and a couple of states successfully sued Diebold, Inc. Global Elections Systems, renamed Diebold Elections Systems, Inc, and finally Premiere Election Systems, Inc. (before Diebold sold it off in 2009). The deal that O’Dell thought would help Diebold print cash, turned out to be the only blemish on the company’s 144 history. So, Trump didn’t start the fire, but he sure knows how to fan the flames. You can read more about the Diebold – Global Election Systems debacle at this link to Harper’s Magazine. http://harpers.org/archive/2012/11/how-to-rig-an-election/1/

M&A Ethics: You Say Yes, I say No….

“Divest it!” said the President. The Consultant said, “No, Keep It!”

Just before the new millennium, Diebold Nixdorf (DBD NYSE) was already one of the global leaders in the ATM (automated teller machines) business; it was also a large electronic security integrator provider and the largest physical security vendor for the financial and banking industries.  Diebold (as it was known then) was on the cusp of a C-suite change. A divestiture_picformer IBM executive was president and COO and it was rumored he was soon to be promoted to CEO, subsequent to the planned retirement of the current CEO. Looking to prepare for his go-forward strategy after he ascended to the position of CEO, the president had decided to divest the company’s electronic security group; that was easier said than done, as the service and install groups of the electronic security and ATM groups were intertwined as tightly as a Gordian knot. No matter, the president ordered the divestiture, which fell to the responsibility of the company’s vice president of corporate development to execute. He, in turn, engaged your author to prepare a strategy and action plan for the separation of the electronic security business from the ATM business and soon thereafter, to execute the divestiture of the now stand-alone electronic security group.

In order to understand the business; its culture, its strengths, and weaknesses, and create a model of a stand-alone business once it was separated from its bigger sibling, I did what I always do first: I looked to the people who actually understood what was going on. Who were those people? Well, the people near the bottom of the hierarchy, of course! The field techs, sales associates, and sales managers. With my objectives clear, I set out for several months, going from city to city, across the length and width of the country, hitting as many of the largest field offices as time allowed.  Some days I’d be putting on jeans and work shoes and a Diebold branded button down shirt to actually assist the service techs as they went from service call to service call.  On other days, donning dark suits and power ties, I would observe the sales associates and sales managers that were either selling new integrated security systems to their mostly banking industry customers, or sitting in on their negotiations with their existing customers’ as they set about renegotiating expiring service contracts, many of which brought in hundreds of thousands of dollars in annual revenues.

Six days a week for nearly three months I worked with sales teams: observed their successes, failures, and challenges as they faced off against their counterparts: the usually highly competent purchasing experts that the banks generally brought to the negotiations.  The Diebold sales associates and managers were highly motivated, but not always as well prepared or trained in the art of negotiations as their counterparts at the banks.  When a negotiation was over, or another meeting was scheduled to complete it,  I posed the questions that had come with many years of experience, both in technology and M&A to the sales associates and their managers.  I listened intently to their answers. I winced more than once when watching a sales associate or manager for Diebold negotiate from weakness: for lack of real-world negotiating training and skills  (not their fault) and often, because of a lack of preparedness going into the negotiation (the fault of the sales manager, his superior, and the company).

I lugged their tool boxes and carried replacement parts,  as I happily assisted the field techs as they solved complex service issues with bank vault alarms and secured communications systems that alerted the bank’s own monitoring center as well as Diebold’s of a hold-up or burglary at a given branch.   I took techs, sales associates, and managers out to lunch daily, and sometimes to dinner in order to build rapport, trust and open lines of communications.  Getting one sales associate or tech to trust me would usually open the door to one or more of their colleagues.   I accumulated a wealth of data and understandings.  I had created for myself a singular, unbiased understanding of the electronic security and ATM groups at Diebold.  No one at any level at Diebold, in any capacity, knew as much about the electronic security group as I did once I had finished my reverse due diligence.

Diebold at that time had been around for about 140 years: and a lot of positive and negative behaviors existed within the ranks of the people most responsible for making the company a success. I witnessed and memorialized the good, the bad, and the ugly. When I wasn’t in the field, I was reading the group’s financials going back at least half a decade. I read sales reports, contracts, everything I could get my hands on. I interviewed the SVP of service and the SVP of sales at great length: neither one wanted to lose the business, as it brought each of them significant revenue, cross-marketing opportunities, and other advantages.  Of all the opinions I had listened to, theirs were the ones I cared about the least. They had little idea of what was going on in the field. And people reporting up to them had learned that the only news to bring either of them was good news. They had seen what happened to the messengers of bad tidings. When I was finished learning what I could from Diebold’s executives, managers, and associates, along with my own, and third party market intelligence reports,  I went off and talked dozens of the company’s largest customers in the banking industry,  made up of local, state, regional, and national banks. I read Diebold’s third party surveys about customer loyalty and satisfaction: and what hundreds of customers of Diebold said was important to them, and why they viewed Diebold as the superior alternative to the company’s regional and national competitors.  I also read a lot of customer surveys that were not loyal or satisfied, but rather, “captive cusomters.”

In full disclosure, I had a horse in this particular race: which is not the way the firm is typically engaged. But the client had suggested the formula, and since there was long established trust between the two firm’s and the principals, I accepted their proposal.  Basically,  I would be paid a smaller fee to execute the disentanglement of the electronic security group from the ATM business,  but receive a  very significant success fee for divesting the unit.  Further, I would be positioned as CEO of the new unit and would “be part of the deal” when it was acquired from Diebold.  Overall, a divestiture of the group was worth in excess of a million dollars to me from a combination of fees from the seller and obligations by the buyer.  For an acquirer to take me out of the picture upon completion of the deal would incur a substantial cost paid directly to me.  In fact, my fees for the work I had to do to sever the electronic security group from the ATM division was a fraction of what I normally would have charged Diebold or any other client. I was playing the long game for all three phases of the process.  Since Diebold was responsible determining the value of the free standing electronic security group, no one could accuse me of undervaluing it to further my own agenda.  And, since the board had already approved the president’s decision to separate the unit and divest it, I was unconcerned about any change of heart by the company.  For those reasons, I did not include a termination or “walk-away” clause in the agreement between the firm and  Diebold.

I Blame My Parents For My Choices
After nearly three months in the field, and after ingesting the results of every document I had at my disposal, which was by now an enormous amount of historical data, current competitive data, customer data, financials, etc., I spent a week back at my office in Tampa to plot the strategy  and action plans for the disentanglement of the Gordian knot that bound the electronic systems group to the ATM  business. I wrote the strategy on how to achieve that goal and crafted a post-divestiture three-year proforma for potential acquirers.

I called my client, who was the vice president of corporate development and M&A to arrange a meeting with him at Diebold’s HQ in Canton, OH to review the documents and take him through the next steps.  I arrived just a few days after the phone call, and we sat together in his familiar office. He and I had worked closely together for many years and had developed an amazing working relationship.   Although I had turned down the CEO  for an executive position years earlier, I was considered by this executive, his staff, and many others throughout the company less a consultant and more of a colleague and fellow employee.  They all knew I bled “Dieobld blue,” as they did.   When I had trouble getting archived information or access to people, Bob made any attempts to block my access evaporate.  There was a mutual trust between us that happens only over time, and by shared experiences where you learn that you can indeed absolutely rely on the other person. Our relationship was singular in that regard, and it made doing business with this client very easy. Any conclusions and solutions I brought to the many engagements my firm was awarded would rarely be contested: questioned? Yes.  My thinking and logic tested? Absolutely. But my decision usually withstood all of his necessary fiduciary and strategic scrutinies. My agenda was then, and always is, aligned with the client. This time would be no different.

After exchanging our usual small talk, catching up on our lives, I delved right into the deal that was going to be a million dollar plus payoff for me for less than six months of work. I looked at him across his spacious, ridiculously neat desk and blurted out, “Don’t do it!  Do not divest the electronic security group. It is the worst possible alternative. The president has no idea of the actual value the group brings to Diebold.”  Why did I do that? Why did I go against the wishes of the president of the company and the board?  Simple. It was the right thing to do strategically.

The client, also my friend, leaned back in his chair and focused on me; with a look of disbelief written all over his face. He said, “I want to make sure I heard you correctly. You are saying we shouldn’t divest?”  I said,  “Yes, do not divest this group. It will prove itself to be a terrible  deal for Diebold.” We then went through my data, including financials, competitive analyses, and the costs associated with divesting; in the short and long-terms. A couple of hours later it was agreed. He would, with my help, put together a presentation for the board of directors. He would alert the president that in his opinion, Diebold should retain the electronic security group. He expected there would be significant pushback from the president. He looked at me again and said, smiling,  “You know you just cost yourself a lot of money?” I replied, “Yes, I do. But this is the right thing, the ethical thing, and the best strategy for Diebold.” And then I suggested to him that he might find a way to make this up to me, down the road.

In my opinion, the ethical thing to do is always the right thing to do. And this was both the right thing for the client, strategically; it was also the ethical thing to do, even though it was going to cost me a lot of money. It might even cost me my relationship with Diebold. Many people I consider among the smartest and most ethical people I know thought I made a bad decision. Their thought process was this: You were given a task to perform: you were not asked if it was the right decision or even the best decision for Diebold. No one asked for your opinion. No one was paying you for an opinion. You, they all said, were being paid to do something that no one internally could do as well as you, and your job, as set forth in the engagement agreement did not include offering Diebold an alternative or an opinion. To them, to very successful lawyers, business people, and CPA’s, my job was simple. And I didn’t do it. I had no moral or ethical mandate to oppose the wishes, instincts or decision of the president and the board. Well, I disagreed with all of those friends and advisers then, and all these years later, with the advantage of 20/20 hindsight, I still disagree.

Before the head of corporate development could meet with the either the president or the board (set for a few weeks after our meeting), the president abruptly resigned.  So there was no internal debate, no ruffled feathers, and I didn’t have to take any heat for going against the wishes of the president (and neither did my direct boss, the vice president of corporate development). The divestiture idea was dropped down a deep, empty well. And there it stayed. For many years.

In 2001, following a strategy that the vice president and I had long encouraged, Diebold acquired their biggest competitor in the electronic security industry catering to the financial sector, Mosler, Inc.  Maverick led the acquisition (three of the four phases) on that deal. It became the most successful domestic acquisition in Diebold’s history.  In 2005, Diebold and Maverick separated after a tremendously successful seventeen-year relationship. There was never an opportunity for the vice president of corporate development to make up the self-imposed loss Maverick took by insisting that Diebold not divest its electronic security group.

In 2016, Diebold’s current CEO, Andy Mattes, divested its electronic security group to global player Securitas, a Swedish company. Maverick wasn’t involved, and time will tell whether it was a good idea selling the unit. Soon after that, Diebold acquired German rival Wincor Nixdorf. So far, the stock market disapproves. But facts are facts, and when Mattes came on board in 2013, DBD’s stock was trading in the low $30’s. After a record stock market in 2016, as of closing on October 21, 2016, DBD was trading at $22.25. (Full Disclosure: I am a shareholder in Diebold Nixdorf).

The author, William R. (Bill) Stark is the Practice Leader at Maverick LLC, a management consulting firm that uniquely integrated the management and behavioral sciences.

Who Do You Trust?

Pitching M&A Strategy: the Hard Way.

A management consulting fee of $750,000 is on the line. Your decades of knowledge and M&A experience has enabled you to ingenuously craft a singular acquisition strategy; by convincing the client to  acquire and conflate three, seemingly unrelated technology companies, the net result will produce truly fantastic synergy and terrific profit margins. There’s just one small problem.   Continue reading

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On Veteran’s Day, I Salute Charles Beck, Jr.

In July of 2014, one of Maverick’s practice leaders, and my friend, mentor and well, much more, passed away. In July of 2013 I had moved to South Carolina-right across the border from Charlotte, NC, in order to spend more time with Chuck, during the twilight of his life. He was still active in the firm until shortly before my arrival. My timing was propitious, as he died just about a year to the day I moved just a few blocks away from his home. Continue reading

Diary of a Family Business Acquisition

By: William R. Stark, Practice Leader & Co-dir. of M&A

“The beginning is the most important part of the work.” Plato

In the first half of the 1990’s, the hottest rock bands were Red Hot Chili Peppers, Pearl Jam, and Smashing Pumpkins. Seinfeld was just hitting its stride, and Dallas would see the end of its long run. President George H.W. Bush (the “good” Bush) was half-way through his first and only term, and the Dow Jones Industrial Average was at just a few points shy of 3000. I was an M&A consultant to the security, technology, and financial technology sectors. For about a year, beginning in the summer of 1991, I was retained exclusively in the security sector by a division of the once venerable, and now defunct (1999) conglomerate, Westinghouse Electric Corporation. The division I worked for was marketed to the public as Westinghouse Security Systems, and internally designated as WSS. I was engaged to target acqiustions, perform due diligence, and negotiate the acquisition of residential and small commercial electronic security companies throughout the contiguous United States.  Continue reading

Breaking Bad: Speaking Truth to Power

My previous blog touched on just a few of the unethical behaviors I’ve encountered and been subjected to, as both an employee and consultant. Recently, I read a book titled Triple Crown Leadership, authored by a father/son team, Bob and Gregg Vanourek (disclosure alert: Bob was a founding member of Maverick but has not been involved with the firm for well over a decade) that speaks to the ideological trilogy of “ethical, excellent and enduring leadership” as the key elements in “triple crown leadership.” After reading their prize winning effort,(http://triplecrownleadership.com/) a flood of what I consider to be unethical business practices from my early career came to mind; many that were infinitely more egregious than those I shared with you in my first posting. I’m going to relate to the reader just one of those events in the hope that they will raise some eyebrows and facilitate discussions of ethical leadership and personal behaviors within your own organizations. Continue reading

Unethical Behaviors in The Corporate World

As a management consultant specializing in M&A and operations primarily for mid and large-cap public companies for twenty-five years, I was intrigued by a recent article in the New York Times about McKinsey, Inc., the giant, global management consulting firm.  The reporter, Anita Raghavan, was interviewing that firm’s global managing director, Mr. Dominic Barton. Link to NYT article here. The subject matter was about what has, and what is Mr. Barton doing to ensure, to the best of his and McKinsey’s ability, to head off a “third man” scenario in the wake of the insider trading scandal that most recently stained the company’s global reputation in 2010, by the guilty verdict relating to insider trading by one of its directors, Anil Kumar. Continue reading