Vulture Update

Back in July of 2008 I brought you the bizarre story of the Orthopedic Hospital of Wisconsin, and its unfortunate tenure as the roosting spot for a flock of turkey vultures. For those of you who missed it, you can find the story here if you want to. As I noted at the time, the birds didn’t really pose any threat to human life, let alone to patients at the hospital, since they won’t attack any living creature (vultures eat carrion almost exclusively) and they don’t carry anything that people can catch (vultures are surprisingly disease-free creatures, considering their diet). Nevertheless, patients were complaining because, in fairness, it can be rather disconcerting to wake up in the hospital and find a vulture perched on your windowsill. Now it turns out that the people at the Orthopedic Hospital of Wisconsin should have been counting their blessings…

According to a story being reported this week in USA Today by way of Delaware Online, a woman in Ridgeway, Virginia is under siege by a flock of 200 or so black vultures, which are eating the roof off of her house. It turns out that this species of vulture likes to chew on rubber, and the unfortunate in our story owns the only house with rubber shingles on the roof anywhere in the neighborhood. Each day 30 or 35 individual birds turn up to munch on the roof, which is now leaking and causing a great deal of distress to the owner, given the winter weather in Ridgeway. Even worse, the vultures are too smart and aggressive to scare away, and Federal law protecting migratory birds makes it illegal to kill them. You might be able to get a kill permit to take out a few individuals, but that will take at least 3 months, by which time the roof will be gone, the rest of the house will have been destroyed by water damage, and the owner will either be homeless or insane, or both. And moving isn’t really an option, because who’s going to buy a house that’s being eaten by vultures?

It’s an even better example of how unexpected conditions can impact your business than the original story was, not least of all because the vultures are impacting the local real estate market and the business opportunities for people who make rubber roofing materials almost as much as they are the homeowner in our story. It’s hard to imagine anyone in the Ridgeway area (or, in fact, anyone else who has read this story on the Internet) ever agreeing to purchase rubber roofing products after this, and anyone who was thinking of moving into the area is now going to be looking for houses with steel shingles (or some other substance that vultures don’t eat) and refusing to consider houses with rubber ones. Which should, in turn, make life difficult for realtors in the area; just as a guess, I don’t think the real estate agent’s license exam in Virginia includes Wildlife Management as one of its subject areas…

Now, I’m not suggesting that you compile a list of every species that could possibly impact your business though its daily behavior, because such a list would take longer than you are likely to have in your lifespan, let alone your strategic planning cycle. I am suggesting that having a contingency plan is a good thing, and that having one that is flexible enough to include what to do if a species you’d previously never even heard of (such as a highly aggressive, carnivorous cousin of the humble turkey vulture) starts to disrupt your business is probably a very good thing. I’m also thinking about investing in those steel roof shingles, as soon as the price comes down far enough that I can afford them – and assuming that nothing out there snacks on those…

Release the Vultures!

By now you’ve probably heard about Toys-R-Us shutting down, either on the news or by seeing someone standing on a street corner holding one of those black-and-yellow “Store Closing” signs. You may also have seen video footage, online or on the news, about long-service employees, in some cases people who have been with the company for 30 or 40 years, being let go with no severance pay. But if you’ve been tempted to blame the failure of the company on Amazon or Wal-Mart, or showrooming, or any of the other scourges of retail businesses these days, I regret to tell you that the answer is much, much, worse – and far sadder…

You can find any number of stories and files online that go into detail about this, but I thought the article on Boing Boing did a good job of summing up the situation. I don’t have much to add to Cory Doctorow’s excellent reporting, but I thought the point ought to be made (again) about who is responsible for this travesty. Basically, what happened to Toys-R-Us was that a cabal of venture capital firms bought it, used the company’s assets to borrow a huge amount of money, took out a reported $200 million for their personal enrichment, and then defaulted on all of the loans. In addition to announcing that they wouldn’t be honoring the loans, the VC firms also revealed that they wouldn’t be keeping any of the commitments them made to their employees…

If you’re wondering how they got away with this, I regret to tell you that as far as I can tell none of the venture capital firms have broken any laws. It’s possible that one or more of their creditors may choose to sue them for defaulting on their loans, but if they’ve worked this out right there should be enough proceeds from the bankruptcy sales to cover most of it, and the lenders can write off whatever is left on their taxes. It’s also possible that the employees might be able to recover something through their own legal efforts, but in any case all of these are civil matters; no one has been charged with a crime – or is likely to be…

This class of financial banditry is sometimes called “Vulture Capital” and the firms involved are referred to as “Vulture Capitalists,” although I have to say I think that the nickname is unfair to actual vultures, who (as previously noted) never bother anything that is still alive. There are no laws to prevent this sort of thing, partly because it would be difficult to prove the difference between somebody doing this in order to extract money and then crash the company and somebody who just borrowed too much money and then failed in their attempt to run the company. You can’t realistically make it a crime to be bad at management (or finance, one assumes), nor would you want to throw people who were actually trying to do the right thing in jail because they overestimated their abilities…

Unfortunately, that means that people like the vultures in this story can abuse the system for their own ends. The other reason no one has been able to establish a standard for distinguishing vulture capitalists from garden-variety incompetents, or implement a law to stop them, is because (as you might expect) a lot of very wealthy people have spent a lot of time and money to prevent it. It might be possible for more progressive political forces to combat this, assuming that there were any and that anyone in the general public cared about this issue before their employer of thirty years was purchased and carved up by vultures. But until such time as the American people start demanding greater accountability, from their political leaders if not from their business leaders, this sort of thing will probably just keep happening…

So the sad truth is, that the people responsible for this travesty, and all of the others like it, are us…

Sometimes You’re the Windshield…

It’s worth pointing out that sometimes, there’s just not much you can do about the problems your business is going to encounter. Sometimes, there’s just going to be a stoned screech owl nesting in your Christmas tree, or some state law that hasn’t been enforced since 1793 that outlaws your new business operation from accepting any money for your services, or some evil genius who has just inserted a “wizard” subroutine into some Microsoft product that will render your entire industry obsolete. And sometimes, it’s going to be turkey vultures…

A story being reported this week in the a Milwaukee Journal Sentinel tells the story of the Orthopedic Hospital of Wisconsin, which has had the unusual experience of having at least three nesting pairs of turkey vultures take up residence on the ledges and windowsills of the building. It’s bad enough to drive up to a hospital in which you are going to receive treatment and see a flock of vultures circling overhead, but apparently some of the patients have been complaining about waking up in the morning (or worse yet, after surgery) and finding a vulture perched on their windowsill…

Now, it’s important to realize that vultures are not known to pose any threat to human life whatsoever; they only eat things that are already dead, and have never been known to even approach a live human. Turkey vultures don’t even carry any forms of disease that could be transferred to a human host; despite their rather demonic appearance (red, wrinkled bald heads, black feathers, impressive beaks and talons, and beady red eyes) these birds could not possibly harm anyone at the hospital. It’s also worth noting that it’s an orthopedic hospital; most of the people there are going to be receiving treatments that have an almost zero chance of a fatal outcome. Still and all, there are probably going to be those people who will panic and run home upon seeing one of these birds. Or at least take their business somewhere else…

In the study of Institutional Failure, which is a specialty under the discipline of Strategic Management, all negative events that can impact your business are considered to have a greater or lesser degree of predictability; that is, some things (like a competitor inventing an alternative product or just reverse-engineering yours) are fairly predictable, while others (like a scientific breakthrough that eliminates your entire industry) are rather less so. Exactly how one goes about determining how likely a specific event is to happen makes up a large part of the studies I am starting on, and I won’t weary the reader with the details here. I’ll just note that a major factor in the survival of any business is how well you can anticipate the threats to your business – and which ones you develop plans to deal with…

Some events are so unlikely as to be not worth bothering about; events planned for Los Angeles in August are not going to be snowed out, for example, nor is your new aircraft design likely to be endangered by an unprecedented marine sponge migration. There have been any number of “Winter Festival” events that have been spoiled by unusually warm (or, at least, snow-free) winters over the years, however, and the second B-1 bomber prototype was destroyed by a flock of snow geese making a completely unprecedented migratory flight in the middle of the summer, to take only the obvious example. There is also the case of a well-know lawnmower company that almost went under because they attempted to introduce a line of snow blowers during a run of unusually warm winters...

In my working life as a manager and a management consultant I have done a lot of strategic planning, and I am always amazed by how many people spend their time and effort worrying about the trivial, the bizarre, and the completely unlikely, while losing track of things that can actually do them in. If your hospital provides the best care available for orthopedic patients, people are going to come there no matter what is perching on the windowsills, and if it is possible for bird strikes to disable your airplane, you must take into account that sooner or later, someone is going to fly it into a flock of birds. But sitting around and whining about things is not going to help much with either problem. Just keep in mind that in business, as in any other aspect of life, some days you’re the windshield, and some days, you’re the bug…