My Biggest Mistake: Richard Austin

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Richard Austin, aged 54, is head of the European division of Bell & Howell, the US-based business equipment company. Born in Harrow, he was educated at the local grammar school before attending London University. His service in the army culminated in a tour of duty at Supreme Headquarters, Allied Powers in Europe.

He began his business career with IBM UK as a management trainee. After three years he moved to a position in sales with 3M UK, and in 1968 accepted a similar position with Bell & Howell. He resides in Buckinghamshire with his wife and two daughters.

IT IS the fashion these days to talk of 'managing change', as if change had just been invented. Over the last 25 years I have had change thrust upon me - change I never recognised until it was too late; change that was sudden; change that was imperceptible. It is only if you can recognise, and, preferably, foresee change, that you can begin the task of actually managing it.

My first 10 years at Bell & Howell were full of change as we built up product lines and distribution networks for our microfilm business. The market leaders were Kodak and 3M - each with particular strengths. Against this competition we determined, first, to focus our attention on a strategic alliance (in Europe) with Fuji Film, which had fine products but limited distribution outside of West Germany. Second, we planned to develop by acquisition a commanding position in the growing business of readers and reader-printers for microfiche - the postcard size sheet-film format.

As we moved through the 1970s and 80s, we prospered. Our weakest major market remained West Germany, despite our having a major engineering and manufacturing operation based near Frankfurt which gave us a strong and prosperous centre for our German business.

My greatest mistake was twofold: first, I was committed to a distribution strategy, formed a decade earlier, that demanded the microfilm business in UK, France and Germany would be direct, not through distributors. Second, I had forgotten the critical nature of having in our product line a strong branded microfilm that would over the years be the foundation of a valuable repeat supply business. This, we had determined, was a prerequisite of a profitable direct selling operation, but our distribution agreement with Fuji precluded Germany, where it already had another partner.

After some years of absorbing operating losses in the German microfilm division - during which time we had restructured, tried two new general managers and tried all the management nostrums of the day - I went back to basics.

It would be grossly simplistic of me to claim that all the ills and missed budgets over a five or six-year period were due solely to the lack of one product line within the portfolio; my mistake was in not comprehending just how significant it was. Its incremental contribution to profit and loss just made the difference between success and failure.

The problem had been in failing to recognise how quite subtle changes in the marketing mix had destroyed a strategy that worked well elsewhere.

Within the problem lay the seeds of a solution. The Fuji distributor in Germany, ALOS, was a medium-sized well-established, Swiss owned company. We had good relations with both the parent and the subsidiary. If one stepped back from the issue, the solution was obvious. Bell & Howell should merge its German microfilm interests with those of ALOS.

This was the outcome, and the story had a happy ending. The amalgamation has been a success story of the 1990s.

There are many morals. First, have a strategy. Second, review it regularly and coldly. Finally, if you are a manager of experience, trust your instincts.

(Photograph omitted)