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"If he were on fire, I wouldn’t piss on him."
—Albert Dunlap on the author
If you think corporate greed went out with the ‘80s, think again. The story of Chainsaw Al Dunlap, the CEO who tore apart Sunbeam, is a saga of duplicity and ego that rivals Barbarians at the Gate. Written by John A. Byrne, a distinguished senior writer at Business Week, this story of one street-fighter’s rise to the corporate penthouse-and the shattering fall caused by his own avarice-comes straight ...
"If he were on fire, I wouldn’t piss on him."
—Albert Dunlap on the author
If you think corporate greed went out with the ‘80s, think again. The story of Chainsaw Al Dunlap, the CEO who tore apart Sunbeam, is a saga of duplicity and ego that rivals Barbarians at the Gate. Written by John A. Byrne, a distinguished senior writer at Business Week, this story of one street-fighter’s rise to the corporate penthouse-and the shattering fall caused by his own avarice-comes straight from today’s headlines.
Byrne weaves together a network of extensive reporting to present a strong, filmic narrative of an out-of-control company and corporate excess in the go-go ‘90s. Al Dunlap, the focus of Chainsaw: The Notorious Career of Al Dunlap in the Era of Profit-at-Any-Price (HarperBusiness; October 28, 1999; $26.00), was a business celebrity whose stomach for firing thousands earned him the nickname of "the Patton of the business world." At small appliance maker Sunbeam, however, he became ensnared in his own greed, with disastrous consequences.
Dunlap-a man who designed an office suite with one room for his dogs and another for his bodyguard-stopped at nothing to realize his vision for Sunbeam, even as he was challenged by Wall Street analysts and his own top lieutenants. Chainsaw opens with a dramatic boardroom scene, as the newly-hired Dunlap makes the senior officers of Sunbeam plead for their jobs. The layoffs begin on his second day, and for two years, Dunlap’s management style, which Byrne calls "brutal pressure on honest people," would terrorize the company. "He sucked the very life and soul out of companies and people," Byrne writes. In the end Dunlap had announced the layoffs off 11,100 Sunbeam employees, firing only one of them in person.
Many of the book’s main players are business stars themselves. Two of Sunbeam’s main investors are Wall Street titans, billionaire financier Ron Perelman and fund manager Michael Price (known as "the scariest S.O.B. on Wall Street"). Hedge-fund wheeler-dealer Michael Steinhardt-who Time magazine named one of the 25 most influential Americans of 1998-is also included. In addition, George Soros and Kerry Packer are supporting players in this drama, which draws its assorted characters from business powerhouses such as Morgan Stanley, Skadden Arps, Coopers & Lybrand (now Pricewaterhouse Coopers), and Arthur Andersen.
Byrne delivers the inside corporate plotting, giving events a Grisham-esque sense of drama, but he is also careful to put Dunlap’s reign at Sunbeam in a broader context. "Chainsaw Al was a creation of the Street and its ceaseless lust for profit at any cost," says Byrne. For Dunlap to prosper, he required a fast-and-loose environment, where the illusion of a company’s speedy turnaround was enough to send its stock soaring. Byrne’s strong knowledge of Wall Street gives edge to this portion of the story; it’s thrilling to follow Sunbeam’s ups-and-downs through the eyes of many of the analysts watching the company. Given special attention is PaineWebber’s Andrew Shore, a young hotshot whose calls on Sunbeam were some of the riskiest of his career.
Dunlap succeeded partly because of his media savvy. "He was good copy and great TV," Byrne notes. Dunlap even wrote a successful business book, Mean Business: How I Save Bad Companies and Make Good Companies Great. While he urged the executives at his companies to buy the book, however, Dunlap didn’t follow its tenets. At Sunbeam, he was not a reorganizer, not a builder, but an "impostor," Byrne says.
Chainsaw is rich in telling character details (such as the story that Dunlap hoped to marry his second wife before the end of a calendar year for tax purposes) but it also has a moral center. The mad pursuit of wealth it portrays takes place at the expense of customers and employees. "During the greatest bull market in the history of the Stock Exchange," notes Byrne, "the self-proclaimed friend of shareholders had lost hundreds of millions of dollars at a consumer products company when consumer spending reached record highs."
About the Author:
John A. Byrne is a distinguished senior writer for Business Week, the author of Informed Consent and The Whiz Kids, and the co-author (with John Sculley) of Odyssey. Byrne has followed Al Dunlap’s career for many years and developed an extensive network of sources. For this book, he interviewed Sunbeam directors and executives, investment bankers, analysts, and even Dunlap’s estranged family. Byrne lives in the New York metropolitan area.
One by one, they briskly walked into the penthouse boardroom of the Sun-Sentinel building in Fort Lauderdale, Florida. It was the only truly exquisite space at Sunbeam Corp. headquarters. Perched atop the modern glass - and-concrete structure in a dome, twenty-one floors up from the ground, it offered stunning views of the Atlantic Ocean. Through the vast tinted windows on three walls, visitors could see the sun glisten off the ocean's surface, watch the rolling waves of incoming storms, and glimpse the sea gulls gliding on the salty air.
The men, restive and fidgety, took their places in the dark green leather chairs around the mahogany table.
James J. Clegg, the towering chief operating officer, had canceled his family vacation in the Caribbean to be there. He had flown in from Chicago's O'Hare Airport the night before with Richard L. Boynton, Jr., the feisty and volatile president of the household products division. Rob Johnson, the acting head of outdoor products, had come from Nashville, where he was based.
Corporate staff were there already, waiting for the man who would soon decide their fates. David Fannin, an earnest Kentucky lawyer who had been the company's chief counsel, had hammered out an employment contract for Dunlap's longtime sidekick Russell Kersh so that Kersh could be at Dunlap's side on his very first day of work. Paul O'Hara, the lanky chief financial officer, and James Wilson, the thinas-a-rail head of human resources, didn't know what to expect.
At precisely 9 A.M., on this Monday, July 22, Albert J. Dunlap marched into the roomwithout introduction, without issuing a single greeting to any of the anxious men around the table. He looked exactly as he appeared in many of the photographs that accompanied the various articles the men had read that weekend. He wore his pinstripes like a military uniform, meticulously pressed, without a single wrinkle or a stray thread, and perfectly fitted to his stocky frame. A white handkerchief peeked out of the chest pocket on his dark blue suit jacket. On his left hand, he sported a chunky West Point class ring above his gold wedding band.
The silver-haired Dunlap also wore a severe look on his face. His hard blue eyes, hidden by dark glasses, canvassed the room, fixing on each one of them. Only Spencer J. Volk, the baritone-voiced international president, was missing. Just moments before Dunlap's entrance, he had gone out to the men's room. And when he returned, no more than a minute past the appointed start time, Dunlap attacked him with vigor.
"Who arc you?" he shouted as the man gingerly tiptoed to his seat.
"I'm Spencer Volk, sir. I'm head of international business," he said in a voice as smooth as a network television anchor's.
"Why arc you late?" barked Dunlap.
"I was in the men's room," Volk nearly whispered.
"When I say we have a meeting at 9 o'clock," bellowed Dunlap, "it starts at 9! Gentlemen, look at your watches. Your lives will never be the same from this moment onward."
Like George C. Scott in the movie Patton, Dunlap began by delivering a spellbinding, if sometimes disjointed, monologue on himself and the company.
"The old Sunbeam is over today!" he proclaimed. "Let's get one thing clear: By God, I'm not Schipke. And I'm not Kazarian," he said, referring to the company's two previous chief executives, Roger Schipke and Paul Kazarian.
"You guys arc responsible for the demise of Sunbeam!" Dunlap roared, tossing his glasses onto the table. "You are the ones who have played this political, bullshit game with Michael Price and Michael Steinhardt. You are the guys responsible for this crap, and I'm here to tell you that things have changed. The old Sunbeam is over today. It's over! "
Glaring fiercely, Dunlap kept repeating the phrase, again and again, saliva sputtering from his lips. His chest was puffed out and his face flushed a bright red. The men stared in silence, incredulous at this outrageous performance, almost expecting Dunlap, like Patton, to slap someone out of frustration. Dunlap's bluster and mad grin, his oversized gleaming teeth too big for his face, seemed to fill the room.
"This is the best day of your life if you are good at what you do and willing to accept change," continued Dunlap, through his clenched teeth. "And it's the worst day of your life if you're not."
Virtually every executive there already believed that his survival would be merely a matter of chance. What they knew about the business or what they had achieved in the past was irrelevant. Survivors, they would soon understand, had to humbly accept blame for failure, and had to swear allegiance to Al and to Russ. Little else mattered.
Because on this day, the first day of the Dunlap era, they were a bunch of duds. They were losers and washouts, directly responsible for the company's failures. Dunlap wanted them to know that's all they were: corporate trash. P. Newton White, who had worked with Dunlap at Scott Paper and would soon join the team at Sunbeam, thought that Dunlap's management skills came right out of the military. "Yeah, Al, I understand," he would say, "piss all over them and then we'll build them back up." Except that some didn't want to be reconstructed by an Albert Dunlap. Some of them already wanted out. At least then they could take their severance pay and walk away from what was surely going to be a living hell, working for an impulsive and abusive loudmouth.
Dunlap tossed off questions and remarks as if they were hand grenades, waiting for an explosion to occur. After noting that Sunbeam had missed five consecutive quarters of profit and revenue estimates, he turned to Paul O'Hara, the company's chief financial officer, who sat next to him, and said: "And you delivered these numbers. How could you in good conscience have done that? How could...
The Principal Players xi Prologue xiii Mean Business (the Nonfiction Version) 1 ``I So Love Them'' 10 ``Strip Me Naked!'' 20 Pirates and Tribes 38 Another Downsizing 56 Coping with the Al Dunlaps 70 Rambo 93 The Blanket with a Brain 110 A Quiet Rebellion 126 The Secret Room 141 The Ditty Bag 153 ``Don't You Think I'm a Bargain?'' 171 ``A Triple!'' 187 Indecent Disclosure 208 An Analyst's Call 227 ``Excuse Me, I'm Not a Cook!'' 250 ``I'll Come Back at You Twice as Hard'' 264 ``Too Rich and Famous'' 275 ``You Want to Quit?'' 283 A Matter of Conscience 299 What Goes Around, Comes Around 317 ``I Screwed the Pooch!'' 328 Epilogue 351 Author's Note 355 Appendix 359 Notes & Sources 365 Index 387