Here's to the OEM

July 1, 2004
You are standing on the shop floor in the semi-darkness that exists after most of the employees have gone home. The shop is filled with the skeletons of several partially built machines.

You think about the 150 employees and the customers, and your responsibility for them. Then it hits you that the company is hanging by a thread. Undercapitalized, if one project goes terribly wrong, the company goes under, the employees lose their jobs and the customers are left hanging without the machinery to build their products.

Machine builders, original equipment manufacturers (OEMs) in our terminology, are essential for the success of manufacturers. It is a tough business with a lot of competition and slim profit margins.

I once led the marketing and application engineering departments for a special machine builder, so I know first hand how tough that business can be. This month, we look at this part of the business and explore how some have made judicious use of various types of automation to get a little edge on the competition.

That scene at the beginning? I was pondering our business one evening as the importance of the balance sheet and company leadership hit me. Each member of the leadership team had a function. That was when I realized that the job of the top leader, the president in this case, was to maintain good relationships with the people who financed the operations.

For that company, the “real” owner was primarily the bank that had loaned us several million dollars, not only for the building and equipment, but also for working capital. One misstep with the “guys with ties” and we’d be history. That happened. Now I’m an editor.

This leads me to thoughts on leadership and my book of the month recommendation. The best thing about “Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value,” by Bill George, published by Jossey-Bass, is that George not only studies leadership, he practices it—well.

He makes two points about what works in building a business that lasts. First, “leadership begins and ends with authenticity.” Second, “Contrary to what the advocates of maximizing short-term shareholder value would have us believe, the best-kept secret in business is that mission-driven companies create far more shareholder value than do financially driven firms.”

Authentic leadership

What is an authentic leader? George says, “Authentic leaders are more interested in empowering the people they lead to make a difference than they are in power, money or prestige for themselves.”

As for the second point, “The best path to long-term growth in shareholder value comes from having a well-articulated mission that inspires employee commitment.”

One of the things I appreciated in reading about all the OEMs probed this month was how they listened to customers and found solutions to benefit them. Many of these companies have existed for many years and plan to be around for a long time to come.

Have you heard about Tony Perkins’ Always On Network? The erstwhile founder of Red Herring launched a new company found only on the Web at The term refers to people who are “always on” the Internet.

At his second Innovation Summit, a conference of Silicon Valley entrepreneurs and government officials held in San Francisco, July 14-15, Perkins launched another innovation—he made the sessions available live over the Web, along with a real-time chat session. Chat comments were displayed at the conference for all to see. It was a great experience. Perhaps a new way to conference is in the making.

I’ve joined the ranks of bloggers. Check out my Weblog at

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