"What's the matter?" I ask.
"Nothing," she says.
' 'Don't give the answers,' definitely makes sense," I try to convince her. "Spelling out the answers when you are trying to convince someone who blindly follows the common practice is totally ineffective. Actually there are only two possibilities, either you are not understood, or you are understood."
"You don't say?"
"In the first case, no real harm has been done, people are just going to ignore you. The second case might be much worse, people might understand you. They'll take your message as something worse than criticism."
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"What is worse than criticism?" she asks innocently .
"Constructive criticism." I smile gloomily, remembering the harsh responses of Hilton Smyth and that Cravitz fellow. "You have a point, but it's below the belt. People will never forgive you for that."
"Alex, you don't have to convince me that when I want to persuade somebody-especially my husband-that giving an- swers is not the way. I'm simply not convinced that only asking questions is much better."
I think about it. She is right. Whenever I tried just to ask questions it was interpreted as patronizing, or even worse, that I was simply negative.
"It looks like one should think twice before charging the tall windmills of common practice." I conclude gloomily.
Julie busies herself with the delicious cheesecake our waiter is placing in front of us. I do the same.
When the coffee's served I gather enough stamina to con- tinue the conversation. "Julie, is it really so bad? I don't recall giving you a lot of grief."
"Are you kidding? Not only are you stubborn like a Southern mule, you had to go and pass on these genes to your kids. I bet you gave Jonah a hard time as well."
I think about it for a short while. "No Julie, with Jonah somehow it was different. You see, whenever I'm talking with Jonah, I have the distinct feeling that not only is he ready with his questions, he's also ready with my questions. It must be that the Socratic method is much more than just asking questions. One thing I can tell you, improvising with this method is hazardous, believe me, I've tried. It's like throwing a sharpened boomer- ang."
Then it dawns on me. Here's the answer. This is the tech- nique that I should ask Jonah to teach me: how to persuade other people, how to peel away the layers of common practice, how to overcome the resistance to change.
I tell Julie about my last telephone conversation with Jonah.
"That's very interesting," she says at last. "You definitely need to learn how to manage your life better. But sweetheart," she laughs, "be careful, remember what happened to Socrates. He was forced to drink poison."
"I don't intend to give Jonah any poison," I say, still very excited. "Julie, let me tell you, whenever Jonah and I talked
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about my troubles at the plant, I always felt he anticipated my response. It actually bothered me for quite some time."
"Why?"
"When did he have the time to learn so much? I'm not talk- ing about theories, I'm talking about his intimate understanding of how the wheels are really turning in a plant. As far as I know, he never worked one day of his life in industry. He's a physicist. I can't believe that a scientist, sitting in his ivory tower, can know so much about the detailed realities of the shop floor. Something doesn't match.
"Alex, if that's the case, it seems that you should ask Jonah to teach you something more than just the Socratic method."
Lou is my first and most important target. If I'm unable to persuade him to join me, I'm basically lost. It's not going to be easy. He's very close to retirement and I know to what extent he's involved in his community. I take a deep breath and walk into his office. "Hey Lou, is it a good time?"
"Good as any. How can I help you?"
Perfect opening, but somehow I don't have the guts to go straight to the point. "I was just wondering about your forecast for the next two months," I say. "Do you see any problem in us reaching and maintaining the fifteen percent net profit? Not that it's crucial any more," I hurriedly add, "but I'd hate giving Hilton Smyth even the slightest opening to hiss, 'I told you so.' '
"You can sleep tight. According to my calculations we'll easily cross the twenty percent net profit for the next two months."
"What!" I can hardly believe my ears. "Lou, what's the mat- ter with you? Since when do you believe marketing's chronically optimistic outlook?"
"Alex, a lot has happened to me recently, but believing mar- keting is not one of them. Actually, my forecast is based on a slight decline in incoming orders."
"So how did you pull this rabbit out of your hat?"
"Have a seat, it'll take me some time to explain. I have some- thing important to tell you," he says.
It's clear that I'm going to hear about another devious ac- counting trick. "All right, let's hear it."
I make myself comfortable while Lou shuffles papers. After two minutes I lose my patience, "Well, Lou?"
"Alex, we blamed the distorted way in which product costs are calculated for giving the appearance that our net profit was only twelve point eight percent, rather than over seventeen per- cent as we believed was the case. I know that you were furious about it, but what I've found out is that there's an even bigger accounting distortion. It's tied to the way that we evaluate inven- tory, but it's hard for me to explain. Maybe I'll try to do it through the balance sheet."
He pauses again. This time I wait patiently.
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"Maybe I should start with a question," he says . "Do you agree that inventory is a liability?"
"Of course, everybody knows that . And even if we didn't know it, the last few months have shown to what extent inventory is a liability. Do you think we could have pulled off this fast re- sponse to orders if the floor had been as jammed up as before? And haven't you noticed that quality has improved, and overtime has gone down-not to mention that we hardly ever have to ex- pedite today!"
"Yeah," he says, still looking at his papers. "Inventory is defi- nitely a liability, but under what heading are we forced to report it on the balance sheet?"
"Holy cow, Lou!" I jump to my feet. "I knew that the finan- cial measurements were remote from reality, but to that extent- to report liabilities under the heading of assets? I never realized the full implications... Tell me, what are the bottom line ramifications?"
"Bigger than you think, Alex. I've checked and rechecked it, but the numbers do talk. You see, we're evaluating inventory ac- cording to the cost to produce the goods. These costs include not only the money we pay for the raw materials, but also the value added in production.
"You know what we have done in the last few months. Dono- van has worked only on things that we have orders for. Stacey has released material accordingly. We've drained about fifty percent of the work in process from the plant, and about twenty-five per- cent from finished goods. We've saved a lot by not purchasing new materials to replace this excess inventory, and the cash fig- ures show it clearly. But on our books, the assets represented by inventory went down, since they were only partially compensated for by the cash we didn't have to pay out. In this period, when we were reducing inventory, all the difference between the product cost and the material cost of the reduced inventory showed up as a net loss."