by W. E. Pete Peterson
Copyright 1993, 1998 W. E. Peterson
WordPerfect Corporation is no more. When attempts to go public failed, Alan and Bruce sold their company to Novell. When WordPerfect sales declined, Novell sold off most of the WordPerfect products to Corel for a very low price. Although WordPerfect is still used by millions of people around the world, Corel is having a tough time making money with the product. Microsoft is a tough competitor.
If you read this book hoping to learn more about running a business, then I hope you noted the parts about teaching correct principles and allowing employees to govern themselves. In spite of the problems I had understanding and implementing this philosophy, I am convinced it is the best way to run a business. In today's competitive environment, businesses can no longer afford the overhead of one supervisor for every five or six employees. As organizations flatten and supervision decreases, employees will make more decisions on their own and govern themselves much more than they have in the past. If a company is to function effectively, its employees must have a good understanding of what is expected of them. Very small organizations may be able to find success without defining and teaching correct principles, but any business with more than 25 or 30 people must get organized.
May 1, 2002
In a recent e-mail I was asked the following questions. Here are the questions with my answers.
What, in your opinion, were the critical marketing mistakes made by WordPerfect from your departure up until the acquisition by Novell?
WPCorp spent themselves to death. The last full year I was there (1991) sales were approximately $600 million and pre-tax profit was $200 million. In 1992, sales fell to about $570 million, but expenses grew to equal sales. 1993 sales were about $700 million (if that number can be believed), but expenses grew to more than $700 million. The employee count from early 1992 to the end of 1993 grew from about 3,300 to 5,500, and the company was bleeding cash.
WPCorp needed better products to compete, and they needed a suite of products. The products didn't get better, and selling a Borland Office (rather than a WordPerfect Office) was silly. By spending away all their cash, the company had no chance of recovering. By not developing better products in a productive and efficient way, the company had no chance of recovering. Given Microsoft's strength, perhaps WordPerfect Corp never would have been able to reclaim their number one position in the word processing market, but they could have survived if they would have kept their expenses in check.
What are your opinions about that acquisition?
Bruce, Alan and others with WP stock options were very lucky to convert their WordPerfect stock to Novell stock. Novell suffered greatly. Instead of a cash cow with promised sales of $880 million and a promised profit of $100 million, WordPerfect was a cash drain, with much lower sales and a $100 million loss. Novell bought a sinking ship and never had a realistic chance of fixing things. Novell was also floundering (and still is). Novell couldn't right its own ship, let alone try to right another.
Did it ever make sense?
It made sense for WPCorp. It didn't make sense for Novell.
Could it have worked if different strategies and tactics had been followed?
Maybe, but there would have had to have been a lot of changes to the development processes. It would have required a lot of work and a lot of patience.