I received an email from Martin King at the end of last week saying: “only drastic action will save Exbiblio.”

Well that’s one way of getting the company blogger’s attention.

A telephone call this weekend filled out some of the details. Martin tells me that conversations have been taking place, both on an individual and a collective level, in which he has informed Exbiblio’s 17 employees that the company will retrench down to a core of about 5 to 8 full time staff by the end of this week. The consultants, who form a large part of Exbiblio’s cost base, will also be cut back – if not to zero, to something close to that.

The news seems all the more unexpected when you take into account that Exbiblio has hired four new people over the last month. In fact, I was just about to publish a portrait of one of the new arrivals. But if you follow some of the links in this post, you will see that all the warning signs have been there.

Martin described the decision as “a sudden awakening”. The company is burning through its resources “way too quickly”. Week after week has passed when there was supposed to be a fully functioning prototype of the oPen scanner pen in their hands. Each week has been met with disappointment.

As well as these continuing “challenges” there were two immediate causes that precipitated the ‘awakening”. Exbiblio found on November 17th that the price of a key optical component was going to be two and a half times what it had budgeted for. Then, on November 21 came another blow: it found that a critical component, the oLed display wasn’t going to be available, and it would require a major redesign to incorporate another display.

In addition to all this, the software project to accompany with the hardware has been progressing slowly.

Martin now acknowledges he made a fundamental mistake six months ago. He insisted that the project would progress in ‘experimental mode’ discovering what worked as it went along. It didn’t have a full spec- just a sort of general direction.

“That was a terrible mistake”, he admits, “I should have allowed people to develop formal product specification, and let everyone know that it would change as we went on. People don’t like working in environments of uncertainty. Formal disciplines are necessary.”

On my last visit to Seattle, I was pleased and surprised to see Exbiblio starting to work in a more formal manner, with milestones that had to be crossed built into the system, and progress ticked off each day. Two months ago I was astonished to discover that Exbiblio had only recently hired a part-time bookkeeper – and could only now present its financial position in detail. I had noted the lack of a finance director but I had wrongly assumed that there was somebody I hadn’t met yet keeping a close eye on every last figure and doing financial projections.

I think that part of what’s happened is that the real picture has started to appear out of the mist. In the new spirit of ‘formal discipline” it has become much clearer just what an enormous undertaking Exbiblio has made, how far away it is from completion, how little room there is for setbacks, and how much it is likely to cost.

I put this point of view to Martin. He doesn’t deny it. Perhaps he is feeling a little low, because normally he is more combative when I put forward my views. However, I have a strong feeling that this is a big part of the truth.

I don’t think Martin made these mistakes unawares. He is experienced in business and knows how things are normally done. He has been – and to an extent still is – determined to do things his own way. The cost of the experiment so far has been high with precious little to show for it. I will be interested to see how conventional or unconventional Exbiblio will be in its coming phase of ‘retrenchment”.