Book Review:The Ten Commandments For Business Failure

Author: Donald R.Keough
Publisher: Penguin/Portfolio
Pages: 190
Price:Rs.195

Bookstore shelves are full of stories by Management Gurus of how businesses (and companies) became highly successful in a sustained way and also the expositions of how their leaders made those businesses or organizations the envy of others. Or to quote David R.Keough, the author of The Ten Commandments Of Business Failure “the success gurus have paraded their wares across the pages and stages of the world”. Departing from the convention, the author of the book talks about the various negative aspects of the leadership that can lead to business failure. His premise for the forceful arguments is that “businesses are the product and extension of personal characteristics of its leaders” and hence the “ real reflect lies in ourselves, the leaders of business”. And he also confesses that “after a lifetime in business, I’ve never been able to develop a set of rules or a step-by-step formula that will guarantee success in anything, much less in a field as dynamic and changing as business”.
So, Keough has decided to discuss about how to lose and guarantee that anyone who followed his formula would be a highly successful loser .At the top of his list is Quit Taking Risks. Don says that we, right from childhood, have always been prevented from venturing into risk.And he says that the culture in most parts of the world are still in a state of promoting risk averse mindset as “let’s-do-it-like- we-always-did-it-because-that’s-the-way-we-always-did-it” and distinguishes America from the rest as risk taking from the very beginning.The attitude of risk aversion according to Keough makes everybody contented with status quo. He narrates the story of one of the early builders of Coca-Cola, Robert Woodruff who took enormous risk of establishing Coca-Cola Export Corporation to tap the markets beyond America on his own due to stiff opposition from the Board of Directors. Keough says that Mr. Woodruff believed the advise “The world Belongs To The Discontented” by Oscar Wilde and went ahead taking the corporation well beyond the shores of America and was instrumental in making Coca-Cola a really global corporation. Don also tells the story of Xerox which failed to take risk with the first PC they were able to design in 1973,which would have given them a five-year head start over its rivals. He says that people refrain from taking risks because they are afraid of making mistakes and failures.He also states categorically that if a company never has a failure, their management is probably not discontented enough to justify their salaries.
The second in Don’s recipe for business failure is being inflexible. Such leaders are so set in their ways that they believe that they have the formula for success and hence can’t see any other way of doing things.He narrates how the stubbornness & inflexibility of a brilliant man like Henry Ford with a wonderful business acumen resulted in Ford giving market share away to competition when he insisted that he will stick to the Model T and the famous “they can have it in any colour they want,as long as it is black”.The competitors,GM and Chrysler, introduced bigger, fancier and brightly-painted cars and zoomed past Ford in meeting customer’s changing preferences.
Another prescription for failure in the list is Isolate Yourself. According to Don, this is another wonderful strategy that will lead to failure. Never try to interact with the people, because you will come to know truth. Keep a close coterie of advisors and staff who get paid to think and say that you are wonderful. Never meet people on the workplace, never know their names or other whereabouts. Eat lunch with a few trusted lieutenants, never allow anybody to bring bad news. Create a climate of fear. Scream and throw tantrums. Dress down people in front of an audience. Embarrass them and be rude. Take all the credit for success and blame others for failures and mistakes.
He narrates the story of “Chainsaw” Al Dunlap and how he drove a fine company like Sunbeam into the ground in 1998.
The fourth prescription is Assume Infallibility.Never admit a problem or a mistake. Cover up issues or blame them on somebody or some external force. Don narrates how the Chairman’s letter to shareholders in annual reports blame on everything ranging from currency fluctuation to hurricanes for the poor show during a year. Don narrates Coca -Cola’s own experience in 1999 while dealing with the issue of school children in Belgium falling sick after consumption of Coke.The management did not admit that there was an issue with itself and refused to do anything. Sales plummeted and after a gap, the management decided to withdraw the product from the shelves, but the damage was already done.The episode resulted in the largest product recall in the company’s 120 year history and necessitated enormous expenses and time to repair the damage to the reputation and image. Don says this kind of infallible we-know-best attitude of managements have caused many companies to ignore reality and miss opportunities.
The fifth commandment is Play The Game Close To The Foul Line. Here he discusses the corruption in corporate circles.He narrates the example of Adelphia where the family owners John Rigas and sons operated the company as it were their family “treasure chest”. And companies like Enron, Tyco and WorldCom where CEOs and CFOs acted without regard for owners and employees.The author makes a strong opinion that enough laws can’t be passed to make men ethical. Enron failure happened despite availability of seventy-one thousand pages of federal regulations and also the numerous SEC and New York Stock Exchange rule for companies .
The sixth in the list is Don’t Take Time To Think. The author says that in today’s world, we have a tendency to communicate and respond instantly without any evaluation, without sitting back and reflecting quietly for a few moments and serious thinking.He says three major problems contribute to this scenario: The In-box Shock meaning that you have to deal with multiple communications happening at a rate of speed and volume which the average human nervous system is not capable of handling; too much of data, unprocessed, masking reality especially because executives tend to believe market research outputs blindly; not taking time to think leading to plain foolish and sometimes even dangerous because one can’t make any real progress if one just sifts through data and reaches quick conclusions based on previous experience rather than slow and careful analysis.
Next in the list is Put All Your Faith in Experts and Outside Consultants. The commandment is well explained with the story of how Coca Cola decided to diversify by entering into wine business by acquiring a wine making firm at the advise of consultants who thought that Coca Cola had to reduce the risk of dependency on soft drinks alone.But, the wisdom of Mr.Woodruff, mentioned earlier showed the management how the wine business is not a good fit for the company and a detailed analysis that followed concluded that even in the best times, the return from wine business will be equal to or less than the company’s cost of capital. And they exited wine by selling the business to Seagram’s. The author also narrates the story of Long Term Capital Management(LTCM) which boasted of Nobel Prize winning economists Myron Scholes and Robert Merton in its founder’s list(highly acclaimed and regarded for their knowledge of finance) but failed as the theories did not lead to practical successes in making money.
The Eighth commandment is Love Your Bureaucracy. The author says that bureaucracy is the best way to not get things done.This is because bureaucrats controls the rigid and many a time obsolete rituals, guard them with their lives because any change may undermine their power and authority.Bureaucrats can often become major impediment to progress of any kind and guarantee failure.Don says that if one wants to impede progress, make sure that administrative concerns take precedence over all others.
The ninth in the list is Send Mixed Messages. Don explains this with the example of the purchase of Columbia Pictures by Coca Cola, a highly unpredictable business with no guaranteed income, which did not fit into any business definition of Coca Cola and hence was sending a mixed message to the investors.
Don’s tenth commandment is Be Afraid of Failure. Don says that pessimism has become a growth industry ever since Thomas Robert Malthus predicted that population would outrun food supplies and thus all of mankind was doomed.But technology enabled world to have enough food for the people.Don also quotes Paul R.Ehrlrich, author of The Population Bomb who predicted in 1968 that hundreds of millions of people would starve in the 70s and that life expectancy would fall in 1980s.Both predictions did not materialize. Most of these predictions try to spread fear with a focus on failure. It is like ten cars in a massive pileup is making headlines but millions of cars safely negotiating a busy road is only an information and no news.
Eventhough the title of the book says ten commandments,Don has added an eleventh one: Lose Your Passion for Work- for Life. Don says that if somebody wants to fail, lose the passion for whatever he is doing .Those who choose to say to themselves “that’s good enough” or” that is not my job” or “I don’t care “ or “I am going to retire soon anyway” etc are examples of people who have lost their passion for work and for life.Don talks about Warren Buffet who said:”I tap- dance to work every day” to show how enthusiastic and passionate are successful people about work.
An unconventional book, well narrated in a lucid and simple style, the book is a must read for all present and aspiring leaders notwithstanding the fact that a few earlier books like Why CEOs Fail( David L.Doltich and Peter C.Cairo, 2003,Jossey-Bass) and Why Smart Executives Fail(Sydney Finkelstein, 2003,Penguin/Portfolio) had dealt with many of these clearly relating business failure to failure at the individual leadership level, which is the premise of the author too.For example, Doltich & Cairo talks about arrogance, volatility excessive caution, aloofness, mischievousness etc among the eleven derailers that is likely pull a CEO down which find their way in this book too may be in different terminologies. Finkelstein lists the “Seven habits of Spectacularly Unsuccessful People” with habits like thinking that they have all the answers, they stubbornly rely on what worked for them in the past which again are contained in the basic ideas of this book.
But the forward written by Warren Buffet lends credibility and sends the right signals to the discernible reader.
About the author: Donald R.Keough was President of Coca Cola from 1981 to 1993.He was again nominated to the board of Coca-Cola in 2004. He is Chairman of Allen& Company Inc and Allen & Company LLC, investment banking firms and sits on the boards of Berkshire Hathway Inc. and InterActive Corp. In the forward to the book, Warren Buffet says that Don is “one of the very few guys I feel I can hand the keys over to”.