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A Book Review by Stephen Yap
The Ten Commandments for Business Failure
Book reviewed: The Ten Commandments for Business Failure (Published 2008, Penguin Books, Camberwell, Vic., Australia)
Author: Donald R. Keough, former President of the Coca-Cola Company
Publisher’s price: $26.95
Donald Keough’s book has been well-received by the business community. Bill Gates, Chairman of Microsoft, says of this book: “Don’s commandments for business failures will teach you more about business success than a whole shelf full of books.”
Don Keough has more than 60 years’ experience in business. For much of his career Keough was an executive of the Coca-Cola Company, of which he eventually became President.
In his Foreword to the book Warren Buffett, Chairman of Berkshire Hathaway and reputedly the world’s second richest man, calls Don Keough “an incredible business leader”. Buffett says: “The greatest achievement of good executives is to get things done through other people, not themselves. Now here is one guy who is capable of getting all kinds of people from all over the world, men and women who want to help him succeed. I‘ve seen him do it ... Maybe it is because no one understands the human aspects of situations better than he….”
In this book Keough enunciates his Ten Commandments which he guarantees will lead to business failure. He cites extensively from his long experience as a senior executive of Coca-Cola.
In this review I will highlight only 7 of Keough’s 10 Commandments. I suggest that readers check out the book for the other 3 Commandments as well as the many examples of business failure cited by the author.
Commandment #1 (top of the list) - Quit Taking Risks
Stop taking risks and you stunt your growth, says Keough.
Keough attributes much of Coca-Cola’s global success to the establishment of the Coca-Cola Export Corporation in 1930.It was immediately after the stock market crash of 1929.Everyone was risk averse. To circumvent resistance from his Board of Directors Chairman Robert Woodruff set up a new company which was independent of the mother corporation. It remained substantially independent until 1973.
By undertaking this single risky act of establishing the Coca Cola Export Corp. at a chaotic time in American history Woodruff launched the iconic American drink into remote reaches of the globe, paving the way for the world’s best known brand today.
Keough places this Commandment at “the top of the List.”
Commandment #2 - Be Inflexible
Being inflexible and being overly risk averse are closely related shortcomings. However, there is an important shade of difference. Truly inflexible people do not merely avoid risk; they are so set in their ways that they do not see any alternative way of doing things.
Keough cites the case of the Ford Motor Company. Henry Ford was the visionary who had a huge headstart over other automobile makers. By the roaring 1920s Ford’s Model T was essentially unchanged from the model introduced in 1908.
You would no doubt have heard of the statement attributed to Ford that the customer could have any colour he wanted as long as it was black. While Ford stubbornly resisted change his competitors were giving the American Consumer plenty of choice by the 1920s - bigger engines, faster cars and brightly coloured paintwork. Finally, in 1928 Ford succumbed to consumers’ requests and launched the Model A. But it was too late and the company never regained its lead.
Commandment #3 - Isolate Yourself
CEOs and Company Directors who isolate themselves from their staff lose touch with the real world of their business.
Keough has this to say: “Unfortunately for those who wish to remain isolated, the history of most successful businesses runs counter to this disposition. In fact, one of the traits of many of the legendary builders of business was that they had an uncanny ability to know and relate to their employees at every level ..."
Commandment #4 - Assume Infallibility
Keough gives several examples of companies succumbing to this defect.
In fact, he included an example of his own mistake. Right after the destruction of the Berlin Wall Keough, the Company President, was at a meeting of his German management team. The German executives proposed an investment of half a billion dollars in the newly-opened East German market. He gave short shrift to the proposal, paying little attention to the explanation of the German managers. He did not even pay attention to the part of the proposal that German bottlers or franchisees were to put up most of the investment, minimising any financial risk to Coca-Cola.
Fortunately, the German-born Head of Coca-Cola’s International Operations prevailed upon Keough to travel to East Germany for a first-hand look. Keough saw for himself the huge market potential of East Germany, following which he announced an investment of a billion dollars for Europe with a substantial proportion for East Germany. Thanks to that trip around the marketplace Coca-Cola is now the leading brand in its category in Eastern Europe.
Commandment #5 - Play the Game close to the Foul Line
In the past decade America has been rocked by several cases of unethical practices by businesses. Remember Enron and World Com?
Keough abhors the financial juggling that goes on in many American companies. He expresses disappointment in the findings of a Rutgers University study that of all American post-graduate students the students most likely to cheat were MBA or Business Management students.
In trying to look good to the public and their shareholders some companies do “creative” accounting, which may tip companies over the line of what is ethical or legal.
Commandment #6 - Don’t Take Time to Think
Never in the history of mankind have we had such ready access to so much data. It is dangerous for companies to just accept unprocessed data. Leaders of businesses have to sort through data to extract meaningful information. You must take the time to think.
Commandment #7 - Put All Your Faith in Experts and Outside Consultants
Businesses must not be so insular that they do not listen to advice from external consultants and experts. But ultimately, you must assess any advice on your own experience and good old common sense.
Keough himself was a leading player in the introduction of the New Coke in 1985. Exhaustive consumer testing and all manners of experts convinced Keough and the top management of the Coca-Cola Company to replace classic Coca-Cola with a sweeter formulation. But the New Coke was one big flop.
Coca-Cola’s failure was to listen to the consultants without taking into account the iconic and cultural meanings of its brand.Many Americans did not want the beverage they grew up with to be tinkered with.
In this review I have mentioned only 7 of Don Keough’s Ten Commandments for Business Failure. I recommend that you read the book for the other 3 Commandments. The author cites very many examples to illustrate his points. Necessarilly, the well-documented examples are of large corporations. Nevertheless, owners of Small and Medium Enterprises will be able to take away many useful tips from this little book. The Ten Commandments for Business Failure is unlike most books on the market - it is not the musings of an academic or a consultant; it has been written by a hands-on business manager.
© Feb.2010 Stephen Yap/Koala Hill Crafts
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