By Donald Keough – A Coco-cola executive and with foreword from Warren buffet.
This book immediately jumps into the best books on business in my list and simply put not many books are worthy of a foreword by Warren buffet (Halo effect). While, there are many books that talk about reasons for business success and as we have seen it those studies suffer terribly from the “Halo effect”, this book does the opposite of citing references of acts that are bound to lead to business failure. This book is a must-read for managers and analysts of business and gives a good checklist to evaluate if the company is on the path to failure
Donald Keough has worked for the Coca-Cola Company for 43 years and rose through the ranks to become President and COO. After retirement in 1993, he served on the boards of Coca-Cola, Buffett’s Berkshire Hathaway, etc. This book is a product of a nudge by Warren buffet to Keough to convert his wisdom delivered into talks into a book.
The 10 commandments of business failure listed:
- Quit Taking Risks: Xerox is a prime example of a company that developed the personal computer interface which was stolen by Apple / Microsoft. While, Jeff Bezos on the failure of Fire phone said “If you think that’s a big failure, we’re working on much bigger failures right now — and I am not kidding,”. “Some of them are going to make the Fire Phone look like a tiny little blip.”
- Be Inflexible. “A man who never alters his opinion is like standing water, and it breeds reptiles of the mind.”- William Blake
- Isolate Yourself (i.e., Be Out of Touch): The book says one way to isolate bosses is to hire a good personal caterer and follow the strict isolationist diet. Saw this at work in a different way in my career. I had visited Havells plants and offices multiple times and every time the lunch was at the office canteen which was common for all be it top mgmt. or factory staff. At the same time, in ICICI securities (I worked 2007-2019) for a very small office at Churchgate, there is a hierarchy in the canteen. And most top mgmt prefers to dine in inside their own cabins. When I joined ICICI sec in 2007, our floor had 3 different conference rooms for meetings and no individual cabin and analysts were required to bounce off ideas with each other in brainstorming sessions. Thematic reports and sector initiation reports were always brainstormed. When I left in 2019, there was not a single conference room on the floor.
- Assume Infallibility
- Play the Game Close to the Foul Line. Essel Group/ Zee groups Subash Chandra has made his empire but can say played close to the foul line. While most of the time he emerged victoriously and therefore did not see the downside risks of the leverage or financial creativity. Things did change in 2019.
- Don’t Take Time to Think
- Put All Your Faith in Experts and Outside Consultants. One company that exhibits almost all of the commandments of business failure is HT Media and I think one can fill volumes about “how not to run a business”. While, I tried to be objective about reaching the valuation targets of all companies, my valuation target for HT Media was decided by the current market price less 15-40%. The company was notorious for hiring consultants to streamline their business, this is despite in every quarterly conference call, I offered them free advice.
- Love Your Bureaucracy: MTNL is an awesome example of bureaucracy at work at its best. The company’s business model from fixed-line was challenged by mobile, making many employees redundant. the company initiated a voluntary retirement scheme but without enough takers. So to absorb the excess staff, they had to create roles for the excess staff. The CFO office which I visited had 3 secretaries working behind a single computer.
- Send Mixed Messages
- Be Afraid of the Future
- Lose Your Passion for Work-for Life: The bonus commandment and the most important as per me. Passion for work to me is the single most important driver for success and vice versa.
Quotes from the Book:
Having things too good is also not too good.
Here lies a company that died risk free.
Einstein said that he needed at his new office … a very large wastebasket “for all the mistakes I will make”.
Whatever you do in life, surround yourself with smart people who will argue with you.
I never meta successful person who did not express love for what he did and care about it passionately.