Follow these 10 business rules and you are guaranteed to fail. Book#78
What can I learn more from, failure or success? I soon realised in life that the truth of the matter is that it‘s hard to know what makes a venture or someone successful. It is easier to know why something failed and do my best to learn from the mistakes of others in order to avoid doing them myself. I came across this book, the ten commandments of business failure by Don Keough, and that got me curious. He reveals how great enterprises get into trouble.
“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. What I can do, however, is talk about how to lose. I guarantee that anyone who follows my formula will be a highly successful loser.”
Don Keough is a former top executive at Coca-Cola. He has witnessed plenty of failures in his sixty-year career (including New Coke). He has also been endorsed by some of the most successful people in business history, including Warren Buffett, Bill Gates, Jack Welch, Rupert Murdoch, and Peter Drucker.
According to an article in Fortune talking about him, he was rather powerful: “If you could line up all the senior executives of Fortune 500 companies over the years and rate them by power and influence, one guy would stand ahead of most of the CEOs — and outrank every other executive.”
Here are some of my personal takeaways from his ten failure commandments. Want to fail ? Here is just how to proceed:
1) Stop taking risks. “It’s human nature. I’ve got something. Why risk it? Who knows what’s on the other side of the mountain? Don’t go there!” As our lives get softer and comfortable the temptation to take less risk is stronger, some people are content with the status quo. When things run too good, it is not so good. Oscar Wild said: The world belongs to the discontented. I didn’t know that only 16 of the largest 100 companies of 1930 are still with us. Praise making mistakes.
3) Isolate yourself. Some CEOs make it tough for their employees to speak to them. It is crucial for leaders to talk to workers directly so that they can quickly take steps to solve and face the problems. Give credit to others for bringing the bad news and take all the blame. Surround yourselves with smart people who will argue with you and challenge your views.
4) Be overconfident. Leaders must listen to everyone before taking decisions, and admit their mistakes. “Einstein said he needed in his office: a desk or a table, a chair, some pencils, paper, and a very large ware basket “for all the mistakes I will make.”
5) Play close to the border line. When corporate leaders find themselves no longer asking “Is it right?” but “Is it legal?” It is just a short leap to “Can we get away with it?” Best to play center field. A reputation takes years to build and 5 min to ruin.
6) Don’t take time to think. Mark Twain said “it is not the things we know that gets us in trouble but the things we think we know that are not so”. We tend to look for confirming evidence, while we should be looking for disconfirming evidence. Best to pause and slow down. Too much data is dangerous because it gives the illusion of rationality. Ask the right questions first. Action is easy, thought is hard.
7) Put all your faith in experts and consultants. Here is a story he tells from his youth that I think I’ll remember “In my teens, while working during the summer at the city stockyards, I got an offer to become a bull buyer. A bull buyer was supposed to choose appropriate bull for slaughter from the bulls scattered all over the yard. After my first day on the job, someone came by and asked to see what I’d bought. It turned out I’d paid too much for quite a few of the bulls. He reminded me that I was among salesmen and because of my young age, they would try to flatter me, be nice to me, distract me, but he pulled out a chart and said here’s exactly what you are looking for in a bull. No matter what anyone says, never deviate from these basic requirements of conformation. He said : Watch the bull, not the man. That simple advice has stuck with me through my years in business even to this day”. Don’t let yourself be charmed by man.
8) Love your bureaucracy. “If you want to get nothing done, make sure that administrative concerns take precedence over all others. Love your bureaucracy. Meetings are the religious service of a great bureaucracy and the bureaucrats are fervently religious. These meetings generate more paperwork, more e-mails, more calls, more meetings. In fact, most often there are meetings to plan meetings.” The bureaucracy game is one where the first who does something looses. Bureaucracy annihilates initiative and imagination. Best to stay nimble and simple. Don’t micromanage employees.
9) Send mixed messages. For example, give bonuses no matter the performance.
10) Be afraid of the future. The only ones who succeed are natural born optimists; they emulate energies.
Bonus: Lose your passion. Passion is everything.
Fun read, I enjoyed his conversation with Charlie Rose below back in 2008. He seemed to have been a wise and good man. Too bad there aren’t more down to earth people like that in governments.
My purpose in life is independence, fulfilment and a better understanding of how the world works. Like Charlie Munger, I believe in the discipline of mastering the best that other people have ever figured out. And like Sir Isaac Newton, I believe in our ability to see further than any others before us by acknowledging that we are standing on the shoulders of giants. With this blog I hope to keep track of my learning about investing, business, decision making, entrepreneurship and self development while inspiring others to do the same. For the moment the format of this blog will be one post for each book that has influenced me, but I expect it to evolve over time. Join my Journey. John.
