The Ten Commandments for Business Failure - Don Keough [21]
When the perception of quality in even the most ordinary product is lost, all is lost. When consumers got word that Schlitz had cut corners with its ingredients, they reacted negatively. In an intensely brand-loyal business, Schlitz drinkers began to abandon their beer. From one of the leading brews in the nation, Schlitz dropped to the point in the mid-1980s where “The Beer That Made Milwaukee Famous” was not only not famous—it was gone.
The infallible we-know-best attitude of management has caused many companies to ignore reality and miss opportunities.
General Motors spent time, money, and an irretrievable part of their reputation fighting off and denying the allegations of Ralph Nader’s Unsafe at Any Speed, a 1965 book criticizing safety throughout the automotive industry, but with one famous chapter aimed specifically at Chevrolet’s new, rear-engine Corvair. Rather than meeting with Nader and other critics and addressing the possibility of working with others in the industry and perhaps improving the engineering of all rear-engine cars, GM executives hired private detectives who were accused of harassing Nader. The leadership of GM squandered what could have been a golden opportunity to really burnish its image of genuine concern over public safety. It chose, instead, to remain infallible at any cost—and the result was an incalculable loss of public goodwill.
Earlier I mentioned being fortunate in having a team of managers who individually would readily tell me when they thought my executive infallibility was not so infallible. One very important instance occurred right after the Berlin Wall came down in 1989.
If you want to fail, do what I did.
We were in a meeting with the head of our German operations and Claus Halle, also a German, who was head of all our international operations. During a review of a routine annual business plan, the German management team put a project on the table that called for the company to invest roughly half a billion dollars or more in this new democratic state of East Germany. The project cost cut deeply into the total budget that was being put together, and apparently I was tough, to a fault, in rejecting it. After the meeting Claus came to me and said that the head of the German management wanted to resign.
I was shocked. Why?
Claus responded, “You didn’t listen clearly to what he had to say. Much of this investment would come from the German bottlers. You don’t know the potential of East Germany. You’ve never been there. You rejected it out of hand without considering that this could be a great opportunity.”
Claus went on, “At the very least, you should talk to them again. But I’d like to ask you to do more. Come with me to see East Germany for yourself, firsthand, and make up your own mind.”
We went to East Germany. We went everywhere. And everywhere I saw opportunity. My mind was completely changed. We assembled everyone involved together, and I apologized for being so narrowly focused and so intransigent. Together, we made plans then and there to buy several plants in the East.
A month later at the World Economic Forum in Davos, Switzerland, I announced that the Coca-Cola system was prepared to invest a billion dollars in Eastern Europe, including East Germany. The move became a major turning point in the renewed global thrust of the company at that time and was also a breakthrough in the total investment of Western businesses in the former Soviet bloc. In addition to our capital investment in machinery for bottling and distribution operations, trucks and vending machines, Coca-Cola also acted, as it did everywhere in the world, as an economic driver, creating opportunities supporting the development of businesses related to our industry such as the manufacture of bottles, cans, crates, pallets, and printing.
Our ultimately profitable experience in East Germany and the rest of the Eastern European countries is further proof that one cannot