The Ten Commandments for Business Failure - Don Keough [44]
The federal government spends about 7.4 billion dollars a day. Yet a billion is a truly staggering number. A billion minutes ago, the Roman emperor Hadrian was building his wall. A billion hours ago, our ancestors were living in the Stone Age. A billion days ago, Homo erectus didn’t exist.
A number of years ago C. Northcote Parkinson in his famous Parkinson’s Law suggested that most people are not able to really comprehend just how much money is represented by all the little zeros on a large budget plan. They really only grasp much smaller sums, like a few hundred, or, at the most, several thousand. I had been thinking about ways to get the Foods Division employees to think about the real money they were spending, about every dollar that comes in and goes out. One year the thought came to me: “Let’s not just think about real cash. Let’s use cash!”
I called the chief financial officer and said that for the first week of next month, I want to do everything in real-cash-dollars-and-cents money. If an executive is taking a trip to New York and the ticket costs $692, I want him to plunk down $692. If a full-page ad in the New York Times is going to cost $19,458 dollars, I want the person responsible to lay out $19,458 in cash. I want to pay every bill in cash. Everything we touch. Cash for the salaries. Cash for the pencils. Cash for every single transaction.
The Foods Division wasn’t a small business, but it wasn’t a corporate giant, either. Nevertheless, there wasn’t enough available cash in all of the banks in Houston to carry out the experiment.
It was an outrageous idea, of course, and we never were able to do it. But it certainly would have been an interesting lesson to have people connect with real money instead of dealing with just numbers in budgets.
I was never able to effectively dramatize the hard reality of money, but with the fountain department I was at least able to drive home the importance of making some.
One final mixed message with the fountain department was that no matter how well or how poorly things were going, it was a long-standing tradition that every winter all the fountain department management and salesmen and -women and their spouses would gather for a “sales meeting,” which was, in fact, a lavish celebration at some exotic sun-soaked watering hole. Sure enough, the year I arrived they were still planning the sales meeting, even though we were in the process of losing money.
Mixed message: “It doesn’t matter what you do. You’ll be rewarded.”
So among the changes being planned, one of them was that the company was no longer going to reward poor performance. To make the point, I announced, “This year we’re going to have the sales meeting in Chicago. Chicago is an exciting city, but not a resort in January. We’ll meet at a commercial hotel. A rather second-tier hotel. No spouses. Everyone will stay two to a room.”
I told them I didn’t like the hotel, either. And I didn’t like January in Chicago much more. But they couldn’t spend money they didn’t have.
They got the message.
The next year they had tremendous increases in sales and profits, and we had a big celebration in Hawaii. With spouses!
And they made money every year thereafter.
“There are many things in life more important than money, and they all cost money.”
—Fred Allen, again
(He should have been teaching at the Harvard Business School.)
MIXED MESSAGES could be the theme of one of my most harrowing experiences. In 1985, I was to receive the Martin Luther King Peace Prize from the Jamaican government. The prime minister, Edward Seaga, and a number of generals were there. During breakfast the generals kept whispering to the prime minister. Finally, he whispered to me, “After the speech you are not going out to the car. We’re going up to your room.” Which I did. As far as I could see in all directions there were fires burning and people shouting and chanting. I asked, “Has Coca-Cola done something here in Jamaica that I should know about?” “Oh, no. The people are just upset because gas