Monday, December 14, 2015

The Ten Commandments of Business Failure

Any book that has its foreword written by Warren Buffett is one I'd like to read, so surprisingly it took me a long time to get to this one, The Ten Commandments of Business Failure.

It's written by Don Keough, who was COO of Coca-Cola for a number of years. He draws on examples mostly from his own firms but also from other famous companies to support his claims for what you ought to do if you want to fail. He's a long-time (maybe childhood?) friend of Charlie Munger's, so I guess this topic idea might have drawn some inspiration from the old "invert, always invert" expression that Munger likes to repeat.

The commandments are pretty basic, like don't be flexible, never take risks etc. so I didn't find them particularly insightful. The examples he is able to employ to support his cases are interesting, however. For example, Keough was in charge when Coca-Cola brought in the whole New Coke thing that customers hated. It was interesting to see his side of it and what he learned from the whole disaster thing.

Some suggestions didn't really pass the "survivorship bias" test to me, though. Highly successful old man says people need to take more risks; well, big surprise there. I'm not sure that's the best message to send to the general reader, as there was no discussion on what constitutes a good risk, protecting your downside etc. Should some guy take a second mortgage on his house to finance a gadget that will compete with the iPhone? Maybe this is just the push he needed.

Keough also seemed to force-fit his narrative a little too much for my liking. He was able to applaud himself for not diversifying Coca-Cola into a bunch of other products sold at supermarkets in one commandment, and yet praise himself for Coca-Cola's astute purchase and eventual sale (at a higher price) of Columbia Pictures (the movie studio!!) in another. I'm not sure he got this combination of things correct, but I guess in hindsight it worked out well enough.


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