Saturday Interview
How to Fail in Business, a Guide to Success
http://www.nytimes.com/2008/07/26/business/26interview.html


By J. ALEX TARQUINIO
Now, at the urging of his lifelong friend, the investor Warren E. Buffett, he has turned the speech into a book, “The Ten Commandments for Business Failure,” which was published by the Portfolio imprint of the Penguin Group this week.

Q. Why did you decide to focus this book on the mistakes that can lead to business failure, rather than on the much more common theme of business success?
A. The word “success” has always made me nervous, because I believe built into that word are a couple of viruses — arrogance and complacency — and left unchecked, they can ensure failure. Ultimately, it is when mistakes are made that life takes its turns. If you watch a tennis match, it is the mistakes that determine who is going to win.
Q. You were highly critical in your book of the role that consultants played in the New Coke episode. Do they really deserve so much of the blame, if management was responsible for calling the shots?
A. Consultants will probably not be great purchasers of this book. There is nothing wrong with outside help. But they have to be there for a specific purpose, for some knowledge that you don’t have. These are usually very smart people, and they are very good at PowerPoint presentations. But you shouldn’t rely on them more than the people in your own company.
Q. Why did you hesitate to invest in Eastern Europe after the Berlin Wall fell in 1989?
A. That was one of those times when I almost succumbed to the view that I was infallible. The man in charge of Europe asked us to invest a huge amount of money in Eastern Europe. Apparently, I was unpleasant about it. His boss, who was in charge of international operations, came into my office afterward and said to me, “You haven’t got the right to shoot him down, because you haven’t been there and you don’t know what’s going on.”
It hit me like a brick that he was right. We went all over Eastern Europe together, and three months later, we announced that we would spend a billion dollars there. And if he hadn’t had the guts to come into my office and tell me how stupid I was being, we wouldn’t have the kind of business that we have there now.
Q. Why do you think there have been so many scandals at large public companies in recent years?
A. The focus has moved from managing the company to managing the stock. If you look back, 20 or 30 years ago, the typical annual report was four or five pages and had no pictures, just the facts. But as the bull market developed, the annual reports became sexier.
And the chief financial officer was no longer there to add and subtract the numbers. He was encouraged to be creative. The C.E.O. might say to him: “The Street is expecting 5 more cents. Can you find it?” The pressure in that bubble was so intense. The bubble ended in 2001.
But it still takes a rare C.E.O. to say: “I am not going to pay attention to my quarterly results. I am going to run the company on the basis of long-term return to my shareholders.”
Q. You had a colorful childhood, working with your father in the Sioux City, Iowa, stockyards. How do you think that influenced your executive career?
A. When I was 15 or 16 years old, I got a job buying bulls to ship to processing plants back East. I worked for a man named Doyle Harmon, and my first day on the job, he chastised me for paying too much. He said “concentrate on the bull, not on the language of selling.” I’ve made most of the mistakes in my career by not concentrating on the bull.