The CEO Follies
LEKACHMAN, ROBERT
The CEO Follies Running American Business By Robert Bowden Lamb Basic. 315 pp. $19.95. Reviewed by Robert Lekachman Robert Lamb, aprofessor of finance and management at New York...
...With the aid of imaginative accounting, ITT reported rising earnings quarter after quarter...
...Middle managers lack loyalty to their superiors...
...Fast track managers, in any case, stay out of production...
...When Harold Geneen at International Telephone and Telegraph was gobbling up bakeries, secretarial schools, pump makers, car rental companies, casualty insurers, and hotels, among other enterprises, his technique of conglomeration was widely emulated...
...I regret these weaknesses for a particular reason...
...Why should a CEO who expects to remain on his perch for three or four years sponsor R&D whose fruits, if any, may ripen years after his departure...
...Reviewed by Robert Lekachman Robert Lamb, aprofessor of finance and management at New York University, had the happy notion of interviewing chief executive officers of major banks and corporations...
...Theirmanagers offer a measure of job security not out of sentimentality but in the conviction that devoted workers are more productive than their alienated peers...
...The loyalty cultivated by Japanese companies is replicated only by IBM and a few other U.S...
...Here is David Rockefeller confessing that in the first decade of his stewardship of Chase Manhattan, he and his quarreling subordinates were never able to formulate a sound strategy...
...corporations...
...They had discovered a new truth: Managers who are specialists in what they manage do better than the universal geniuses...
...Moreover, the company that issues one's paycheck on Friday may ? ver the weekend be devoured by a raider infamous for his lack of empathy for workers...
...Too bad it doesn't do a more solid job of destroying the myths that surround the American corporation...
...Sad to say, this is not a good book...
...It wasn't like it is today...
...Nor does the author measure the frequently self-serving utterances of his subjects against independent evidence...
...Geneen himself was privy to the secret that a good general manager didn't need to know anything in particular about what his various divisions did: A firm grip on the numbers sufficed...
...Lamb's heroes point to the importance of fad and fashion...
...I have said enough to recommend Lamb's volume as an excellent source of antibusiness stories...
...The responses are loosely organized around the themes of takeover strategies, resuscitation of declining enterprises, financial restructuring, marketing wizardry, employee relations, and the delicate question of who succeeds the king when, usually reluctantly, he finally vacates the throne...
...Short-term maximization of profits and stock prices notoriously conflicts with long-run strategies of research and development leading to quality enhancement...
...No one who wanted a CEO's job jumped off theboat...
...and rowed the oars of that company all the way throughout our career...
...During this period, Chase lost ground, not yet regained, to Citicorp...
...Do the heads of vast enterprises know what they are doing...
...I plan to refer to it frequently...
...the remainder preferred to remain anonymous...
...Forget it...
...With honorable exceptions, our leading enterprises treat their customers, their employees, and the communities where they operate with all the contempt that American idolizationof the private sector tolerates...
...Of course, after Geneen retired his successors sold off most of the ITT empire...
...Their protection from hostile takeover frequently depends upon the next quarter's earnings...
...As for labor-management relations, harken to Wallace Rasmussen, who has spent his entire working career at Beatrice Foods: "We joined the company right out of high school...
...The action is in finance and marketing...
...Are the CEOs beginning at long last to take quality seriously...
...Lamb cites a film mogul who boasted of the marketing approach that turned a profit on a flick called Sinbad, judged by the mogul as possibly the worst movie he had ever seen...
...Workers, subject to plant closings or layoffs without notice, understandably regard their employers with distrust...
...Some of the 89 who agreed to talk to him are still in active service, and others are in lucrative retirement...
...Full of interesting stories though it is, there is no way of telling how representative Lamb's sample is (a large number of the puissant CEOs he approached were unwilling to be interviewed...
...So far as it goes, the text supports what devoted corporation bashers like myself have been saying for years...
...Do you indulge in the fantasy that CEOs carefully weigh the costs and benefits of acquiring other companies, either in their own industry or an unrelated one...
...A substantial minority answered on the record...
...It's easier to devise a novel sales technique or a new advertising campaign than it is to change the sloppy habits of factory managers and workers...
...Our CEOs lead perilous lives, at the mercy of stock exchange valuations of their enterprises' merits...
Vol. 70 • September 1987 • No. 12
