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Best Business Books 2004: Management

Japanese exponents of lean production are fond of using the fable of the tortoise and the hare to contrast their deliberateness and constancy of purpose with the rabbitlike leaps of many of their overseas competitors. At every turn, this contrast seems to capture the inherent counterintuitiveness of lean production to the Western-trained management mind. It highlights the tensions between the visceral and the cerebral, between learning and instruction, and between standards that are enabling and those that are coercive. Everything depends on the appropriate dynamic balance between these apparent opposites. And that balance takes discernment, judgment, and a sense of proportion — all arts for which there can be no formula.

The Real Thing
Cynics sometimes contend that what appears to be management excellence, like superior investment performance, is often the result of a short memory and a rising market, and that over time corporations’ financial results have a way of regressing toward the mean. The ending of the last bull market in North America certainly offers some support for this argument, and there is no better case in point than the rise and fall in the performance of the Coca-Cola Company. In The Real Thing: Truth and Power at the Coca-Cola Company (Random House, 2004), a meticulously researched, beautifully crafted book, Constance L. Hays, the food and beverage reporter for the New York Times, tells the company story. Our choice for the best management book of the year, The Real Thing focuses on the dynamics of the senior management group over the last 20 years, but in the process the author recounts the company’s entire history.

Coke is as much a cult as it is a company, with all those who make it to the top sharing a fierce, unshakeable belief in the transformational powers of sweet carbonated water. The management styles of the three top executives around whom Hays builds her story bear a rough resemblance to Mintzberg’s tripartite division of management into an art, a craft, and a little bit of science. The patrician, Cuban-born Roberto Goizueta, appointed CEO in 1981, was the visionary artist; Coke’s president, the affable Don Keough, was the craftsman; and the cool — some said icy — Douglas Ivester, an accountant who had become chief financial officer in 1985, was the scientist. Goizueta handled Wall Street and the board, and Keough fired up the troops, while Ivester devised the complex financial engineering that allowed Coke, via Coca-Cola Enterprises, to achieve a huge one-time transfer of wealth from its independent bottlers to the Coca-Cola Company itself. Together this triumvirate presided over an astonishing increase in shareholder wealth as Coke’s share price zoomed from the low single digits in the early 1980s to nearly $90 a share in 1998.

One of the chief beneficiaries of this windfall was the legendary investor Warren Buffett, who had bought into the company in the mid-1980s. But after Roberto Goizueta, the toast of Atlanta and Wall Street, died suddenly of lung cancer in 1997, things began to fall apart. Don Keough had retired in 1992 but continued to be a shadowy presence in the Coke power structure through his access to board members and his huge network of contacts within the company. He opposed the appointment of Ivester as president in 1994 and CEO in 1997, and was critical of his performance. The simmering factional war between the “Keough people,” whose veins ran brown with Coke, and the “Doug-ettes” — gimlet-eyed financial whiz kids hired and promoted by Ivester — eventually boiled over. After several well-publicized external missteps, Douglas Ivester lost the confidence of Buffett and other key directors and was summarily “retired” early in 2000.

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