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Home / Opinion / The CEO’s dog ate
the profits last year

The CEO’s dog ate
the profits last year

“We are out of denial now. We were wishing (the problems) would go away. We were deluded by our own thinking.”
When George Fisher uttered those words in a meeting with Wall Street analysts last November–as he disclosed a plan to eliminate 10,000 jobs from Eastman Kodak Co.’s global work force–some people saw his admission as a sign of weakness and failure. Fisher, hired with great hoopla in 1993 as the photo giant’s savior, was forced to admit he and his management team had screwed up.
In fact, Fisher exhibited a strength of character that too often is hard to find at the highest levels of corporations. Frequently, top executives hunt for an excuse–any excuse–to explain why things have gone badly.
Want an exhaustive explanation for what went wrong? No problem. But accountability is another matter.
A few years ago the New York Times published an article that examined the phenomenon. At the top of the page was: “We Forgot to Write a Headline. But It’s Not Our Fault.”
“The market for excuses–good, bad and ridiculous–is growing,” wrote Margot Slade, author of the piece. She described it as “a veritable hotbed of corporate activity.”
Some examples listed in the article:
–When a flaw was discovered soon after the Pentium chip hit the market, Intel Corp. dismissed it as a minor glitch that cropped up infrequently during long-division calculations. The company agreed to replace the chips only after it was hit with a storm of negative publicity.
–After losing large sums on derivatives, many companies diverted blame by saying they were not sophisticated enough to understand the consequences of complex investments pitched by Wall Street firms. This was labeled the “babe-in-the-woods-among-wolves” excuse.
If these examples seem somewhat dated, consider a few others culled from recent business-news items:
–Several firms, Oracle Corp. among them, cited the Asian financial mess as a chief reason for a significant drop in earnings. When investors did a little math and determined that Oracle’s Asian business could not begin to explain the scope of its problems, they hammered the stock.
–Even more firms have cited the “negative impact of foreign-exchange rates.” This is heard most often from companies that fail to hedge their currency risk.
Then there is the “intensifying competition” excuse–perhaps we should outlaw competitors, but who’d be left to take the blame?–and, for those who are meteorologically afflicted, El Nino.
So, that’s why George Fisher’s mea culpa seemed so refreshing.
On other occasions, Kodak’s chairman and CEO has taken a somewhat different tack. The company’s protests about barriers to Japan’s photographic market may be well-founded, but they also have tended to obscure the shortcomings of its strategy to reach those consumers.
In his letter to shareholders in the annual report sent out last week, Fisher acknowledges in the first sentence that “1997 was clearly a disappointing year.” He says the management team is “capable of better results” and promises it will “lead this company back to profitable growth.”
Those statements are forceful, upbeat.
But they don’t take responsibility for mistakes the way confessing to wishful thinking does.
The Times article noted that some corporate leaders do not try to distance themselves from flawed decisions. As an example it cited Roberto Goizueta, who as chief of the Coca-Cola Co. acknowledged his monumental goof in abandoning the old Coke formula, and quickly brought it back as Classic Coke. The initial blunder was transformed into a huge marketing plus.
As a Kodak board member, Goizueta was instrumental in bringing Fisher to the company. Goizueta cannot advise Fisher on how to lead Kodak out of its current troubles; he passed away last October.
I’m sure Fisher would say he misses Goizueta’s counsel. No need to make excuses for that.

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