IN THEIR MIXED FEELINGS about business, Americans are much like Linus of the “Peanuts” cartoon strip, who declared, “I love mankind; it’s people I can’t stand.” Americans often castigate individual companies but rarely question the competitive, free-market culture that gives companies huge, sometimes dangerous, power.
Two new books, both by Wall Street Journal reporters and both about the dark side of a corporate behemoth, continue in this pattern. Paul Carroll’s “Big Blues: The Unmaking of IBM” details the “lethal…hubris” of the computer maker whose declining fortunes have decimated thousands of careers and even more retirement accounts. Alecia Swasy’s “Soap Opera: The Inside Story of Procter & Gamble” argues that P&G’s pure public image belies a pattern of deceit and manipulation.
Carroll and Swasy offer compelling illustrations of how human frailty and even malice can breed in the corporate ivory tower. Both authors argue that their subjects have taken such behavior to an extreme, and they are probably right. But hubris and the abuse of power are numbingly familiar phenomena. Like so many one-company business books, these beg essential questions: Are IBM and P&G really filled with unusually arrogant or vile men? Or are they typical of a system that relies on the very slow hand of the market to mete out justice?
Clearly, the market has judged IBM. As everyone now knows, IBM has recently suffered a descent into bell, marked by a $75 billion plunge in stock-market value and the loss of about 150,000 jobs. Carroll details how IBM’s culture, which once worked so well, failed utterly to adjust to the new realities of fast-moving technology and less loyal customers. The story is something of a Greek tragedy, Carroll says, in that IBM’s leaders’ passion for their company inspired, but ultimately blinded, them. They developed an arrogance that couldn’t contemplate change, let alone failure.
The culture was paralyzingly closed and conformist. (Trainees who violated the white-shirt rule were asked: “Do you have an attitude problem or a laundry problem?”) IBM managers endlessly debated but did not decide; they were rewarded for presenting ideas, not implementing them. Microsoft wrested dominance of the software industry from IBM by such innovations as cutting the number of characters of computer code to 200 from 33,000; IBM programmers were rated on how much code they wrote, not how fast it ran.
Carroll reveals some startling missed opportunities, including IBM’s refusal to buy a big, cheap chunk of Microsoft in 1986. Major instruments of IBM’s fall, in fact, were Microsoft and its founder, Bill Gates; IBM helped make Gates, but he had the last laugh. Too much of the book, though, concerns battles between IBM and Microsoft (it could have been subtitled “How Microsoft Unmade IBM”), and Carroll accepts the Microsoft line a little too fully.
For her part, Swasy may have gone too far in portraying P&G as a uniquely sinister company. Her book will be most powerful for readers familiar only with P&G’s public image, carefully cultivated from the moment it dubbed Ivory soap “99 44/100 percent pure” in 1881. Home to such wholesome characters as Messrs. Clean and Whipple, P&G is regularly ranked as a “most admired” company. In truth, says Swasy, P&G practices a ruthless aggression that one former executive terms “organizational fascism.”
She tells stories of P&G’s harassment of environmental activists, its iron grip on employees–to the point of outright spying on wayward “Proctoids”–and its arrogant manipulation of competitors, advertising agencies and its hometown of Cincinnati. Swasy herself experienced P&G at its worst; in a notorious 1991 incident, P&G subpoenaed hundreds of phone records to find out which employees were talking to Swasy.
The most disturbing chapter charges that P&G knew how dangerous its Rely tampon was but resisted acting until women were sick and dying from toxic-shock syndrome. (P&G has said it acted responsibly. It has settled many cases but never paid punitive damages.) Another chapter, drawn from the archives of advertising, offers fascinating detail on P&G’s role in shaping U.S. culture. In a 19th-century ad, a violent Indian gives Ivory credit for having “civilized my squaw and me/And made us clean and fair to see.” P&G hires a Jungian analyst to research body-odor taboos, then introduces the concept of “morning breath” to sell Scope mouthwash. Admen test how abusive husbands should sound in Folgers ads where they rail at wives for bad coffee.
In some reviews, Swasy has been accused of exaggerating the evil that Proctoids do. Many charges seem unsubstantiated, but don’t be too quick to belittle the picture Swasy draws. The real flaw seems to be a lack of context. While P&G (dubbed “the Kremlin”) has perfected the command-and-control style, it isn’t alone. And P&G has done a far better job than IBM at keeping on top of global competition. If its style is behind some P&G failures, as Swasy says, the bigger question may be how much it contributes to P&G’s success.
