Corporate Masterminds Should Heed the Wisdom of the Ages

Back in the days when people still prized common sense, there was a saying that went something like this:


For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

We don’t ride horses much any more, and we no longer use them in battle, but the old proverb is as relevant today as ever. I was reminded of this when I read a news item today about a $1.26 billion default judgment against PepsiCo. Inc. According to the story, the soft drink giant got hit with the huge judgment because its high-priced lawyers failed to appear in court as scheduled.

Two Wisconsin men, Charles Joyce and James Voigt, had sued Pepsico, alleging the company stole their idea to bottle purified water. When the company was notified of a hearing in the case, no one showed up. So, Circuit Judge Jacqueline Erwin ruled for the plaintiff.

Pepsico is trying to get the judgment vacated, explaining that a busy secretary hadn’t forwarded a document to the right person in time. According to the company, here’s what happened:

The corporation first received a legal document related to the case from the North Carolina agent on Sept. 15 when a copy of a co-defendant’s letter was forwarded to Deputy General Counsel Tom Tamoney in PepsiCo’s law department. Tamoney’s secretary, Kathy Henry, put the letter aside and didn’t tell anyone about it because she was “so busy preparing for a board meeting.”

workerI don’t know how reliable Kathy Henry normally is, but I imagine she was overwhelmed by an unreasonable workload, the way most corporate employees are these days. Corporate masterminds have found out they can increase profits and boost stock prices by cutting staff, and they always cut from the bottom. Instead of firing an overpaid vice president, companies usually lay off half a dozen clerks. This naturally leads to inefficiency as important documents get misplaced and important tasks remain undone.

The prevailing feeling in corporate America is that some employees are “valuable” and others are not. Companies pay CEOs and other top brass huge salaries and bonuses because these executives are considered essential to success. And the people who actually do the work? Why they’re a dime a dozen and get paid accordingly. Now, I have known my share of CEOs, and I can vouch for the fact that they are about as smart as the next person. A few are a little smarter; others aren’t as smart. But they have all managed to build impressive resumes peppered with the right buzz words, and they are able to convince boards of directors that they know the secrets of success.

Even if some of these fat cats do have bright ideas (Lee Iacocca’s development of the Ford Mustang springs to mind), they wouldn’t do much good if the minions charged with executing the ideas fall down on the job. As the old proverb illustrates, the farrier replacing that horseshoe was as important as the general who devised the battle plan.

Pepsico is fighting the $1.26 billion award and a hearing is scheduled for Nov. 6. I imagine the lawyers will wiggle out of this embarrassing situation somehow. But I hope the soft drink behemoth has learned a valuable lesson. And I also hope the rest of the corporate world is paying attention.