24. A Model Threatened by the Anti-Model – The Legacy of Arthur Andersen: A Model for Excellence

24. A Model Threatened by the Anti-Model

Behind the Andersen Model, like with any other model, there are what we might call the anti-models. Some acting patterns, some “cultures” or “incultures”, if we can call them so, that interpret the principles in a wrong or extreme manner, either by excess or by shortness, and that consequently drive the company to deviate away from what was intended. An action that is usually even self-destructive.

It is a danger that looms over any organizational model. Andersen was also threatened, and probably signs of this anti-model can be found in the Firm’s wear that we have described in Part III of this book.

Sometimes the worsening of the model begins with some principles been interpreted or applied in excess or in defect and hence loose their balance point. What seems clear is that when an organization begins showing cracks, as in a building, it is difficult to know which way they will fall.

Let’s see where the cracks start and what properties the anti-models have:

The patterns of the anti-model by excess

They correspond to extreme positions by excess in the principles we have dealt with in earlier chapters:

  1. Unity that drifts into Monolithic unity
  2. Integrity that drifts into Fundamentalism
  3. Cooperation that drifts into internal Obsequiousness
  4. Controlled Ambition that drifts into runaway Ambition
  5. Talent promotion that drifts into Elitism
  6. Service to the Client philosophy that drifts into Abuse of the client or by the client
  7. Results oriented behaviours that drift into Greediness

They are like the capital sins that correspond to capital virtues in Christian belief. The basic principles of the Andersen Model are the equivalent to the capital virtues. Every virtue can drift into a vice, and the same thing happens in organizations. Andersen was not vaccinated against that danger.

Monolithic Unity

This is the consequence of carrying the virtue of Unity to the vice of Monolithic Unity, that drives to “single thought” and rejects anything from outside. Andersen was often blamed for this sin.

It is a danger that lurks for organizations that want to preserve their unity. Restrain is needed to prevent going to the extreme, and also a certain opening to external elements and opinions, although with control so that the principle is preserved.

Andersen, for instance, gave priority to internal careers and made few outside recruitments of managers or partners. At some moment, it even recognized that such a practice could impoverish the Firm’s culture.

In the last years, especially after the auditing and consulting split, the recruitment of expert professionals from outside grew. To a large degree, this was associated with the start-up of new practice areas, mainly in systems consulting, specialized functional consulting and legal advice.

Fundamentalism

Integrity is a great virtue, but taken to the extreme becomes fundamentalism. Fundamentalists believe themselves owners of absolute truth and do not accept any attitude other than their own.

At Andersen, taken a minor but easy to see example, the dress pattern was very strict. Men had to wear dark suit and tie and a white shirt preferably. In summer, short-sleeved shirts, even in hot countries like Spain, were disapproved.

With the arrival of the informal fashion along with the technological bubble, in the late 90s informal dressing began to be permitted in internal meetings and even on the offices on Friday, unless clients were to be present.

Some people referred to the Arthurs as the “mormons”, by analogy with the couples of mormon or evangelists pastors calling on houses, dressed always in proper suit and shirts.

Obsequiousness

It is healthy to cooperate with colleagues on the things that must be shared, at all levels. But one thing is free voluntary cooperation and another the forced one. And, on the other hand, one thing is to look for cooperation as help and complement to individual effort, and another to take it as replacement for individual work.

The replacement of individual work by cooperation must be avoided. Best things are done by teamwork, but individual effort is the basis of teamwork.

Cooperation as the forced result of a demand has to be avoided. It must be a natural attitude.

Specialists in “I’ll get everything done for me” have to be kept out. And the great team workers that have not done their own work, too.

Runaway Ambition

Ambition is good as long as it is measured. Unbridled ambition is not good anymore.

Sometimes at Andersen somebody did not see it that way and mistook aggressiveness for ambition. Combining Ambition with the Unity, Integrity, and Cooperation principles is not easy. It requires equanimity.

But that’s where the merit is won. To be ambitious without loosing sight of the other virtues. That means being ambitious but on the right measure.

At Andersen, Ambition was projected above all in focusing the work for the clients’ benefit. And also in the development of the professional career.

Very few, if any, were the clients that would consider Andersen’s approach as too ambitious, but some may have thought so.

As for the career, there were also some that let themselves be carried by excessive ambition when planning its development. It turned out not too well for most of them. It used to be said at Andersen that those that were not ambitious enough were invited to leave the Firm, but those too ambitious were gone by themselves.

Elitism

Breeding Talent can easily lead to elitism. Once again, a thin line separates talent promotion from elitism promotion. Talent is enriching, elitism is impoverishing.

In this connection too there were some who thought that Andersen was a sect, that admitted just an elite. We believe that was not true even if, as in any human creation, there could be exceptions that would confirm the rule.

Abuse of the client

An excessive eagerness to serve the client can lead to a servile attitude towards him. Obsequiousness means accepting everything the client brings up without discussing it. It is an unhealthy attitude. It never happened at Andersen, at least in Spain. Obviously, the big clients had more power over their suppliers. No doubt Enron had it and used it with Andersen. And Andersen let itself be forced in this case.

On the other hand, there is a type of vice, stemming from the Service to the client principle, consisting of forcing the client to accept the service offered, beyond the will of the client itself. In this case it’s not the client abusing the supplier, but the supplier abusing the client.

There were some who accused Andersen of being dominant over their clients, of taking decisions in their place, of forcing them in their activity, given the extraordinary power it had in any of its practice areas (auditing, tax advice or consultancy). We believe these accusations are far from what was the usual reality. Those accusers do not know and do not respect the professional value of Andersen’s clients. We are speaking of the biggest and best companies in Spain and in the world. Their ambitious operations, combined with the commitment and implication applied by Andersen in all its projects, may have given the impression that it was Andersen who was taking the decisions, but that was not the case; the decisions were taken by the clients.

Abusing our clients is not an advisable attitude. It can be profitable in the short term, but in the medium term we will be condemned to its loss, and perhaps to face the damages caused as well. On the other hand, neither is it advisable to let the client abuse our company.

Client and supplier must establish a mutually beneficial (win-win) relational context.

Greediness

It is clear that companies must make money. That is the reason for their existence. But it is necessary to know where the profit limit is.

That limit is, first of all, determined by the market. In addition, there is the need to know how to regulate profits so that they become constant and regular, growing incrementally. It’s no good maximizing them today if that implies a reduction tomorrow.

Profits, on the other hand, must be regulated in a way that respects the relation with the company’s environment: clients, employees, suppliers and society.

Andersen always had the reputation of being an expensive Firm, but its clients were in the position to choose other firms and did not, what meant they appreciated the value they were getting for their money.

Maximizing the profit was never the main Firm’s goal. It was not quoted in the stock market, so it was not bound to the market, but only to its clients. The profit growth rates planned annually were always moderate. Perhaps in the last stage of the Firm, during the fatal race with Andersen Consulting, the planned profit goals were excessive, causing the attitudes that led to Enron.

The patterns of the anti-model by defect

They correspond to the extreme by defect positions in the principles we have dealt with in earlier chapters, respectively:

  • Disunity
  • Lack of integrity
  • Selfishness
  • Lack of ambition
  • Mediocrity
  • Disdain for the client
  • Disregard for results

Disunity is a clear problem. Every one goes his own way. Very soon somebody will say: Why are we together?

One either has or does not have integrity. If one does not, anything goes. Once one loses integrity it is very difficult to get it back.

Selfishness is the opposite of the generosity that leads to cooperation, to help colleagues. If generosity is lost, organizations are poorer.

When ambition is not valued, the timorous are being promoted. Those who will be nothing. An organization without ambition has its days numbered.

Mediocrity is the result of neither valuing nor caring for talent. Companies are not machines, they are people. When this simple principle is forgotten, the company’s grave is been dug.

The client is either appreciated or despised, and that is noticed. There are companies with a culture of despise for the client. In them the client is a problem, a nuisance. In principle, the client is never right, employees feel superior to the client. The client should be grateful that these companies give their precious time to them. Who has not felt this disdain in the way he has been treated by an airline, for example? Companies that despise their clients have their days numbered.

Finally, there are companies where nobody seems to care for results. Things are done without concern for their cost or for the economic results they would bring. When this happens, the results (surprise! surprise!) are usually bad.