Look to Coors for lesson on how not to run a company

By ALECIA SWASY

© St. Petersburg Times, published July 9, 2000

As I scan the bookstore shelves, I have long hoped to find a series of books called Corporate Stupidity. This multivolume set would make the collected works of James Michener look like Cliffs Notes, considering the business blunders committed daily.

My personal favorites are the sins of chief executives who ignore their managers, or the workers on the factory floor. Or the debacles that follow when they tune out the most important audience: their customers. There's no shortage of material from every industry, ranging from the Edsel to New Coke.

It's a familiar scene: Company fouls up, chief executive rants when the headlines chronicle their foul-ups, six-figure consultants are hired to figure out who fouled up. If only these consultants would suggest that CEOs create a new office called the CSO: common sense officer. Job description: lone voice in a company who can tell the boss he might be wrong.

A recent example of a hefty dose of arrogance and the absence of anyone willing to apply some common sense comes from the Coors family. The family started brewing beer in Golden, Colo., in 1876 and continued until the younger generations nearly ran the company into the ground by the early 1990s. Author Dan Baum has wisely singled out the family in Citizen Coors: An American Dynasty (William Morrow, $27).

The narrative is strong because this is one big dysfunctional family, making a lot of cold beer and money that ultimately funds conservative causes via the Republican Party and the Heritage Foundation. There's no lack of drama, starting with patriarch Adolph Coors, who committed suicide by jumping out of a hotel window. (He did pay the room bill first.)

Succeeding generations had their problems, too. Pity his grandchildren, who must have dreaded Sundays. Adolph Jr. kept notes on his kids' weekly misdeeds, then spanked them each Sunday. One of the offspring followed Grandpa Adolph out a hotel window.

But this book also gives corporate America a primer on how not to run a company.

For starters, Coors abused its workers. Sure, paternalism is sweet when it's served up as free lagers during break time in the brewery. But no amount of alcohol takes the sting out of being subjected to lie-detector tests used to screen out what the book describes as "thieves, radicals and homosexuals." Some workers were asked if they had sex the previous night. At times, employees were forced to see psychologists. Brewery workers regarded themselves, in the words of one, as "overworked animals."

Equal rights took a while to catch up with the Coors. Women lacked a restroom in the brewery. There was one in the office for secretaries, but women working in the brewery were docked for time off if they left the plant to use it. As one Coors family member noted: "A woman's place isin the beauty parlor."

Not that management was spared from the odd behavior and whims of the Coors clan. When Bill Coors caught the transcendental meditation bug, all executives were ordered to take the classes in the practice.

Meanwhile, Coors showed an amazing lack of knowledge about behemoth competitors such as Anheuser-Busch. While members of the Busch family in St. Louis knew that their company was driven by the relentless marketing of Budweiser and other brands, the folks at Coors didn't get it and balked at spending money on ads.

Indeed, marketing executives had short tenures at Coors. Some did manage a few hit ads, such as using "Elvira, Mistress of the Dark" to sell beer at Halloween. But Jeff Coors, a born-again Christian and member of the fourth generation, ordered an end to Elvira selling Coors because he considered her satanic.

Other ads were ludicrous, like the time senior family members ordered the company's advertising agency to make a commercial featuring Eva Gabor, a family friend who was generous to the Republican Party. Men in the focus group viewing the aging actor yelled: "What's she doing selling beer?"

Even product introductions lagged behind the competition. Coors was so behind the curve that it introduced a light beer three years after Miller Lite hit the shelves. The company botched other product introductions because it failed to do market research.

Naturally, the blunders caught up with Coors. The company went public in 1975 at $32 a share. By 1978, investors lost half their money. Earnings were once 30 cents for every dollar of beer sold but slipped to a penny. Boycotts by unions and barley farmers hurt Coors' image and sales. Market share wilted everywhere, even in its home state of Colorado.

What did the Coors brothers do about it? They continued to focus on pushing their conservative political causes in Washington. Some had affairs. And they bought themselves a Lear jet.

What did the board members do? They dozed off during presentations on the demographics of beer drinkers. One of the best lines of the book likens a Coors board meeting to an Idi Amin cabinet meeting: Nobody objects.

Senior management did seem to pay attention to one event: the pollution of its famous Rocky Mountain spring waters. Clear Creek was the primary reason Adolph Coors built his brewery in Golden. Trouble was, his brewery was responsible for the contamination of the once pristine waters. The book spends far too few pages on this environmental mess. Coors knew for nine years that it was destroying the spring water but covered it up, according to Baum.

To help ease the bad public relations, Peter Coors coughed up a $30-million check for a baseball stadium in Denver. For the money, the team would play at, you guessed it, Coors Field.

The book's final pages chronicle the Coors men stepping aside and hiring an outsider to run the company. More than a century after the brewery was founded, the arrogance and indifference had caught up with them. As Baum notes, they would've made more money by selling the place outright, instead of going public, and putting the money in an ordinary passbook account.

- Alecia Swasy is Assistant Managing Editor/Business.

Citizen Coors: An American Dynasty

By Dan Baum

(William Morrow, $27)

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