Valuable Lessons from the Busch Family

A friend of mine learned to water ski by watching another friend as he desperately tried to rise up out of the water, but instead took a face plant into a wave every time. A guy in the boat was coaching him with each effort. My friend listened, and when it was her turn, got up on the first try.

Bitter-Brew-cover-e1342374617214I’m a big believer in learning from others mistakes. In fact, I’ve written a book about it. My new book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” will be available in early 2013.

There’s another new book that anyone in business would enjoy, particularly if you have a family business. “Bitter Brew: The Rise and Fall of Anheuser-Busch and America’s Kings of Beer” is a fascinating account of the infamous Busch family. Author William Knoedelseder recounts the story in all its lurid, scandalous detail of how Adolphus Busch, a German immigrant, came to the United States before the Civil War, and with the purchase of a beer recipe from monks in a Bohemian village called Budheis, founded Budweiser.

The company, which became Anheuser-Busch Cos, was sold in a takeover to InBev, a Belgian-based holding company, in 2008 for $52 billion amidst flattening stock prices and a drop to a number 2 position.

Although Busch family members walked away with hundreds of millions, America lost a $19 billion a year Fortune 500 company and 1,000 people in St. Louis lost their jobs. Anheuser-Busch was the last remaining independent beer company, still owner and operated by the founding family.

There are so many lessons to learn from their mistakes. I’ll talk about two.

1. Not picking the best successor for the company.

Rather than analyze who would be best suited to take over the company, as I discuss in a recent post, responsibility for running this huge company was automatically passed from father to first-born son. The board of directors ignored most of the proper successor analysis and genes were selected over ability. Not a formula for long-term success.

August IV, commonly known as “The Fourth,” was the sixth in the Busch family to run it and was CEO in 2008 when the company was taken over.

His qualifications included several drunken driving accidents, including one in which a young woman was killed; leading police on car chases and taking young women along with him on business trips. His father, August III, had seized control of the company from his father, known as Gussie, in a boardroom coup in 1975. Hardly an ideal method of succession.

2. Not paying attention to the competition and changes in the marketplace.

In 1969 the tobacco giant Philip Morris bought Miller Brewing Company. Gussie was in control of Anheuser-Busch at the time and failed to see the threat this acquisition posed to its market share. The seemingly insignificant beer company rose to become the number 2 brewer in the United States.

Early in the 21st century beer sales began to fall. In 2000, beer accounted for 55.5 percent of alcohol sold in the United States. In 2006, that percentage had dropped to 50.7 percent. And In 2007, Anheuser-Busch’s two main competitors, SABMiller and Molson Coors, merged, putting the company in an even more vulnerable position.

I often reference the saying, “If the alligators are biting it’s too late to drain the swamp.” The alligators were definitely making a meal out of Anheuser-Busch.

Ironically, in a speech The Fourth made in 2006 while accepting an award, he said, “Mistakes will happen, mistakes are inevitable, but in failure there is learning and in learning there is experience. That’s how you improve and grow.”

I agree with his sentiment. If only he had taken it to heart.

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