At a time when American industry faces unprecedented worldwide competition, one leading firm after another has decided to meet the challenge of the future by . . . looking backward.
That's the unsettling message of the latest batch of annual reports surveyed for this column by William P. Dunk, a leading national authority on corporate communications.Once a year, Dunk gives us his exclusive annual report on annual reports, and it repeatedly has kept us ahead of such major corporate changes as the trend toward slimming down and getting into cash. But this year's theme is considerably less encouraging.
"Last year's trickle has become a waterfall," Dunk says. "We told you then that the annual reports of a number of companies had immersed themselves in history and past glories. Now every Tom, Dick, Harry and Lee has discovered immortality - or at least 25 to 150 years of it."
While the companies obviously think this parading of a firm's history "lends a mark of greatness," to corporate raiders "this penchant probably suggests senility," Dunk observes, adding that his own view is in between: the nostalgia-crazed businesses are "in late middle age."
Examples of what Dunk derides as "World Historical Year":
"Westvaco does its 100th anniversary. Parker Hannifin gives us 70 years of milestones on its inside cover. Moog does a lovely tribute to its founder - William C. Moog Jr. - who split off part of the company and started a new outfit. And on and on.
"H.J. Heinz, doing the same stuff but in a classier manner - good packaging for a catsup company - does `Seven Turning Points.' Shades of Richard Nixon's six crises. It amounts to little biographies of six executives who are identified with key moves at Heinz. Heinz did a history report a couple of years back. Now, to paraphrase Clausewitz, it - like many others - is continuing histories by other means."
Why did "various permutations of history" become "the mindless choice for annual reports in 1988"? Dunk offers three possible explanations:
- Retreat into the past. "A lot of managers are not finding the present very neat. They're working terribly hard, are stressed out and see all the rewards flowing out to the rapacious folk in Wall Street and Beverly Hills."
- They're afraid of being eliminated by takeover artists like Carl Icahn or, if the companies are already overleveraged, by Federal Reserve chairman Alan Greenspan's rising interest rates. "Somehow a long history makes them believe - temporarily - that they are here to stay."
- "The Establishment is back, so let's look established. George Bush ain't Ronald Reagan. He will arrange bailouts for the S&L's - and gosh knows what else. Let's look Establishment, and maybe the Establishment will save us."
With "everybody looking to tell us about their X-number of years of past greatness instead of focusing on what will make them great in the future," Dunk, who heads New York's William Dunk Partners, found it harder than usual to find praiseworthy exceptions.
One was Analog Devices, whose chairman Ray Stata described 1988 as "a very successful beginning to our new five-year plan" ("Spoken like a founder who still means business") and backed up his rhetoric with such useful in-depth indicators as defect indexes and professional turnover rates.
Too often, though, executives made this "a year of cliches," Dunk says. Two that he says were done to death:
- "Getting close to our customers." Everybody who's been neglecting customers is now getting close to them, especially since it's getting harder to grind out unit increases in sales.
- "Well, that pretty much tells the story." Meaning: Things are rough. Parker Drilling: "The chart on the cover of this year's annual report pretty well tells the story." Tektronix: "Our financial highlights page pretty much tells the story."
Dunk maintains that the lesson of the year for investors is to "dwell on the few that are still obstinate futurists," but he concludes gloomily that "with the world looking backward, with the lack of original thinking in this year's annual reports, investors should have low expectations for the stock market in 1989."
And that, to Bill Dunk, pretty much tells the story.