Introduction

What is the aim of this book?

We have written this book because we both, co-authors, were “Arturos” (Spanish common term for Arthurs) in the Arthur Andersen practice in Spain and had the privilege of living a Culture of which we felt proud when we were part of it. We continue to feel proud even now, years after the Firm ceased to exist.

We have used the term “Arthurs” because that was the word that always identified Arthur Andersen’s employees. We have written the Firm with a capital F because that was the way it used to be referred to by those inside, as a sign of admiration and respect. And we speak of Culture with a capital C because, as we’ll try to prove in this book, the Culture, the Andersen’s values, won in their time the admiration of the entrepreneurial community throughout the world. Especially in the professional services sector, of which Andersen was leader and necessary reference.

The company model adopted by Andersen was in its time an example to be followed. An example from which lessons can still be learnt for application in today’s world.

We feel proud of Andersen, in spite of all what, mostly negative, has been said and written about the Firm after the Enron scandal (American energy company, audited by Andersen, that went bankrupt on 2001, following illegal financial actions that sunk the Firm’s reputation and carried it to collapse in 2002).

The bad press that Andersen received after the Enron’s case darkened the Firm’s public image and buried it under a “curse” halo that we believe unfair. We also believe that in any case this should not hide the merits of a management model that for many years and in many countries left an indelible mark.

Spain stood out especially among those countries, reaching a success position publicly acknowledged at a level perhaps unequaled anywhere else in the world. No doubt that in Spain the imprint left by Andersen and its heritage was very important and, we believe, still valid.

The pride of having belonged to that legendary Firm, along with sad feelings and repressed vindication wishes, can be detected in many other ex-Arthurs that we have frequented during these past years. This is so in Spain and in the other countries where the Firm’s legacy is alive, like Mexico, Argentina, Portugal and many others, including of course the United States of America.

This book is written for them, exArthurs, and for us too.

But we have not wanted to write a “vindication” book. We have done it as well, honestly, with another purpose: we believe that interesting lessons can be learned from the Andersen experience. From the good and from the bad; from what is to be done and what should not be done.

Andersen’s was an almost perfect success model. We believe there are many interesting things that can be learned from its successful company model. Other things, equally interesting, can be learned from the dangers that sank it in the end, dangers that threaten every company, no matter how strongly they believe their business model is perfect.

The central purpose of this book is to identify which elements, present in Arthur Andersen’s entrepreneurial model, turned it into a model for excellence in the professional services realm. This happened at least at a certain time and in certain countries, perhaps in Spain more than anywhere else.

In the end, what has moved us to write the book has been to offer a model, a guide, a source of inspiration for all those businessmen and executives fighting everyday to turn their companies into excellent organizations. The kind of organizations in which efficiency and quality come in a natural way, exceeding the value expectations of their clients and those of their employees and, consequently, those of their shareholders too. In other words, they achieve every company’s main objective.

Whether the Andersen Model we describe in these pages is an inspiration for them is something that each reader should find out by himself.

What the book does not pretend

We have not written this book to feed morbid fascination on Andersen’s collapse or its surrounding episodes. We have not tried though to skip that issue not to hide any information on the Firm or on the events around its demise. We have contributed all the information we have, without ties or limitations, when we have judged that its content was required.

Neither have we written the book to argue polemically with anybody. We have tried however to be self-critical and to show the pros and cons of each of the principles in which the model is based. We have never been complacent. We do not try to possess truth or to defend anybody. If we defend anything it is our honesty and transparency when writing this book.

In any case, we are sure that many will differ from our approach, and even some will from the start deny that Andersen was ever a model of excellence. Others will disagree in the identification of the model’s basic values. Even some will perhaps feel that Andersen was just the opposite, the anti-model of excellence, based on the evidence of what happened at Enron. They may be right, we respect all honest opinions.

Finally, the reader will see that we do not center on the Enron case and perhaps will feel disappointed. The truth is that we have not wished to write a book on the Enron case. There are many already. We are not interested in that negative view of the Andersen that reached Enron (it doubtless existed and paid for its mistakes, we don’t deny it) but the positive view of the Andersen that did many well-done things for many years, in many countries, with many satisfied clients. It also educated and delivered many professionals to their respective economies, making a significant contribution to world development during the XX century.

We shall analyze and comment the Enron case once we have explained and understood the Andersen Model. This way of advance is important because, let us make it plain and direct, the culture that appeared with Enron’s scandal was almost diametrically opposed to what we understand as Andersen’s culture.

...At least to the authentic “Andersen Culture”.

How we have organized the book

After the present introductory chapter we wished to do the history bit, containing five chapters grouped together under the word “background”.

The first chapter collects the main details, facts and dates that explain the Firm’s evolution in general.

The second describes the different development of Andersen in the world, with strong impact on some countries and small impact or almost none at all on others.

In the third chapter we wish to present a synthesis of Andersen’s Model main traits, those that made it “more than one firm”, but without entering in the analysis of its basic values.

The fourth chapter identifies the three stages in the evolution of the Andersen’s Culture and Andersen’s Model. This is an essential chapter to understand why the Andersen Culture did not remain fixed and unchanged along its history, and how it became quite different in the last stage, which in part explains the sad ending.

The fifth tries to reflect on the influence of the economic environment, and its temporal evolution in each country, in the development of the Firm’s Model. It also tries to find the reasons for the different development in different countries, and in particular the reasons for succeeding so well in Spain.

From there, the remaining chapters are grouped in three parts:

I. The 7 columns or basic principles of the Andersen Model

On which we try to identify the basic values that supported the Andersen Model.

II. Turning principles into practice

Where we unravel the elements that supported the 7 principles and turn them into practice.

III. The decomposition of the model

Here we get into the threats hidden in the Andersen Model, as in any other model, no matter how good.

In fact, those threats became more menacing with time and finally materialized, for reasons that we shall expose further on, until they caused Andersen downfall and then its well known disappearance.

We trust that the reader may reach some general conclusions to help his understanding of what Arthur Andersen was, and to enable him to develop the basis of his own company model. We believe that the Andersen Model can be validly taken as a reference by any company as. A model that we see as systemic (or “en-thropic”, as Francisco López defines in his book Empresas que van solas [1]), in other words, that feeds back on itself for control, as all successful models do.