each issue, you will find an interview conducted by Innovate with a senior
executive known for innovation, transforming their organization, or leading
breakthroughs in their company.
Bob Danzig, formerly head of Hearst Newspaper Group, is known for taking
the newspaper group from losses year after year to the biggest cash generator
in all of the Hearst Corporation. His leadership exemplifies the best
of breakthrough thinking. We are pleased and excited to share with you
his insights, thinking, and game plan for creating a new future for Hearst
Publishing. Interview conducted by Doug Berger, Managing Partner of Innovate
||The focus for this interview is Breakthrough Innovation - where
executives are taking their companies outside the traditions of
the company, outside the performance levels, and in new directions.
Sometimes they are changing the very nature of the enterprise,
their leadership actions, and behaviors that support it.
Quantum Leap thinking.
Let's focus the conversation in
that area of your experience at the Hearst Newspapers. If you could
take a moment and reflect on a time when you were out to produce
a quantum leap accomplishment at Hearst.
My own view is that this breakthrough
thinking, this quantum leap redirection, often implies that you
have to do something different from your core business. While that
may be one way to go about it, in my experience, there is a quantum
leap redirection of the business you are in that is often available.
This comes out in the way you objectively assess the reality of
The best way for me to start is with my own experience.
When I was publisher of the Hearst newspaper in upstate NY, I
was the publisher of the most successful Hearst newspaper. [At
Hearst Publishing] if we had made one dollar, we would have been
most successful. We had losing newspapers all over the country.
Big city after big city, we had highly unionized newspapers --
no strategic direction. They drifted along existing on whatever
talent they had, and by benign neglect, fed off the profits of
Hearst magazines and television stations. When I was asked to
come to NY and take over, my view was that it would be uninteresting
to administer a group of lost wastes.
We had to become the destiny
architects of the quantum leap thinking that you are describing.
We did not discard what we had, but rediscovered what we had.
The number one thing was to find the very best talent, those
who could be destiny architects. They might be in your
own organization. Step number 1-- is to identify, assess
and engage the very best talent.
The second is to become strategic rather than operational.
There is a certain comfort in operating. There is a corridor of
cushioning that comes with knowing how to operate a given business.
When you become strategic, it implies you are willing to embrace
that which is discomforting, that which is uncomfortable. Essential
in redirecting the destiny of these very large newspapers around
the country, was to have our individual new talent teams sit down
and develop strategic objectives, as contrasted with operational
comforts. Strategic does not mean a guaranteed success. It means
a game plan for how you are going to conduct yourself. The game
plan can include the termination of a business, if it isn't going
to satisfy the minimal requirements you put in place.
The second thing we did was to sit back and talk about how we
grow this enterprise; how we grow these core businesses that are
welfare victims -- so we can breathe new life into them. We had
not acquired a property in 50 years. No one thought of Hearst when
thinking of selling a newspaper property, because we were never
in the game. We developed a list of the 50 most attractive targets
in the country for acquisition. We built a shadow silhouette of
every one of those operations, without ever going near them. We
assessed their probable market position, probable revenues, and
probable cost of acquisition. We had a complete library that represented
a brand new destiny for our company - a brand new breakthrough
thinking. Indeed, when the first of those properties became available,
we went after it like we were visiting our sister-in-law. We knew
everything about it. We acquired that first property, and then
we acquired $3 billion in additional properties.
We had a complete inventory of every property we may go after,
before it ever got on the radar screen. That could have been a
waste of time; we didn't think so. We thought it was exciting for
our people to be part of destiny architecture. That is my view
of how you go about reframing a business whether through external
acquisition or internal rediscovery.
Meanwhile, our strategic imperative for existing properties included
discarding some that we couldn't make work. I give you those as
an example that breakthrough thinking can be layered upon existing
businesses. To make a long story short, we went from being on corporate
welfare, unable to meet our own capital needs, drinking off the
successful magazines and television stations, to become the #1
cash generator in the entire corporation. What we did was take a
quantum leap from where we were to where we could be. That
took architecture; that took talent; it took strategy; it took
determined focus on acquisitions; it took a completely new breadth
Along the way, we worked at creating a whole new spirit among
our folks. I am a great believer that spirited places excel. Well-managed
places function well, but spirited places excel because of talents.
We put a lot of energy into creating a climate of celebration and
applause that would have our great talent excel. The excellence
is what produced the ultimate result of being the #1 cash generator
in the corporation.
Whether you are talking about breakthrough thinking that leads
to brand new additives, or the rediscovery of business potential
in the businesses you already have, there are the same key elements.
- A dispassionate assessment
of the talent quotient.
- A commitment to discover
or incent the best talent.
- A commitment to find
ways to develop strategic imperatives contrasted with the comfort
of current operations.
- The courage to go
out and waste time to build cases for things that may never
When establishing the strategic
imperatives, were you establishing objectives in conventional newspaper
terms or did you establish different objectives that were qualitatively
different from the way the business had been run?
Strength of Franchise was
what we were investing in. What were the trust, credibility and
market savvy of this enterprise? Many newspapers simply function
in a community as a branch of a national bank. Strength of franchise
built a compelling case for the acquisition. The paper is simply
today's currency; it may not be the future.
What was your thinking about
leverage points for building further strength? Were you buying
something that was already strong, yet you saw you could add or
create value that the current owners didn't?
You are going to find my answer
squishy, but it happens to be the criteria. We looked for the spirit
quotient of the organization. Could we take the talent of
an existing organization; could we enrich the spirit of that place?
It was a silent invitation for the talent to ratchet up to a new
I'll give you an example. We acquired a major newspaper in the
southwest, for $416 million. It was a powerhouse of a franchise.
It was occupied by a group of competitive warriors. They got up,
went to work everyday against their competition. They were splendid
in focusing on the competitive advantage in the marketplace, on
market share, on all those indices they determined in their history
were the key criteria of excellence. That combative warrior-like
attribute, which was very powerful and important to their success,
tended to be brutal, blunt, and unforgiving within their walls.
They also made no money. They were owned by a charitable foundation.
They measured themselves totally by the warrior-like achievements
of their competitive market share. After paying $416 million for
them, [our challenge] was to coax them into understanding the corridor
of market dominance that would permit them profitability.
I went there every Tuesday for weeks - just focusing on their
corridor of market dominance. We guided them to define it. In that
process, we found ways to celebrate their people just by how we
conducted ourselves. If we could find a way to balance this warrior-like
quality with a greater sense of nurturing the spirit of the place,
we could reach whole new levels. In fact, the very first month
they made $1 million, and I sent yellow roses to every spouse of
those executives - just congratulating them on the good news.
We worked to create a spirit of celebration and applause. As we
did that, they did it within their walls. Slowly, they moved from
a brutal, brunt unforgiving type of personality to a nurturing,
caring, uplifting kind of personality. They made $163 million last
year. Once you got them going and the spirit was created, it invited
the talent to optimize what they did.
In my language, to accomplish
what you are talking about, a mindset shift needs to take place.
No question. It is what I call
one of the softer values of success. Think about it. The first
softer value of success is mindset. It is the way we picture institutional
possibilities. If we picture ourselves as functioning then we just
function. If we picture ourselves as destiny architects, we may
not have quite the right formula yet, but we are committed everyday
to putting that pickaxe to the mountain, and finding new ways to
lift ourselves higher.
What was your thinking, what questions,
what principles guided how you interacted with people to actually
shift their mindset?
My #1 role was not to be the budget
approver, not the capital approver, not the recruitment source
of senior executives. My #1 role was to be the source of possibility
thinking for our folks. How do we set our sights? How do I
participate in the process that encourages sights that we define
as excellence? You never do that by imposition, by managing processes.
You do that by invoking noble purpose. You have to inspire
people to join you in the journey of noble purpose. I think
that is role of a senior executive.
What else did you do to inspire
people or to create for them this choice of mindset?
I sought ways to celebrate
and applaud our people. I'll give you an example. I traveled
all over the nation. When I was in NY for the day, my assistant
sent out an email saying Bob is here today. All my operations
around the country knew that by 4:00 pm they were to have a name,
personal achievement, the name of the spouse and personal address
of someone from their operation. On the train ride, I wrote thank
you notes on personal stationery. I would thank them for what
they did. If there was something extraordinary, I put an "F" after
their name. If something won a regional prize, I put a "T" next
to their names. I gave the list and notes to my assistant. The "F"'s
had flowers sent to the spouse. The "T" meant that a Tiffany
bracelet was sent, or a Tiffany key ring, if a male spouse. This
was so simple. It took a train ride coming home. It was a way
to celebrate our people and to incent these different businesses
all over the country.
There was a rhythm. Anybody who got a note from Bob Danzig would
tell 50 other people. I used to say that in the course of a year,
we spent maybe $35,000 on flowers and we spent $50,000 at Tiffany's.
We pay a truck driver in San Francisco, $75,000 a year. It is a
matter of how we look at it. I looked for ways to do the same thing
with all our senior people around the country. I looked for ways
to celebrate and applaud them. A lot of our people got flowers.
Your practices - this way of celebrating
people - how did you stimulate that practice to become the practice
of other executives at Hearst?
The only ones that I was concerned
about were the people who worked with me. In fact, my successor
sat next to me for 5 years. When I was getting ready to move onto
this chapter, George and I were talking about the things he would
continue. He said, "I'll tell you one thing I am going to continue
- writing notes to our people. I saved every note you ever sent
me." What I cared about was cultivating him.
Every month when the executives got together for a meeting, I
would talk about these kinds of things. I only talked about them
in the context of 'why we were achieving what we were achieving,'
and being 'a model of excellence.' Many of our people throughout
the company picked up those attributes.
Were there particular conversations,
particular questions or lines of discussion that you found fruitful
over the years in stimulating the thinking and actions you wanted?
The #1 question for me whenever
I talked to the folks was: "How are the troops?" They
knew what I meant by that. What were we doing to create the atmosphere?
What were we doing to create celebration and applause? That is
the first question, rather than 'explain your expenses or tell
me about your revenue plan.' 'Tell me about the troops.' People
make that part of their mental culture, their mindset.
What other questions did you ask?
When we sat down to go over quarterly
budgets and other matters, my question was beyond the numerics.
What are the strategic imperatives? What are the strategies that
we have in mind that are embraced by these numbers? So, you have
to redirect yourself to those things that are about your destiny,
not about your operation. It takes extra initiative to lift yourself,
not out of, but beyond the comfort of the operation into a strategic
imperative and to cultivate that mentality in your people.
Rather than the quantitative,
those are more directional conversations.
The quantitative is there. But,
if that is all you do, you may only be doing that quarter's work.
You may not be doing anything to influence your ultimate destiny
as an organization.
During this journey of yours at
Hearst, what did you do when you ran across a significant breakdown
where a strategic imperative was way off course?
I would just say to folks - we
are going to have a two-step dance. First, you have to "tamp down
the fire." Solve the issue. That is not the end of the dance. If
you just handle the debacle, then all you have done is handle the
debacle. My greater responsibility was root cause. How do we step
back, dispassionately from the situation and better understand
the root cause? Is there something we can take away from this situation
that will better guide us in the future when something like this
comes up? We are going to talk it through and organize the case
for how we take instruction from this situation.
What was your role in resolving
First, to be advised of it. Second,
make a judgement whether the two-step dance could be handled at
the local level. If yes, there is no need for me to give my energy.
A lot of companies in recent years
have embraced formal methodologies for business improvement. Did
you consider those initiatives? Did you embrace any methodologies?
I call these tools on the pathways
of excellence. You make a judgement and evaluate the efficacy.
I'll give you an example. In 1990-1 when the Gulf War occurred,
concurrent with that was a great economic reversal for our country.
All of our advertising collapsed and went into severe decline.
The war ended and the decline did not. Hearst Corporation made
a commitment to achieve a certain level of performance for that
year. We saw we were going to have a calamity on our hands. We
went into a mode of thinking of how to constrain our costs, because
our revenues would be so limited that year. Out came the machetes.
If I went out and issued the machete order, we would cut our costs
very quickly. I took the position that we worked so hard to build
a culture of talent we can't tamper with the spirit. I asked for
time to think about it. They said 'Okay, but don't take forever
to think about it.'
Shortly after, I met the head of productivity initiatives for
General Motors and got invited to their productivity conference.
We saw the difference between productivity and cost cutting. We
saw productivity could be a positive objective. You could enlist
your people. It could be a positive objective. It is more painstaking;
it is more elaborate; it is more complex. You have to analyze turnover,
analyze retirements, what jobs are leaving where you can retrain
somebody else - Very complex.
I decided we could embrace a productivity program, which would
require much more deliberation, more patience than cutting costs
with a machete. We saved $60 million a year. It took us longer
to get there. We never tampered with our culture. We incented no
insecurity, no sense of fear. We had productivity councils going
on all over the country. We changed the cost structure without
ever changing the culture.
If you reflect on the way that
you lead to impart your key values to people close to you, how
did you work?
You picked people around you who
were already sympathetic to your viewpoint. You celebrate and applaud
them. When you are celebrating and applauding them, it becomes
a much stronger affirmation and it becomes a stronger affirmation
of what to do throughout the organization.
I happen to believe that informality breeds comfort. When you
have a highly structured - Mr. this or Ms. That, and you have to
make a formal date, that invites discomfort. We had a very informal
atmosphere. Humor - I was playful. I would hide the administrative
assistant's shoes during lunch, for example. I did all that kind
of whacky stuff.
Who most influenced your character
as a leader?
Countless numbers of people I
encountered that let me drink at the fountain of their insight
and wisdom. Two were most compelling. A social worker when I was
11 years old told me "you are worthwhile." My first woman boss,
when I was 16, took an interest in me. She sat me down after I
had been working for 4 months and said, "I want you to know I have
been observing you and I think you are full of promise. It was
magical. They turned me on to possibilities.
What do you consider to be some
of the problems, truly worth solving in business today?
The first is self-evident.
That is a refreshed commitment to integrity. If we have corrosion
in the basic belief in the free enterprise system and in the quality
of our leadership, it contaminates our nation. The number one thing
business must do is find disciplined, organized ways to focus on
the integrity, trust, credibility, and the commitment to do the
right thing. The second thing is to find ways to encourage elasticity
of thinking, to be destiny pursuers rather than operational comfort
seekers. Those are easy words and hard challenges. I guide our
corporation's Hearst Management Institute. Our whole focus is on
We encourage our folks on a more comprehensive basis to be more
comfortable with risk. Daring to seek out things that may be related
to our core competencies not necessarily in our businesses. How
do we broaden the capacity for curiosity? How do you take an already
creative enterprise and enhance its creativity?
One of the differentiators between
a manager and a leader is that leaders create futures.
I am often asked to talk about
the difference between managing and leading. My first comment is
management is about today, leading is about tomorrow. Management
is about process, leadership is about purpose. Management is about
feeding the body of a place; leadership is about nurturing the
spirit of a place. Both have to be in place. I think that constipated
companies are those that don't embrace enough leadership.
Is there anything else?
The final observation comes to
mind when people are being hard on themselves. I tell them that
this is not about perfection; this is about progress. You need
not seek to have a perfect mindset; you need to seek making progress
towards a mindset you think is desirable. The idea is - it is not
perfection, it is progress. That is my final thought.
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