To Arthur Sulzberger, Jr., chairman and publisher of the New York Times Co., the terror attacks of Sept. 11 were not only the story of a lifetime, but a test of leadership skills that had been under development for more than a decade.
Already facing the worst advertising decline since 1938, the Times managed to publish on Sept. 12, get through subsequent anthrax threats and go on to win seven Pulitzer Prizes this spring, more than double the previous record of any newspaper.
“Our response was driven by core values that had been created and enunciated long before those planes slammed into the World Trade Center and the Pentagon,” said Sulzberger during the annual Wharton Leadership Conference titled, “Leading in All Directions.” The conference, organized by the school’s Center for Leadership and Change Management and the Center for Human Resources, also included speeches by management experts, mountain climbers and a magician.
For Sulzberger, the path to leadership was present at birth. He is the fourth member of his family to run the Times. After a decade as a reporter, he moved into his first general management job in 1987, as the paper was about to embark on a 10-year plan that included development of a six-section color newspaper and construction of two new printing plants.
Following five years of growth, the company was hit hard by the 1987 stock market crash. But the biggest obstacle to executing the plan was the Times’ internal culture, said Sulzberger. “We knew that the Times was often too slow to change, too set in its ways, too hierarchically based,” said Sulzberger. “We needed to change all of this, but in a way that preserved our core values.” The company hired consultants, including W. Edwards Deming, but by 1992 it became obvious that the Times would need to change from within.
The problems ran deep. “Our newspaper was mired in a silo-based mentality which for years had fostered a culture of mistrust and antagonism,” said Sulzberger. For example, the man in circulation responsible every day for sending the production department a memo on how many newspapers to print had never met the man who took the number. Both men had worked at the paper for 20 years and sat two floors away from each other.
Sulzberger set up a series of retreats to confront what he said was a paralyzing, fear-based culture. The first meeting was brutally honest as executives finally dealt with what Sulzberger calls “moose” issues. Moose issues are those that everyone in the organization knows are problems, but are afraid to discuss openly.
A major moose at the Times, he said, is the role of the Sulzberger family in the publicly-held company. (The family controls the company through preferred stock.) At one retreat, Sulzberger recalled, a circulation executive finally piped up and said: “Arthur, this is fine for you; no one’s going to fire you. But what’s going to happen to the rest of us?”
Sulzberger said he later made that executive, Russell Lewis, chief executive officer of the New York Times Co. and his main partner in driving change, because he had the courage to speak up.
By the time the terrorist attacks occurred in September, Sulzberger said, the company had established enough communication and trust between departments that editor Howell Raines made the decision to throw out nearly every ad in the front section of the Sept. 12 paper without even calling the business side of the organization. “He didn’t have to,” Sulzberger noted. “We knew what the values were and we agreed. It didn’t have to be a conversation.”
Sulzberger said the biggest moose facing the Times and all news organizations is what he called “the false dichotomy between quality journalism and quality profits.” To address that, executives at the Times agreed on a value system that included the words, “Editorial excellence and independence are essential to our profitability, and profit sustains them.”
This year, the New York Times Co. ranked first in profits as a percent of revenue in its industry according to the Fortune 500 rankings. It was second in return on assets for its industry in 2001 and first in earning per share growth from 1991 to 2001.
Sulzberger meets weekly for lunch with the paper’s top editors and business managers to foster a sense of collaboration. “You just force them together,” he said. “That Wednesday lunch means “no surprises.”
At one point he was asked whether the scandals that have hit several major corporations are isolated incidents or symptoms of a larger collapse in corporate culture. His belief, he responded, is that most companies are honest, but he also expects more revelations of corporate corruption to come out. “It speaks to the decade that just went by. It speaks to a culture of greed. You fall into a culture of blindness … unless you breed in a process for somebody to raise his hand and say, ‘The emperor has no clothes on.’ It’s good this is getting out,” he added. “I like the fact that I no longer have to compete with people who are getting their profits fraudulently.” Regulators and others, he suggested, should be aggressive in pursuing claims of fraud. “I hope Washington steps up to its role in this, although I doubt it will.”
Finally, he said, his 10 years as a journalist have made him a better leader. “They don’t walk away from honesty,” he said of reporters and editors. “It’s confrontational, but it’s what we do.”
With another perspective on leadership, a panel of executive women discussed the role of women on corporate boards. Sally W. Stetson, president of the Forum of Executive Women, cited statistics showing that the percentage of Fortune 500 corporate boards with at least one woman member grew from 63% in 1993 to 84% in 1999. But overall, women held just 11.2% of total board seats.
Deborah M. Fretz, president and chief executive of Sunoco Logistics Partners, said the main roadblock to women attaining board seats is that so few are chief executives. “The simple answer is that CEOs go after other CEOs of publicly traded companies,” said Fretz. “When you look at corporate America today, there are just not that many women in senior level positions in line-operating jobs.” Fretz said another obstacle is the current trend to consolidate boards, which will make fewer total seats available.
Nancy Straus Sundheim, senior vice president of Unisys Corp., said women miss out on board appointments because they are not part of the informal networks that generate board posts. She also suggested that some boards fear adding a female member who might put a “women’s” agenda – such as how many women hold executive jobs – ahead of shareholders’ concerns. “The other basic fact is that people feel more comfortable with people in their own mold,” she said. “There is a reluctance to bring on people who might see things differently.”
Yet according to Fretz and Sundheim, there is a business case to be made for women board members. Fretz said the Enron debacle shows a need for greater financial literacy on boards. She said that while women as a group may lack line operating experience, they are well represented in financial areas. “It’s very difficult as you go through a corporation to keep women engaged in line organizations. You see too many of them who have had enough of corporate politics and corporate bureaucracies.”
Sundheim said the most compelling reason to add women board members is that they represent important corporate constituencies. For example, women are consumers and powerful in business procurement. They also, increasingly, represent employees and investors. “For all these reasons I think their voice should be represented on corporate boards.”
As board work becomes more time-consuming and loaded with potential liability, Fretz added, corporations will have to reach out to a broader pool of applicants, including women.
Stetson pointed out that non-profit boards can be a stepping stone to the corporate boardroom. She also noted that a critical attribute in making it onto a board is emotional maturity. “What are the person’s interpersonal skills?” she asked. “No one wants someone on the board who is going to dominate the conversation, who is, frankly, going to be a pain in the neck.”
Fretz said board service is helpful to executives in running their own operations. “Until you sit on the other side of the table you just don’t understand how that looks and how that feels.” Added Sundheim: “It takes a lot of time but you learn an enormous amount about business at a very high level. If you are interested in a career in business, being on a board adds a new dimension.”