Media Curmudgeon

Disclosure: I hired Bill Grimes at CBS in 1968, mentored him, and promoted him to succeed me at CBS Radio Spot Sales in 1970. Bill went on to become one of the most successful executives in the media industry as CEO of ESPN, Univision, Multimedia, and the managing partner in a successful media investment fund. In those media jobs he hired me as a sales and management trainer and consultant. We have been close friends since 1968 and he was the best man at my wedding (like Jack Welsh, my third).

Bill and I agree on only three things I can think of: (1) That we really like each other, (2) that we respect each other personally and intellectually, and (3) that my wife is wonderful in all ways. We clash on most other issues.

Jack Welsh and his latest book Winning is one issue on which we disagree. Bill is correct, however, on one thing, that I have been a devoted fan of Peter Drucker's for many years. When I first became a manager in 1996 at WTOP-AM in Washington, DC, and later, in 1967, at CBS, where I used to get Drucker books from the CBS News Library.

I have on my bookshelf almost all of the books Drucker has written, and in my book, Broadcast and Cable Selling, I began each chapter with a brief Drucker quote, for which I received permission in a gracious letter from the master.

I met Drucker twice, about a decade apart, at conferences where he conducted seminars for about a small group of people. In a group session he was difficult to understand with his thick German accent and in person he was cold, aloof, and arrogant, as far from warm, friendly, and inclusive as you would expect a Viennese Ph.D. to be. He was a brilliant thinker but he wasn't very likable.

But neither I, nor The Economist article Bill Grimes refers to, judged Peter Drucker on whether or not we liked him or thought he was a good person, we judged him, not on his behavior, but on his ideas, accomplishments, and contribution to management theory and practice.

To use another analogy in the field of art, most art experts and critics judge Picasso on the body of his work, his creative accomplishments, not on his behavior, which was often appallingly misogynistic and cruel--not the least bit admirable, but, oh, that art.

All of which leads to the point of basic disagreement between Bill Grimes and myself on the issue of Jack Welsh--whether to judge him on the basis of his overall job performance and on the management principles he espouses or whether to judge him based on his behavior, his outrageous perks, his marriages, or his egomania. I submit that his eventual legacy will be his performance at GE and the implementation and execution of many excellent management principles, some of which may have been originated by Drucker, not on his personal behavior or his narcissism.

Furthermore, I'm disappointed in Bill for criticizing Winning without having read the book, without knowing what ideas Welsh was proposing. I believe Drucker would have approved of many of Welsh's concepts such as corporate budgeting is often an exercise in minimalization, that candor is vital in an organization, and Welsh's people management principles. And, by the way, I know Bill was a superb executive adn that he would agree with many of Welsh's precepts.

No one is perfect, certainly not Jack Welsh or Peter Drucker. The Economist article Bill linked to has a section about Drucker titled "What he got wrong" which was imbedded in an article lionizing Drucker as the father of management, or as the
BusinessWeek cover headlined, "the man who invented management."

So, I would like to give Bill the same advice about Winning that The Economist give its readers in the last paragraph of its Peter Drucker story: "Asked which management books he paid attention to, Bill Gates once replied, “Well, Drucker of course,” before citing a few lesser mortals. Management theory has not evolved into the world's most rigorous or enticing intellectual discipline. But in Peter Drucker it at least found a champion whom every educated person should take the trouble to read."

Bill Grimes writes:

"I was disappointed that you focused on a book written by (for?) Jack Welch and have not applied your insight and intellect on the life and the many intellectual contributions that Peter Drucker (who died last week) has made to corporations worldwide.

First, on "Winning" the reason I was not at all surprised by the meager sales (relative to expectations by you and his publisher but not to many who have followed his behavior over the last several years) is threefold:

(1) Welch became an imperial King in his last years at GE and drank too deeply of the well of monarchial praise produced in business pubs by his personal PR agent. This self-promoting behavior alienated many who had previously fawned lavishly with each and every successs the company had.

But what really angered a broader public was Welch's greedy "pick-pocket" move when he retired. Neither he nor the company disclosed at his retirment the bucket of perks that he persuaded the Board of GE to provide for his pricey comforts. Before I review those goodies keep in mind that Welch's net worth probably exceeds $1 billion--all generated at GE. His pension retirement, I beleive, was $1 million a year for life and he was provided a consulting gig at $10,000 an hour, as I recall.

This package was not enough for this King. No, Welch need more--he knew he deserved more--so he convinced the board of directors to provide him with a company-paid NYC apartment, season tix to Madison Square Garden events and other delicious and completely unwarranted perks. Later when these came to light in the small print of SEC docs that company had to file, the broader public came to know the real King, the same King who was known to many others who worked closely with him.

The response of this outraged audience: we don't need to pay $20 to read another Welch book about the old story (by now) of all the "magic" he performed at GE.

Lots of people said, "enough already" and "Winning" became "Losing" rather quickly.

(2) The King's second wife, who had him removed from their $12 million Southport mansion when she learned what others already knew--that her husband was romping around with the married editor of the Harvard Business Review --and who was (is) a highly respected partner of a Wall Street white-shoe law firm. She was liked by many of the King's friends and a large cadre of hangers-on. This constituency was not pleased that Number Two was given the same shabby treatment that Number One had experienced some fifteen years earlier. No, they thought it a bit tawdry that old Jack in another life crisis with an outsized and still-growing ego had dumped another wife. The result was that the negative buzz this behavior of our hero produced was, among other things, a call for action, and that call was to "Let the book sit on the shelf." And it did sit there. No surpise to anyone clued in to the King.

(3) A number of close followers of GE's tremendous success over the years noticed something that could not be easily ascertained by the casual headline reader of the business press. And the revelation was that almost all the GE operating businesses from early 90's until the King's retirement were NOT growing in double digits like the company was. What was happening was that one business, GE Capital, was growing immensely and quickly. Profit increases of 25%+ annually nicely disguised the fact that many other GE businesses were slumping along. (How many were losing marke tshare is an intersting question.) But this news was not trumpeted by the company nor its King.

Now, the executive running GE Capital, Gary Wendt, was becoming well-known by Wall Street, and the publicity of his success began to increase and increase. Wendt's face appeared in the Wall Street Journal and, as I recall, on a BusinessWeek cover. One must only assume that this development was neither expected or appreciated by the King, because after about 10 years at the helm of GECapital, the division contributing about 50% of the parent company's profits, Wendt was forced out by an angry King in 1998 or 99, as I recall.

Subordinates (Princes? Rivals?) whose performance led to a high profile at GE were not the King's idea of management by succession.

This act displayed a new and different side of Welch--a side not seen before. Oh, yes, "Nuetron Jack" had closed some non-performing plants but never had a high ranking executive been fired and never had there been an executive at GE whose division made as much money as Wendt's GE Capital. Many people who had associations with the company did not like this side of Welch and this large and growing group--natural prospects to buy "Winning" did not do so.

Finally, Welch publicy communicated successfully that one of his (many) skills/strategies for producing these winning financial results at GE was his decision to own businesses that ranked first or second within their markets. This concept was initiated years earlier by Peter Drucker but the King was not fond of attributions and I only learned that in the article on Drucker's life in the ECONOMIST (see below).

Nonetheless, casual followers of GE thought this was great stuff. "Wow, all our companies are first or second in their business segments". Great stuff but, unfortunately, not true. For example, NBC headed by Welch buddy, Bob Wright, who had performed sourly as head of GE Capital before Wendt created miracles there, was never in the top two positions in even Network TV--defining their business segment as narrowly (giving the King evey benefit of doubt) as possible during Wright's first 5 years there (87-92). If you define NBC business as Television or Entertainment there is not a possible way of the King's spinners making this dog hunt.

Again, close observers began to notice a growing hype in the carefully managed legend of King Welch and they likely found it not attractive, as I didn't. The result? Among other things--and a small thing--they did not buy the losing "Winning".

Like many stories spun so well to a public seeking heroes and finding few, the Legend of King Welch has diminshed significantly now. The book's sales is but one example. I saw him on TV recently with Number Three on his side talking about "Values" to a small group of colleges students somewhere--not Harvard--and he seemed small, too, and hollow. Have you noticed how ordinary and common Legends look when removed from office?

Did someone once say that the Emporer has no--was it clothes--or should it be shame?

Now why not opine, Media Curmudgeon, about a man who eschewd publicty mostly. An intellectual who beleived that businesses managed well produced better jobs for more people and enhanced society by doing so. Peter Drucker is that man you introduced to me many years ago. Give us your insight into a man that really made a difference. Not an Emperor was Docter Drucker, but he wore a grey suit and had nothing to be ashamed of.

ECONOMIST links:
www.economist.com/business/displaystory.cfm?story_id=5165460

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