I have spent most of my career chronicling the power of business at its best and highlighting strategies for making positive change in difficult situations. It’s great fun. I get to spend time with remarkably talented people doing important work and building valuable organizations. But every once in a while, I (along with lots of other people) encounter the face of business at its worst, and see the damage done when remarkably untalented people make tough situations even worse and destroy value in the process.
That’s how I felt yesterday as I read a front-page account in The New York Times of Sam Zell’s reign of error at the Tribune Company, and of the absurd frat-house culture that his executive group has inflicted upon a once-great (albeit deeply troubled) institution. That Zell’s much-ballyhooed takeover of the Tribune has not worked out is beyond dispute. The company is in bankruptcy, more than 4,200 employees have lost their jobs, and its flagship editorial properties (including the Los Angeles Times and Chicago Tribune) are shadows of their former selves.
What’s worse than the business results, though, is the workplace atmosphere inside the company. Zell’s “leadership team” (I use term loosely) talks about organizational change and strategic reinvention with language that sounds like a parody. CEO Randy Michaels wants to build a “fun, non-linear creative environment.” Chief Innovation Officer Lee Abrams (who, like his CEO, comes from radio) sent a memo that declared: “Rock n Roll musically is behind us. NEWS & INFORMATION IS THE NEW ROCK N ROLL.” An announcement for the company’s radical approach to local television news proclaimed, “The TV revolution is upon us–and the new Tribune Company is leading the resistance.” It then issued a call for “anti-establishment producer/editors” and had this message for candidates with “solid newsroom” experience. “We don’t care.”
Need I say more? Actually I do, because the silly and overheated rhetoric of revolution and transformation that made me wince has been accompanied, if the New York Times account is accurate, by a lewd and lascivious work environment that made me blush. All told, life at the Tribune Company seems like Animal House meets The Office, with a little Caligula thrown in for good measure. (If you don’t believe me, read about what allegedly took place on a 22nd-floor balcony. It was decidedly, ahem, “non-linear.”)
So what do we make of this painful episode in the mismanagement of much-needed change? Let’s set aside the X-rated shenanigans and focus instead on the change program itself. I’d say there are at least three big problems:
There is a difference between radical words and meaningful change. It’s hard to build something great for the future if you spend most of your time demeaning what happened before. For even the most determined change agents, history and tradition can be unrivaled sources of strength–as the foundation for an enduring sense of purpose that newcomers can’t begin to copy; as a reservoir of professional wisdom that gets more valuable as times get more volatile; as an engine of expertise that competitors can’t hope to match; as a reminder of founding principles that never go out of style, regardless of how styles change. You can’t get people excited about the future if all you do is trash the past.
Outside perspectives are important, but total outsiders, especially if they fill the leadership ranks with other outsiders, rarely turn ideas about change into well-executed actions. What struck me about CEO Michaels, CIO Abrams, and the more than 20 other executives Zell installed is that they wore their ignorance about the newspaper industry like a badge of honor. They had a history in radio–as DJs, even shock jocks, as well as in other parts of the radio business–and acted as if they had nothing to learn from people who grew up in the business. It’s painful to read about the changes they initiated, the memos they wrote, the decisions they made. Sure, newspaper veterans can be a tough group to persuade to embrace change. But these newcomers made rookie mistake after rookie mistake.
As I think about leaders who have managed to make deep-seated change in organizations with tough-to-change cultures–from urban police departments to teaching hospitals to national nonprofits–what strikes me about them is that they are “insider-outsiders.” That is, they crusade for big new ideas about strategic and organizational renewal. But they’ve actually walked a beat, or cared for patients, or trained volunteers. It’s one thing to provide start-from-scratch thinking. It’s quite another, as a CEO or leadership team, to start from scratch in a troubled industry and think you can make progress quickly.
It’s tough to make big strategic bets and huge financial bets at the same time. The leadership of the Tribune Company made enough bone-headed moves to endanger even a company that was in a solid financial position. But of course, thanks to the debt-heavy strategy that Sam Zell used to finance the buyout, Tribune was teetering on the brink of insolvency almost from Day One. As the old cliché goes, it’s hard to “change the tires on a moving car”–especially if there’s almost no air in the tires. According to the Times, Zell bought the Tribune in December 2007 for $8.2 billion. Less than a year later it filed for bankruptcy, with assets of $7.6 billion and debt of $13 billion. You can’t build a whole new strategy if your balance sheet is a house of cards.
People often say that they enjoy studying success, but that they learn more from studying failure. If that’s true, then there must be tons to learn from the sad tale of the Tribune Company. So please read the Times account, think about what you learned, and share your thoughts in the Comments section. Some good should come of this sorry spectacle.
Reprinted from Harvard Business Review