[{"_1":2,"_3":-5,"_4":-5},"loaderData",{"_5":6,"_7":8},"actionData","errors","root",{"_136":-5,"_137":-5,"_138":139,"_140":141,"_142":143},"routes/clips.$id.$slug",{"_9":10,"_11":12},"clip",{"_13":14,"_15":16,"_17":-5,"_18":19,"_20":-5,"_21":22,"_23":24,"_25":26,"_27":28,"_29":30,"_31":32,"_33":34,"_35":36,"_37":38,"_39":40,"_41":-5,"_42":-5,"_43":-5,"_44":45,"_46":-5,"_47":48,"_49":50,"_51":-5},"canonicalUrl","https://howleaderslead.com/clips/2215/how-to-get-a-business-out-of-the-ditch","id",2215,"title","How to get a business out of the ditch","subtitle","transcript","WEBVTT\n\n1\n00:00:00.000 --> 00:00:01.860\nout of the ditch.\n\n2\n00:00:01.860 --> 00:00:07.040\nI think that an outsider can add real value in a situation like this because\n\n3\n00:00:07.040 --> 00:00:07.880\ntypically\n\n4\n00:00:07.880 --> 00:00:12.360\nwhen I entered the scene, things were really bad like in the case of Chrysler\n\n5\n00:00:12.360 --> 00:00:12.940\nand there\n\n6\n00:00:12.940 --> 00:00:16.200\nare several others that I could pick off for you.\n\n7\n00:00:16.200 --> 00:00:20.140\nAnd so the first thing they need is the answer to your first question which was\n\n8\n00:00:20.140 --> 00:00:20.700\nhow did they\n\n9\n00:00:20.700 --> 00:00:22.000\nget there?\n\n10\n00:00:22.000 --> 00:00:27.000\nAnd that requires a level of understanding of what the dynamics are in both\n\n11\n00:00:27.000 --> 00:00:28.060\nthat business\n\n12\n00:00:28.060 --> 00:00:33.650\nand that industry and those times which the current management team typically\n\n13\n00:00:33.650 --> 00:00:34.320\nhaven't\n\n14\n00:00:34.320 --> 00:00:36.220\nbeen able to do.\n\n15\n00:00:36.220 --> 00:00:40.640\nAnd as a result you get on a trajectory and as you well know if trajectories\n\n16\n00:00:40.640 --> 00:00:41.220\nare very\n\n17\n00:00:41.220 --> 00:00:45.170\nimportant whether they're going up or down they tend to continue in the same\n\n18\n00:00:45.170 --> 00:00:45.840\ndirection\n\n19\n00:00:45.840 --> 00:00:49.760\nunless you change course in some fairly major way.\n\n20\n00:00:49.760 --> 00:00:54.170\nAnd so it's finding that out first and then simply coming up with the set of\n\n21\n00:00:54.170 --> 00:00:54.880\nthings that\n\n22\n00:00:54.880 --> 00:01:00.480\nare necessary to correct the problems, to change the trajectory and in every\n\n23\n00:01:00.480 --> 00:01:01.080\ncase they're\n\n24\n00:01:01.080 --> 00:01:05.320\ndifferent and a couple of cases that I had there was no way out.\n\n25\n00:01:05.320 --> 00:01:09.650\nAnd I remember some of the tougher discussions with CEOs was saying the right\n\n26\n00:01:09.650 --> 00:01:10.360\nthing to do\n\n27\n00:01:10.360 --> 00:01:14.480\nfor you now is to liquidate what you got.\n\n28\n00:01:14.480 --> 00:01:18.100\nAnd if you wind up with some money at the end then go buy something.\n\n29\n00:01:18.100 --> 00:01:21.440\nIf you don't well then close the doors.\n\n30\n00:01:21.440 --> 00:01:26.100\nAnd it's a very tough thing for any CEO to do whether he's a founder or just a\n\n31\n00:01:26.100 --> 00:01:26.760\ncurrent\n\n32\n00:01:26.760 --> 00:01:29.520\nguy in the chair but it's something that has to be done.\n","pretty_transcript","start_time",1125739,"end_time",1213649,"keywords","liquidate, liquidation","slug","how-to-get-a-business-out-of-the-ditch","origin","cms","mux_playback_id","c02ovMM00R02fYMePcKOYkBrVSDZFHBa4ZGLIPfpy1ny01E","mux_asset_id","02d9uX5PRDowVhNWgJ2HoWp012pyaUhqyG8MteKtIEa6w","leader_id",45,"episode_id",192,"updated_at","2025-02-26T19:50:18.000000Z","meta_title","meta_description","og_image_media_id","web_url","https://www.howleaderslead.com/clips/2215/how-to-get-a-business-out-of-the-ditch","og_image_url","leader",{"_13":36,"_100":101,"_102":103,"_104":105,"_25":106,"_107":108,"_61":109,"_58":109,"_110":111,"_68":112,"_39":113,"_114":-5,"_41":-5,"_42":-5,"_43":-5,"_115":116,"_88":117,"_44":118,"_119":120,"_121":122,"_46":-5,"_123":124,"_125":126,"_92":127,"_51":-5},"episode",{"_13":38,"_15":52,"_27":53,"_17":-5,"_54":55,"_18":56,"_20":57,"_58":59,"_60":-5,"_61":59,"_62":-5,"_63":64,"_65":66,"_67":-5,"_68":-5,"_69":70,"_71":72,"_73":-5,"_35":36,"_39":74,"_41":-5,"_42":-5,"_43":-5,"_75":76,"_77":78,"_79":80,"_81":82,"_83":-5,"_84":-5,"_85":86,"_87":-5,"_88":-5,"_46":-5,"_89":90,"_91":-5,"_92":-5,"_51":-5},"og_image_media","Get an Outside Perspective","get-an-outside-perspective","summary","

Today’s guest is Cyrus Freidheim, the former CEO of both Chiquita and the Chicago Sun-Times and an absolutely legendary management consultant.

Consultants often get a bad rap for over-charging and under-delivering. (And let’s be honest – sometimes, they deserve it!)

But the RIGHT consultant delivers something that’s vital for your business: an outside perspective. It’s often the only way you can diagnose and fix your blind spots. And if you don’t, those blind spots will come back to haunt you!

In this conversation, Cyrus will show you how to use that outside perspective to grow your businesses. As a consultant, he’s turned around countless organizations. He’s served on dozens of boards, and of course, he’s faced his own leadership challenges as CEO of the Chicago Sun-Times.

He really has seen it all, and there is so much we can learn from him about the power of an outside perspective.

You’ll also learn:

The first question you need to ask if you want to turn a business around
What to do when you face a major disagreement you just can’t resolve
Two vital ingredients in a successful consultant-leader relationship
Why having (and becoming) a mentor is crucial to your success

Take your learning further. Get proven leadership advice from these (free!) resources:

The How Leaders Lead App: A vast library of 90-second leadership lessons to stay sharp on the go

Daily Insight Emails: One small (but powerful!) leadership principle to focus on each day

Whichever you choose, you can be sure you’ll get the trusted leadership advice you need to advance your career, develop your team, and grow your business.

","WEBVTT\n\n1\n00:00:00.000 --> 00:00:07.820\nWelcome to How Leaders Lead, where every week you get to listen in while I\n\n2\n00:00:07.820 --> 00:00:08.560\ninterview some\n\n3\n00:00:08.560 --> 00:00:10.600\nof the very best leaders in the world.\n\n4\n00:00:10.600 --> 00:00:13.850\nI break down the key learning so that by the end of the episode, you'll have\n\n5\n00:00:13.850 --> 00:00:14.400\nsomething\n\n6\n00:00:14.400 --> 00:00:18.240\nsimple you can apply as you develop into a better leader.\n\n7\n00:00:18.240 --> 00:00:20.800\nThat's what this podcast is all about.\n\n8\n00:00:20.800 --> 00:00:25.830\nToday's guest is Cyrus Friedheim, the former CEO of both Chiquita and the\n\n9\n00:00:25.830 --> 00:00:26.760\nChicago Sun\n\n10\n00:00:26.760 --> 00:00:31.120\nTimes, and an absolutely legendary management consultant.\n\n11\n00:00:31.120 --> 00:00:35.040\nNow, look, I've got to tell you, I have always been pretty slow to hire\n\n12\n00:00:35.040 --> 00:00:36.000\nconsultants.\n\n13\n00:00:36.000 --> 00:00:39.780\nToo many people bring them in because they just aren't willing to do the hard\n\n14\n00:00:39.780 --> 00:00:41.320\nwork themselves.\n\n15\n00:00:41.320 --> 00:00:46.050\nThey want the consultant to tell people what they have to do that's really hard\n\n16\n00:00:46.050 --> 00:00:46.560\nto do.\n\n17\n00:00:46.560 --> 00:00:51.920\nBut I also know this, every business needs an outside perspective.\n\n18\n00:00:51.920 --> 00:00:55.920\nThat is truly the only way you can diagnose and fix your blind spots.\n\n19\n00:00:55.920 --> 00:01:00.360\nSo you've got to find it one way or the other because those blind spots are\n\n20\n00:01:00.360 --> 00:01:01.280\ngoing to cost\n\n21\n00:01:01.280 --> 00:01:05.360\nyou if you don't really understand what they are.\n\n22\n00:01:05.360 --> 00:01:09.840\nAnd this conversation is so great because Cyrus is going to show you how to use\n\n23\n00:01:09.840 --> 00:01:10.160\nthis\n\n24\n00:01:10.160 --> 00:01:13.640\noutside perspective to grow your business.\n\n25\n00:01:13.640 --> 00:01:17.520\nAs a consultant, he's turned around countless organizations.\n\n26\n00:01:17.520 --> 00:01:21.520\nHe's served on dozens of boards and of course, he's faced his own leadership\n\n27\n00:01:21.520 --> 00:01:22.480\nchallenges as\n\n28\n00:01:22.480 --> 00:01:26.800\nCEO of Chiquita and the Chicago Sun Times.\n\n29\n00:01:26.800 --> 00:01:28.760\nHe really has seen it all.\n\n30\n00:01:28.760 --> 00:01:32.850\nAnd there's so much we can learn from him about the power of an outside\n\n31\n00:01:32.850 --> 00:01:33.880\nperspective.\n\n32\n00:01:33.880 --> 00:01:44.130\nSo here's my conversation with my good friend and soon to be yours, Cyrus Fried\n\n33\n00:01:44.130 --> 00:01:45.280\nheim.\n\n34\n00:01:45.280 --> 00:01:48.190\nYou know, your book, Commit and Deliver, which is actually by the way, you know\n\n35\n00:01:48.190 --> 00:01:49.160\n, it's a subhead\n\n36\n00:01:49.160 --> 00:01:52.480\nthat is on the front lines of management consulting.\n\n37\n00:01:52.480 --> 00:01:57.040\nAnd speaking of the front lines, I understand you work directly with one of the\n\n38\n00:01:57.040 --> 00:01:57.800\nmost iconic\n\n39\n00:01:57.800 --> 00:02:02.880\nleaders in American history, Lee Iacocca, and you helped him turn around\n\n40\n00:02:02.880 --> 00:02:03.760\nChrysler.\n\n41\n00:02:03.760 --> 00:02:04.920\nTell us about your role.\n\n42\n00:02:04.920 --> 00:02:10.200\nI'd been in the firm for about 13 years or so.\n\n43\n00:02:10.200 --> 00:02:14.700\nAnd so I had gone through the ranks and was a senior partner at that point and\n\n44\n00:02:14.700 --> 00:02:15.200\nhad done\n\n45\n00:02:15.200 --> 00:02:20.520\na lot of work in automotive and I had three years of direct experience with\n\n46\n00:02:20.520 --> 00:02:21.240\nFord.\n\n47\n00:02:21.240 --> 00:02:25.120\nSo among the senior partners, I probably knew as much about or had as much\n\n48\n00:02:25.120 --> 00:02:25.920\nexperience in\n\n49\n00:02:25.920 --> 00:02:27.720\nthe auto industry as any.\n\n50\n00:02:27.720 --> 00:02:34.260\nThe Secretary of the Treasury, Bill Miller, called our chairman, my boss, Jim\n\n51\n00:02:34.260 --> 00:02:35.040\nFarley,\n\n52\n00:02:35.040 --> 00:02:37.360\nand said, \"We got a real problem here.\n\n53\n00:02:37.360 --> 00:02:42.380\nChrysler's failing and the president wants to help them, but we don't know if\n\n54\n00:02:42.380 --> 00:02:43.040\nthey're\n\n55\n00:02:43.040 --> 00:02:44.680\ngoing to survive.\"\n\n56\n00:02:44.680 --> 00:02:49.810\nAnd would you come in, take a look at their plan, and tell us whether the plan\n\n57\n00:02:49.810 --> 00:02:50.600\nworks.\n\n58\n00:02:50.600 --> 00:02:54.080\nAnd so Jim called me in and we talked about it.\n\n59\n00:02:54.080 --> 00:02:55.920\nThe issue wasn't, would we do it?\n\n60\n00:02:55.920 --> 00:02:57.760\nIt was, how can we do it?\n\n61\n00:02:57.760 --> 00:03:02.640\nAnd with no lead time, and oh, by the way, he wanted to do it in two weeks.\n\n62\n00:03:02.640 --> 00:03:05.080\nAnd so we agreed we're going to do it.\n\n63\n00:03:05.080 --> 00:03:10.680\nWe identified the team that I wanted and off we went to Detroit.\n\n64\n00:03:10.680 --> 00:03:15.150\nNow, I understand before you agreed to take on the Chrysler project, you had a\n\n65\n00:03:15.150 --> 00:03:16.480\nfew non-negotiables\n\n66\n00:03:16.480 --> 00:03:20.830\nfrom your perspective, and one of which was you wanted Iacocca to call you and\n\n67\n00:03:20.830 --> 00:03:21.400\nmeet with\n\n68\n00:03:21.400 --> 00:03:24.200\nyou before you would begin the job.\n\n69\n00:03:24.200 --> 00:03:25.200\nWhat drove that?\n\n70\n00:03:25.200 --> 00:03:26.200\nTell us about that.\n\n71\n00:03:26.200 --> 00:03:27.200\nThat's interesting.\n\n72\n00:03:27.200 --> 00:03:31.880\nAfter two weeks, there was a stunning conclusion, and the conclusion was they\n\n73\n00:03:31.880 --> 00:03:32.960\ndidn't have a\n\n74\n00:03:32.960 --> 00:03:33.960\nplan.\n\n75\n00:03:33.960 --> 00:03:38.870\nWhat they had were all the normal planning tools, you know, a product plan, a\n\n76\n00:03:38.870 --> 00:03:39.600\nmarketing\n\n77\n00:03:39.600 --> 00:03:45.040\nplan, sales plan, engineering people, all these plans.\n\n78\n00:03:45.040 --> 00:03:51.120\nBut the company was sinking fast, bleeding cash, and losing sales.\n\n79\n00:03:51.120 --> 00:03:55.590\nAnd nothing that pulled together and said, okay, in order to survive, what we\n\n80\n00:03:55.590 --> 00:03:56.080\nneed to\n\n81\n00:03:56.080 --> 00:03:59.080\ndo is A, B, C, D, and nothing like that.\n\n82\n00:03:59.080 --> 00:04:02.280\nSo we called up Miller and said, we finished in these.\n\n83\n00:04:02.280 --> 00:04:06.200\nHe said, fine, what you find, and we said, just what I told you.\n\n84\n00:04:06.200 --> 00:04:07.760\nAnd he said, hmm.\n\n85\n00:04:07.760 --> 00:04:11.760\nWhen you put the plan together, and we said, you got to be kidding.\n\n86\n00:04:11.760 --> 00:04:13.800\nAnd two weeks is almost up.\n\n87\n00:04:13.800 --> 00:04:15.880\nAnd so he said, yes.\n\n88\n00:04:15.880 --> 00:04:17.320\nAnd so we did.\n\n89\n00:04:17.320 --> 00:04:23.100\nI presented that plan to the top management, and at that point, Iacocca was the\n\n90\n00:04:23.100 --> 00:04:24.240\npresident.\n\n91\n00:04:24.240 --> 00:04:26.880\nJohn Ricardo was the chairman.\n\n92\n00:04:26.880 --> 00:04:30.360\nBut poor John Ricardo was almost in the state of shock.\n\n93\n00:04:30.360 --> 00:04:35.360\nIt was clear that he no longer was going to be able to lead the company.\n\n94\n00:04:35.360 --> 00:04:40.500\nIacocca had been hired a year earlier, and we all knew that he was the heir\n\n95\n00:04:40.500 --> 00:04:41.480\napparent.\n\n96\n00:04:41.480 --> 00:04:44.920\nAnd it was just a matter of time before he would be appointed.\n\n97\n00:04:44.920 --> 00:04:49.040\nSo given the situation, I gave him three conditions.\n\n98\n00:04:49.040 --> 00:04:51.200\nI said, we're willing to do it.\n\n99\n00:04:51.200 --> 00:04:54.560\nCondition one was Iacocca becomes chairman immediately.\n\n100\n00:04:54.560 --> 00:04:56.400\nTheir board elected him that afternoon.\n\n101\n00:04:56.400 --> 00:05:01.760\nI said, number two, you've got to rehire Solomon brothers, but with Jim Wolf\n\n102\n00:05:01.760 --> 00:05:02.760\nenson in as the\n\n103\n00:05:02.760 --> 00:05:05.240\nhead of the team, not good friend.\n\n104\n00:05:05.240 --> 00:05:08.480\nAnd the third condition was that Iacocca called me.\n\n105\n00:05:08.480 --> 00:05:13.410\nAnd the reason for that is that I knew from my personal experience that he\n\n106\n00:05:13.410 --> 00:05:14.200\nreally didn't\n\n107\n00:05:14.200 --> 00:05:15.760\nlike consultants.\n\n108\n00:05:15.760 --> 00:05:20.270\nI guess he tolerated marketing consultants or engineering consultants, but\n\n109\n00:05:20.270 --> 00:05:20.920\nanybody who\n\n110\n00:05:20.920 --> 00:05:24.750\nhired a management consultant, they couldn't do their job and they ought to be\n\n111\n00:05:24.750 --> 00:05:25.120\nfired.\n\n112\n00:05:25.120 --> 00:05:28.560\nSo to be consistent, how could he do it?\n\n113\n00:05:28.560 --> 00:05:34.440\nBut I knew if he personally didn't hire us, nobody would pay attention to us.\n\n114\n00:05:34.440 --> 00:05:37.960\nThey'll just say, the government is making us take these people.\n\n115\n00:05:37.960 --> 00:05:40.640\nSo that's kind of a cost of getting the loan.\n\n116\n00:05:40.640 --> 00:05:41.640\nDon't worry about them.\n\n117\n00:05:41.640 --> 00:05:43.520\nYou don't have to answer their phone calls.\n\n118\n00:05:43.520 --> 00:05:46.390\nAnd I said, there's no way in the world we're going to get into a situation\n\n119\n00:05:46.390 --> 00:05:47.560\nlike that.\n\n120\n00:05:47.560 --> 00:05:51.950\nSo I said to Dick Dilworth, who was the lead director, I said, that's the third\n\n121\n00:05:51.950 --> 00:05:52.880\ncondition.\n\n122\n00:05:52.880 --> 00:05:55.400\nWell of course he said, great, all set.\n\n123\n00:05:55.400 --> 00:05:56.400\nLet's go.\n\n124\n00:05:56.400 --> 00:05:57.400\nI said, no, no, no.\n\n125\n00:05:57.400 --> 00:05:59.200\nIt took almost three weeks.\n\n126\n00:05:59.200 --> 00:06:04.830\nAnd remember at this point in time, Chrysler was in such bad shape, the damn\n\n127\n00:06:04.830 --> 00:06:05.800\nship was sinking\n\n128\n00:06:05.800 --> 00:06:07.560\nright in front of him.\n\n129\n00:06:07.560 --> 00:06:11.920\nAnd so I took a finely called me and I went over and saw him.\n\n130\n00:06:11.920 --> 00:06:16.400\nHe was delightful and we got along very well during the entire assignment.\n\n131\n00:06:16.400 --> 00:06:19.120\nBut I don't think it would have worked if we didn't do that.\n\n132\n00:06:19.120 --> 00:06:23.770\nYeah, to get him on board so everybody would truly listen to what needed to be\n\n133\n00:06:23.770 --> 00:06:24.400\ndone.\n\n134\n00:06:24.400 --> 00:06:25.400\nAbsolutely.\n\n135\n00:06:25.400 --> 00:06:30.380\nOne example of what you saw in Lee Iacocca that made him such a special leader\n\n136\n00:06:30.380 --> 00:06:31.000\nbecause\n\n137\n00:06:31.000 --> 00:06:33.200\nhe was ranked very high up there.\n\n138\n00:06:33.200 --> 00:06:38.240\nFor leadership in a tough situation, I guess I might put him as first of those\n\n139\n00:06:38.240 --> 00:06:38.880\nwho I've\n\n140\n00:06:38.880 --> 00:06:39.880\nworked with.\n\n141\n00:06:39.880 --> 00:06:42.920\nAnd I've worked with lots and lots and lots of leaders.\n\n142\n00:06:42.920 --> 00:06:43.920\nWhat is it?\n\n143\n00:06:43.920 --> 00:06:46.680\nWell, number one, people trusted him.\n\n144\n00:06:46.680 --> 00:06:52.080\nFor example, he went to the union and asked him for a pay cut.\n\n145\n00:06:52.080 --> 00:06:55.520\nI can't remember how much it was, but it was significant.\n\n146\n00:06:55.520 --> 00:07:00.800\nHe of course first took a cut himself, put himself on a dollar a year, and then\n\n147\n00:07:00.800 --> 00:07:01.480\nhe asked\n\n148\n00:07:01.480 --> 00:07:07.720\nthe unions, not to go that far, but he asked the unions to take a big cut.\n\n149\n00:07:07.720 --> 00:07:12.110\nAnd he said, \"I promise you that when we turn this thing around and we will, we\n\n150\n00:07:12.110 --> 00:07:12.240\n'll\n\n151\n00:07:12.240 --> 00:07:13.720\nsnap you back.\"\n\n152\n00:07:13.720 --> 00:07:18.480\nAnd then he had to go back a second time and that was really tough.\n\n153\n00:07:18.480 --> 00:07:22.800\nBut he got it both times because the unions trusted him.\n\n154\n00:07:22.800 --> 00:07:27.140\nAnd you know, in the world then, and I expect even now to have that level of\n\n155\n00:07:27.140 --> 00:07:28.100\ntrust between\n\n156\n00:07:28.100 --> 00:07:31.320\nmanagement and the union is really extraordinary.\n\n157\n00:07:31.320 --> 00:07:36.200\nThe second thing he did was basically the same thing with the banks.\n\n158\n00:07:36.200 --> 00:07:39.600\nHe convinced all of them to sign up for a haircut.\n\n159\n00:07:39.600 --> 00:07:45.310\nHe convinced the dealers who were not taking cars to start taking cars and to\n\n160\n00:07:45.310 --> 00:07:46.040\npay them\n\n161\n00:07:46.040 --> 00:07:47.200\nfor them.\n\n162\n00:07:47.200 --> 00:07:53.840\nAnd so it was just a remarkable performance of a man who was clearly in command\n\n163\n00:07:53.840 --> 00:07:54.360\nwhom people\n\n164\n00:07:54.360 --> 00:07:55.720\ntrusted.\n\n165\n00:07:55.720 --> 00:07:59.280\nAnd so he got things done that very few people could have.\n\n166\n00:07:59.280 --> 00:08:03.550\nCyrus, when I read your book, maybe he asked myself, \"What makes companies like\n\n167\n00:08:03.550 --> 00:08:04.120\nChrysler\n\n168\n00:08:04.120 --> 00:08:06.400\ngetting trouble in the first place?\n\n169\n00:08:06.400 --> 00:08:08.600\nAnd how can others avoid it?\"\n\n170\n00:08:08.600 --> 00:08:11.280\nThere are as many reasons as there are companies.\n\n171\n00:08:11.280 --> 00:08:14.600\nI don't know how many companies I worked with during my whole career, but it\n\n172\n00:08:14.600 --> 00:08:15.320\nwas probably\n\n173\n00:08:15.320 --> 00:08:16.920\nin the hundreds.\n\n174\n00:08:16.920 --> 00:08:19.280\nAnd I've never seen the perfect company.\n\n175\n00:08:19.280 --> 00:08:24.390\nI've never seen a company that didn't make serious mistakes, that didn't have\n\n176\n00:08:24.390 --> 00:08:25.040\ntoo much\n\n177\n00:08:25.040 --> 00:08:30.270\ncost, that created the wrong product, that didn't pay attention to their\n\n178\n00:08:30.270 --> 00:08:31.280\ncustomers,\n\n179\n00:08:31.280 --> 00:08:34.280\nthat ended up dozens of normal reasons.\n\n180\n00:08:34.280 --> 00:08:38.000\nBut clearly the only reason you go bankrupt is to run out of cash.\n\n181\n00:08:38.000 --> 00:08:42.320\nAnd what happened in this particular case is that they just were fooling\n\n182\n00:08:42.320 --> 00:08:43.200\nthemselves for\n\n183\n00:08:43.200 --> 00:08:44.600\nsome period of time.\n\n184\n00:08:44.600 --> 00:08:49.340\nI'm not sure why, was it to make sure the investors stick with them or what I\n\n185\n00:08:49.340 --> 00:08:49.800\ndon't\n\n186\n00:08:49.800 --> 00:08:50.800\nknow.\n\n187\n00:08:50.800 --> 00:08:54.320\nBut they were doing things with accounting that were wrong.\n\n188\n00:08:54.320 --> 00:08:59.200\nFor example, they kept production up even though sales had dropped.\n\n189\n00:08:59.200 --> 00:09:00.200\nSo what did they do?\n\n190\n00:09:00.200 --> 00:09:03.910\nThey put the vehicles, either stuffed them into the dealerships and counted\n\n191\n00:09:03.910 --> 00:09:05.240\nthem as sales,\n\n192\n00:09:05.240 --> 00:09:09.370\nor they put them into what they called a sales bank and then put them into\n\n193\n00:09:09.370 --> 00:09:10.320\ninventory.\n\n194\n00:09:10.320 --> 00:09:16.750\nSo it didn't show up, you had to be a real expert in accounting to have caught\n\n195\n00:09:16.750 --> 00:09:17.480\nit just\n\n196\n00:09:17.480 --> 00:09:19.480\nby reading reports.\n\n197\n00:09:19.480 --> 00:09:20.640\nThat's what happened to them.\n\n198\n00:09:20.640 --> 00:09:24.400\nAnd as a result of those things, as you can easily understand, cash is a\n\n199\n00:09:24.400 --> 00:09:25.400\nseparate animal\n\n200\n00:09:25.400 --> 00:09:27.440\nfrom putting things in inventory.\n\n201\n00:09:27.440 --> 00:09:29.240\nYou don't get any cash for that.\n\n202\n00:09:29.240 --> 00:09:32.000\nAnd so they were just hemorrhaging cash.\n\n203\n00:09:32.000 --> 00:09:34.760\nBut why do those sort of things happen?\n\n204\n00:09:34.760 --> 00:09:36.280\nCertainly leadership is an issue.\n\n205\n00:09:36.280 --> 00:09:41.370\nThere's an institutional organization that has to be clicking so that something\n\n206\n00:09:41.370 --> 00:09:41.720\nlike\n\n207\n00:09:41.720 --> 00:09:43.360\nthat is discovered.\n\n208\n00:09:43.360 --> 00:09:44.800\nThere are all different reasons.\n\n209\n00:09:44.800 --> 00:09:48.320\nI've worked with a number of failing companies over time.\n\n210\n00:09:48.320 --> 00:09:54.260\nAs a matter of fact, over time, I expect that the principal area that I focused\n\n211\n00:09:54.260 --> 00:09:55.760\non was companies\n\n212\n00:09:55.760 --> 00:10:01.230\nin major transitions and well over half of them were companies that were in\n\n213\n00:10:01.230 --> 00:10:02.120\ntrouble and\n\n214\n00:10:02.120 --> 00:10:06.240\ntherefore required to turn themselves around in some major way.\n\n215\n00:10:06.240 --> 00:10:10.800\nBut I don't see any real comedy nominator in what caused it.\n\n216\n00:10:10.800 --> 00:10:14.610\nYou say getting the facts right and uncovering and facing hard truths or always\n\n217\n00:10:14.610 --> 00:10:15.160\nthe first\n\n218\n00:10:15.160 --> 00:10:17.400\nstep towards solving a problem.\n\n219\n00:10:17.400 --> 00:10:22.080\nWhy does so many leaders struggle to orient themselves around the brutal facts\n\n220\n00:10:22.080 --> 00:10:22.640\nof their\n\n221\n00:10:22.640 --> 00:10:23.640\nbusiness?\n\n222\n00:10:23.640 --> 00:10:26.520\nWell, I think the good ones do it.\n\n223\n00:10:26.520 --> 00:10:28.880\nAnd you'd ask, well, why not everybody?\n\n224\n00:10:28.880 --> 00:10:34.350\nFirst of all, CEOs are, there's no CEO school and so each one is kind of like\n\n225\n00:10:34.350 --> 00:10:36.240\nbeing a father.\n\n226\n00:10:36.240 --> 00:10:40.360\nYou're there and you suddenly figure out, well, it is what I got to do.\n\n227\n00:10:40.360 --> 00:10:45.000\nAnd a lot of CEOs are appointed for a variety of different reasons.\n\n228\n00:10:45.000 --> 00:10:49.000\nNot all of them come with a full set of skills and talents.\n\n229\n00:10:49.000 --> 00:10:53.130\nBut even if a person is up to date on all the financials, as you point out\n\n230\n00:10:53.130 --> 00:10:53.920\ncorrectly,\n\n231\n00:10:53.920 --> 00:10:59.930\nthe hard facts on how the product is doing, how the people are developing, on a\n\n232\n00:10:59.930 --> 00:11:00.280\nlot of\n\n233\n00:11:00.280 --> 00:11:06.270\nother of the key pillars of success in any business require that facts-based,\n\n234\n00:11:06.270 --> 00:11:07.800\ntough analysis\n\n235\n00:11:07.800 --> 00:11:09.840\nand understanding.\n\n236\n00:11:09.840 --> 00:11:16.040\nYou have a number of CEOs that are instinctive rather than analytical.\n\n237\n00:11:16.040 --> 00:11:21.710\nAs a matter of fact, I'd say of the two characteristics, good instincts might\n\n238\n00:11:21.710 --> 00:11:23.240\neven be more important.\n\n239\n00:11:23.240 --> 00:11:28.280\nI've never seen a company that succeeded without a CEO that had good instincts.\n\n240\n00:11:28.280 --> 00:11:33.070\nI have seen companies that have succeeded with a top guy not being a good\n\n241\n00:11:33.070 --> 00:11:33.920\nanalyst.\n\n242\n00:11:33.920 --> 00:11:37.920\nBut in those cases, he had people who could do analysis for him.\n\n243\n00:11:37.920 --> 00:11:43.230\nAnd matter of fact, that's why Boozell and Hamilton existed because a lot of\n\n244\n00:11:43.230 --> 00:11:43.920\nthe CEOs\n\n245\n00:11:43.920 --> 00:11:48.700\njust didn't know or didn't know how to figure out answers or wanted a second\n\n246\n00:11:48.700 --> 00:11:49.440\nopinion or\n\n247\n00:11:49.440 --> 00:11:51.320\nwanted just a partner.\n\n248\n00:11:51.320 --> 00:11:54.640\nAnd so we made an industry out of it.\n\n249\n00:11:54.640 --> 00:11:59.610\nBut I think it's the analytical skill that misses, I think, rather than the\n\n250\n00:11:59.610 --> 00:12:00.680\ninstinct on\n\n251\n00:12:00.680 --> 00:12:04.640\nissues like not paying attention to hard facts.\n\n252\n00:12:04.640 --> 00:12:08.240\nYou became a renowned expert in the automobile business.\n\n253\n00:12:08.240 --> 00:12:12.920\nWhat do you think of Elon Musk as a leader and what he's doing at Tesla today?\n\n254\n00:12:12.920 --> 00:12:16.360\nWell, I'm not close enough to know.\n\n255\n00:12:16.360 --> 00:12:18.680\nThis is a further disqualification.\n\n256\n00:12:18.680 --> 00:12:22.480\nI thought three years ago it was a must short.\n\n257\n00:12:22.480 --> 00:12:27.320\nAnd I'd have been taken to the cleaners so many times if I ever went ahead with\n\n258\n00:12:27.320 --> 00:12:27.760\nthat\n\n259\n00:12:27.760 --> 00:12:29.040\ninstinct.\n\n260\n00:12:29.040 --> 00:12:33.000\nI do know the guy is extraordinarily visionary.\n\n261\n00:12:33.000 --> 00:12:38.810\nThe thing that really is stunning is how somebody from the outside can do\n\n262\n00:12:38.810 --> 00:12:40.040\nsomething that is\n\n263\n00:12:40.040 --> 00:12:46.740\nso obviously necessary in the industry itself and just blow by the whole\n\n264\n00:12:46.740 --> 00:12:48.040\nindustry.\n\n265\n00:12:48.040 --> 00:12:49.040\nIt's just stunning.\n\n266\n00:12:49.040 --> 00:12:55.440\nNow, the automotive industry whipped once before this and that is on Japan.\n\n267\n00:12:55.440 --> 00:13:00.220\nWhen I went around both in Europe and in the United States, the Japanese were\n\n268\n00:13:00.220 --> 00:13:01.520\nquite clearly\n\n269\n00:13:01.520 --> 00:13:06.140\nin the marketplace everywhere with products that people were buying, but\n\n270\n00:13:06.140 --> 00:13:06.920\nfundamentally\n\n271\n00:13:06.920 --> 00:13:09.840\nthey were panned as cheap imitations.\n\n272\n00:13:09.840 --> 00:13:13.280\nThis was throughout the '60s and early '70s.\n\n273\n00:13:13.280 --> 00:13:17.800\nAnd if you looked at the needle of market share both in Europe and the United\n\n274\n00:13:17.800 --> 00:13:18.640\nStates, it was\n\n275\n00:13:18.640 --> 00:13:24.760\nmoving up even at the time of 1979 when the Chrysler event occurred.\n\n276\n00:13:24.760 --> 00:13:27.880\nIt was still below 10%.\n\n277\n00:13:27.880 --> 00:13:30.800\nAnd so nobody cared much.\n\n278\n00:13:30.800 --> 00:13:35.140\nI remember going to Chrysler and one of their top guys told me it was not Iacoc\n\n279\n00:13:35.140 --> 00:13:35.760\nca.\n\n280\n00:13:35.760 --> 00:13:40.720\nWe're not worried about Japan because they produce these tinny little cars and\n\n281\n00:13:40.720 --> 00:13:41.480\nAmericans\n\n282\n00:13:41.480 --> 00:13:44.560\nwant big gas cost lawyers.\n\n283\n00:13:44.560 --> 00:13:46.240\nAnd that's what we produce.\n\n284\n00:13:46.240 --> 00:13:51.810\nWell, you know, really wrong, really, really wrong as we now know where the\n\n285\n00:13:51.810 --> 00:13:53.240\nJapanese have\n\n286\n00:13:53.240 --> 00:13:57.550\nat least a third, maybe more of the world market and that much there's number\n\n287\n00:13:57.550 --> 00:13:58.240\none seller\n\n288\n00:13:58.240 --> 00:13:59.920\nin the United States.\n\n289\n00:13:59.920 --> 00:14:04.520\nSo this second major error should never have occurred.\n\n290\n00:14:04.520 --> 00:14:08.760\nThey should have been all over the electric car, but they weren't.\n\n291\n00:14:08.760 --> 00:14:14.640\nSo I guess this kind of a problem is characteristic, not just of automotive.\n\n292\n00:14:14.640 --> 00:14:21.130\nBut what Tesla did is it didn't produce a car, it produced a computer on wheels\n\n293\n00:14:21.130 --> 00:14:21.880\n, which\n\n294\n00:14:21.880 --> 00:14:25.800\nwas a fundamentally different way to think about a car.\n\n295\n00:14:25.800 --> 00:14:27.120\nAnd it's a marvelous car.\n\n296\n00:14:27.120 --> 00:14:28.680\nYou've probably driven one.\n\n297\n00:14:28.680 --> 00:14:30.720\nThey're really marvelous automobiles.\n\n298\n00:14:30.720 --> 00:14:31.720\nAbsolutely.\n\n299\n00:14:31.720 --> 00:14:35.810\nThe problems that he's had have all been not on the technology, but rather on\n\n300\n00:14:35.810 --> 00:14:36.520\nthe ability\n\n301\n00:14:36.520 --> 00:14:38.000\nto produce a car.\n\n302\n00:14:38.000 --> 00:14:42.480\nYou know, it took hold forever to get the production up to where it is today.\n\n303\n00:14:42.480 --> 00:14:45.720\nAnd every now and then the stock dropped because he wasn't getting the\n\n304\n00:14:45.720 --> 00:14:46.520\nproduction.\n\n305\n00:14:46.520 --> 00:14:50.720\nBut the quality of the vehicle, the responsiveness, the driving pleasure are\n\n306\n00:14:50.720 --> 00:14:52.680\nall really top notch.\n\n307\n00:14:52.680 --> 00:14:54.720\nBut Detroit was sleeping at the switch.\n\n308\n00:14:54.720 --> 00:14:59.310\nYeah, it's funny how people in categories just, they're so insular, they don't\n\n309\n00:14:59.310 --> 00:14:59.800\nreally\n\n310\n00:14:59.800 --> 00:15:03.440\nlook outside and see what's possible.\n\n311\n00:15:03.440 --> 00:15:07.230\nWhen you look back at your consulting career, Cyrus, what was the most fun\n\n312\n00:15:07.230 --> 00:15:07.920\nproject you\n\n313\n00:15:07.920 --> 00:15:08.920\nhad?\n\n314\n00:15:08.920 --> 00:15:10.160\nThere were a ton of them that were fun.\n\n315\n00:15:10.160 --> 00:15:13.680\nMatter of fact, I was in a situation for all those years.\n\n316\n00:15:13.680 --> 00:15:18.040\nWhen I got up in the morning, I had half a dozen things to do at least.\n\n317\n00:15:18.040 --> 00:15:20.160\nAnd they were all going to be terrific.\n\n318\n00:15:20.160 --> 00:15:21.320\nI enjoyed them.\n\n319\n00:15:21.320 --> 00:15:24.680\nThe top of the list was working directly with clients.\n\n320\n00:15:24.680 --> 00:15:27.680\nSo I don't have one favorite.\n\n321\n00:15:27.680 --> 00:15:32.800\nChrysler certainly was one of the most notable and one of the most satisfying.\n\n322\n00:15:32.800 --> 00:15:36.880\nBut there were lots of others that had other characteristics that made it\n\n323\n00:15:36.880 --> 00:15:37.760\nenjoyable.\n\n324\n00:15:37.760 --> 00:15:39.960\nSounds like you're talking about your children.\n\n325\n00:15:39.960 --> 00:15:41.640\nYou can't pick one.\n\n326\n00:15:41.640 --> 00:15:42.640\nYeah.\n\n327\n00:15:42.640 --> 00:15:46.000\nI could pick one, but it wouldn't be true.\n\n328\n00:15:46.000 --> 00:15:49.440\nWhat's the most challenging project you ever had besides Chrysler?\n\n329\n00:15:49.440 --> 00:15:51.640\nI'll throw out one that wasn't actually consulting me.\n\n330\n00:15:51.640 --> 00:15:53.480\nIt was at a board.\n\n331\n00:15:53.480 --> 00:15:55.400\nThe company was micro age.\n\n332\n00:15:55.400 --> 00:15:57.640\nAnd they were a part of Fortune 500.\n\n333\n00:15:57.640 --> 00:16:02.960\nThey were the largest reseller of computers and other technical equipment.\n\n334\n00:16:02.960 --> 00:16:08.800\nI'd been on the board for about six or eight months and had done my homework.\n\n335\n00:16:08.800 --> 00:16:13.610\nAnd it came clear to me that the company was strategically misfit for where\n\n336\n00:16:13.610 --> 00:16:14.160\nthey were\n\n337\n00:16:14.160 --> 00:16:15.360\ngoing.\n\n338\n00:16:15.360 --> 00:16:21.170\nToo much of the sales well over half were in commodity segments of the market,\n\n339\n00:16:21.170 --> 00:16:22.720\nlow margin,\n\n340\n00:16:22.720 --> 00:16:25.200\nand becoming more and more competitive.\n\n341\n00:16:25.200 --> 00:16:29.200\nAnd there was really no brand power that's micro age had.\n\n342\n00:16:29.200 --> 00:16:34.250\nThey had a good distribution system, but no real brand power to control the\n\n343\n00:16:34.250 --> 00:16:34.560\nmarket.\n\n344\n00:16:34.560 --> 00:16:36.520\nAnd the margins started to fall.\n\n345\n00:16:36.520 --> 00:16:39.320\nSo I concluded that they had to sell it.\n\n346\n00:16:39.320 --> 00:16:44.350\nAnd if they didn't, the company would likely go into bankruptcy in the near to\n\n347\n00:16:44.350 --> 00:16:46.280\nmedium term.\n\n348\n00:16:46.280 --> 00:16:52.950\nSo this was a big deal because the question is, how does a board member make\n\n349\n00:16:52.950 --> 00:16:54.040\nthat point\n\n350\n00:16:54.040 --> 00:16:56.480\nwhen the company is going along?\n\n351\n00:16:56.480 --> 00:16:57.840\nThere's a small board.\n\n352\n00:16:57.840 --> 00:16:59.600\nThere's seven people.\n\n353\n00:16:59.600 --> 00:17:04.400\nAnd three of them had been with the CEO through the long march.\n\n354\n00:17:04.400 --> 00:17:08.080\nThey had been bankrupt once before and the CEO pulled them out.\n\n355\n00:17:08.080 --> 00:17:11.320\nThe other three, including myself, were not.\n\n356\n00:17:11.320 --> 00:17:15.200\nAnd so what I did is something that I've never heard of before.\n\n357\n00:17:15.200 --> 00:17:18.960\nAnd I'm certainly not recommending it for any outside board member.\n\n358\n00:17:18.960 --> 00:17:24.100\nBut I called an executive session of the board, excluding the CEO and prepared\n\n359\n00:17:24.100 --> 00:17:25.680\na presentation,\n\n360\n00:17:25.680 --> 00:17:27.680\nlaid the whole thing out.\n\n361\n00:17:27.680 --> 00:17:29.520\nI thought it was compelling.\n\n362\n00:17:29.520 --> 00:17:31.000\nThey said, well, what should we do?\n\n363\n00:17:31.000 --> 00:17:33.520\nI said, well, he has to sell this.\n\n364\n00:17:33.520 --> 00:17:38.480\nAnd I knew one of the potential buyers because I had worked with him before.\n\n365\n00:17:38.480 --> 00:17:42.080\nAnd so I offered to help in any way and told the board.\n\n366\n00:17:42.080 --> 00:17:45.320\nI said, one of you guys should become chairman, go sell that.\n\n367\n00:17:45.320 --> 00:17:48.400\nAnd then we don't have to fire the CEO.\n\n368\n00:17:48.400 --> 00:17:51.960\nWell, one of the board members talked to the chairman about it.\n\n369\n00:17:51.960 --> 00:17:57.080\nHe basically said, no, would split the board three, four.\n\n370\n00:17:57.080 --> 00:18:01.510\nNow, what I should have done-- and this is a terrible mistake I made in my\n\n371\n00:18:01.510 --> 00:18:02.240\ncareer--\n\n372\n00:18:02.240 --> 00:18:04.920\nI should have resigned right then and there.\n\n373\n00:18:04.920 --> 00:18:10.370\nAnd I believe that if you ever are in a situation with an organization where\n\n374\n00:18:10.370 --> 00:18:11.120\neither you're\n\n375\n00:18:11.120 --> 00:18:16.550\nfor reasons of values or other disagreements which are major and you cannot\n\n376\n00:18:16.550 --> 00:18:17.680\nresolve them,\n\n377\n00:18:17.680 --> 00:18:21.280\nyou should resign gracefully but immediately.\n\n378\n00:18:21.280 --> 00:18:26.600\nAnd that was burned in my brain after I fell and didn't do it.\n\n379\n00:18:26.600 --> 00:18:29.480\nSo that was probably my biggest single challenge.\n\n380\n00:18:29.480 --> 00:18:33.320\nThat had to be some very interesting piece I could see you being in those.\n\n381\n00:18:33.320 --> 00:18:37.180\nNow, you mentioned earlier, you've been a part of a lot of turnarounds and a\n\n382\n00:18:37.180 --> 00:18:37.600\nlot of\n\n383\n00:18:37.600 --> 00:18:40.280\ntimes when companies have gone awry.\n\n384\n00:18:40.280 --> 00:18:45.800\nGive us the keys to what you think it takes to get a business out of the ditch.\n\n385\n00:18:45.800 --> 00:18:50.950\nI think that an outsider can add real value in a situation like this because\n\n386\n00:18:50.950 --> 00:18:51.800\ntypically\n\n387\n00:18:51.800 --> 00:18:56.600\nwhen I entered the scene, things were really bad like in the case of Chrysler\n\n388\n00:18:56.600 --> 00:18:56.840\nand there\n\n389\n00:18:56.840 --> 00:19:00.120\nare several others that I could pick off for you.\n\n390\n00:19:00.120 --> 00:19:04.110\nAnd so the first thing they need is the answer to your first question which was\n\n391\n00:19:04.110 --> 00:19:04.520\n, how did\n\n392\n00:19:04.520 --> 00:19:05.920\nthey get there?\n\n393\n00:19:05.920 --> 00:19:10.930\nAnd that requires a level of understanding of what the dynamics are in both\n\n394\n00:19:10.930 --> 00:19:12.000\nthat business\n\n395\n00:19:12.000 --> 00:19:18.020\nand that industry and those times which the current management team typically\n\n396\n00:19:18.020 --> 00:19:18.280\nhaven't\n\n397\n00:19:18.280 --> 00:19:20.160\nbeen able to do.\n\n398\n00:19:20.160 --> 00:19:24.740\nAs a result, you get on a trajectory and as you well know, if trajectories are\n\n399\n00:19:24.740 --> 00:19:25.640\nvery important\n\n400\n00:19:25.640 --> 00:19:29.840\nwhether they're going up or down, they tend to continue in the same direction\n\n401\n00:19:29.840 --> 00:19:30.280\nunless you\n\n402\n00:19:30.280 --> 00:19:33.680\nchange course in some fairly major way.\n\n403\n00:19:33.680 --> 00:19:38.070\nAnd so it's finding that out first and then simply coming up with the set of\n\n404\n00:19:38.070 --> 00:19:38.760\nthings that\n\n405\n00:19:38.760 --> 00:19:44.170\nare necessary to correct the problems, to change the trajectory and in every\n\n406\n00:19:44.170 --> 00:19:44.960\ncase they're\n\n407\n00:19:44.960 --> 00:19:45.960\ndifferent.\n\n408\n00:19:45.960 --> 00:19:49.240\nIn a couple of cases that I had, there was no way out.\n\n409\n00:19:49.240 --> 00:19:53.570\nAnd I remember some of the tougher discussions with CEOs was saying the right\n\n410\n00:19:53.570 --> 00:19:54.280\nthing to do\n\n411\n00:19:54.280 --> 00:19:58.400\nfor you now is to liquidate what you got.\n\n412\n00:19:58.400 --> 00:20:02.000\nAnd if you wind up with some money at the end, then go buy something.\n\n413\n00:20:02.000 --> 00:20:05.360\nIf you don't, well then close the doors.\n\n414\n00:20:05.360 --> 00:20:09.820\nAnd it's a very tough thing for any CEO to do whether he's a founder or just\n\n415\n00:20:09.820 --> 00:20:10.680\nthe current\n\n416\n00:20:10.680 --> 00:20:14.120\nguy in the chair, but it's something that has to be done.\n\n417\n00:20:14.120 --> 00:20:17.720\nIt takes a lot of courage, I was to really take that head on with the CEO.\n\n418\n00:20:17.720 --> 00:20:22.150\nHave you always been able to have productive conflict and really take somebody\n\n419\n00:20:22.150 --> 00:20:22.600\non like\n\n420\n00:20:22.600 --> 00:20:23.600\nthat?\n\n421\n00:20:23.600 --> 00:20:25.840\nWhat does it take to develop that skill?\n\n422\n00:20:25.840 --> 00:20:27.840\nIn my case, it happened very early.\n\n423\n00:20:27.840 --> 00:20:32.360\nIt was in my first year of my consulting career.\n\n424\n00:20:32.360 --> 00:20:38.070\nAnd there was one particular guy in the office, a partner who was kind of the\n\n425\n00:20:38.070 --> 00:20:39.040\nterror.\n\n426\n00:20:39.040 --> 00:20:42.440\nNobody wanted to work with him because he was just too rough and tough.\n\n427\n00:20:42.440 --> 00:20:46.820\nSo I was a little older than most of the new guys because I had spent four\n\n428\n00:20:46.820 --> 00:20:47.440\nyears in the\n\n429\n00:20:47.440 --> 00:20:49.720\nNavy and then went to business school.\n\n430\n00:20:49.720 --> 00:20:53.560\nAnd most of the other guys had gone to business school relatively quickly.\n\n431\n00:20:53.560 --> 00:20:55.120\nAnd so they were a couple of years younger.\n\n432\n00:20:55.120 --> 00:20:57.760\nSo I'm sure that helped me a little bit.\n\n433\n00:20:57.760 --> 00:21:01.930\nI said to the guy who assigns consultants to projects, I said, \"Look, I'd like\n\n434\n00:21:01.930 --> 00:21:02.440\nto work\n\n435\n00:21:02.440 --> 00:21:05.400\nwith Joe, the senior partner.\"\n\n436\n00:21:05.400 --> 00:21:06.400\nThey said, \"Why?\"\n\n437\n00:21:06.400 --> 00:21:09.480\nAnd I said, \"Well, because I hear he's really a good consultant.\n\n438\n00:21:09.480 --> 00:21:13.160\nHe might be a little rough around the edges, but he's really good and smart.\"\n\n439\n00:21:13.160 --> 00:21:17.720\nSo I went in to see him and the interview was ridiculous.\n\n440\n00:21:17.720 --> 00:21:18.720\nWhat do you want to do?\n\n441\n00:21:18.720 --> 00:21:19.720\nWhat do you hear for?\n\n442\n00:21:19.720 --> 00:21:21.640\nWho do you think you are kind of a thing?\n\n443\n00:21:21.640 --> 00:21:23.600\nBut we got along very well.\n\n444\n00:21:23.600 --> 00:21:26.940\nSo what I would do, and I was working alone on the project, and it was for a\n\n445\n00:21:26.940 --> 00:21:27.400\nbuddy of\n\n446\n00:21:27.400 --> 00:21:33.040\nhis who headed up a company called the Burton Dixie Mathras Company.\n\n447\n00:21:33.040 --> 00:21:39.200\nAnd Burton Dixie was a really important name about 20 years before that.\n\n448\n00:21:39.200 --> 00:21:42.360\nAnd it just slid down as new competitors came in.\n\n449\n00:21:42.360 --> 00:21:44.480\nThey didn't update their products.\n\n450\n00:21:44.480 --> 00:21:51.330\nThey wound up from being the V-brand slumber on to a commodity, sold for Motel\n\n451\n00:21:51.330 --> 00:21:52.160\n6s and\n\n452\n00:21:52.160 --> 00:21:53.160\nstuff like that.\n\n453\n00:21:53.160 --> 00:21:56.730\nI went through all the actions of figuring out, \"Is there any cost we could\n\n454\n00:21:56.730 --> 00:21:57.400\nreduce any\n\n455\n00:21:57.400 --> 00:21:59.120\nproduct we could change?\"\n\n456\n00:21:59.120 --> 00:22:03.850\nAnd it turned out that the Mathras business was dead, and they had made it over\n\n457\n00:22:03.850 --> 00:22:04.480\nthe last\n\n458\n00:22:04.480 --> 00:22:08.800\nfew years by selling automotive seats.\n\n459\n00:22:08.800 --> 00:22:13.840\nAnd they sold them by packing a frame with cycles like hay.\n\n460\n00:22:13.840 --> 00:22:17.730\nSo I went around and saw the automotive companies and asked them what their\n\n461\n00:22:17.730 --> 00:22:18.920\nplans were.\n\n462\n00:22:18.920 --> 00:22:21.800\nAnd he said, \"Oh, we're switching to foam.\"\n\n463\n00:22:21.800 --> 00:22:24.040\nAnd I said, \"Oh, I beg your pardon.\"\n\n464\n00:22:24.040 --> 00:22:25.720\nAnd he said, \"We're switching to foam.\n\n465\n00:22:25.720 --> 00:22:27.760\nAs a matter of fact, it's going so well.\n\n466\n00:22:27.760 --> 00:22:31.720\nWe've been doing it for about a year, and we have decided to really accelerate\n\n467\n00:22:31.720 --> 00:22:32.080\n.\"\n\n468\n00:22:32.080 --> 00:22:37.860\nWell, my poor old, Burton Dixie had no capability in that area, and would cost\n\n469\n00:22:37.860 --> 00:22:38.640\ntoo much to\n\n470\n00:22:38.640 --> 00:22:40.640\nget it.\n\n471\n00:22:40.640 --> 00:22:42.440\nAnd it was over.\n\n472\n00:22:42.440 --> 00:22:47.120\nAnd so I told Joe, and he said, \"Oh, dear.\"\n\n473\n00:22:47.120 --> 00:22:49.360\nBut he handled it the first time.\n\n474\n00:22:49.360 --> 00:22:52.400\nAnd I watched him and how he did it, and it was very graceful.\n\n475\n00:22:52.400 --> 00:22:57.160\nAnd at the end, nobody was crying, nobody was bleeding, and he went on.\n\n476\n00:22:57.160 --> 00:22:59.360\nAnd I think they might have gone out to dinner that night.\n\n477\n00:22:59.360 --> 00:23:03.400\nSo that was my lesson, and I've used it from then on.\n\n478\n00:23:03.400 --> 00:23:07.070\nSo there's tough guy was able to tell the client in a gentle way that it's\n\n479\n00:23:07.070 --> 00:23:07.600\nhostile\n\n480\n00:23:07.600 --> 00:23:09.600\nand it's a little bit too bad.\n\n481\n00:23:09.600 --> 00:23:10.600\nYeah, right.\n\n482\n00:23:10.600 --> 00:23:14.600\nOf course, my reaction on the auto seat says, \"How could they not have known?\"\n\n483\n00:23:14.600 --> 00:23:15.600\nRight?\n\n484\n00:23:15.600 --> 00:23:20.220\nI mean, your client is moving from your product to something else, and you're\n\n485\n00:23:20.220 --> 00:23:20.800\ngoing to have\n\n486\n00:23:20.800 --> 00:23:22.520\nnothing in a year.\n\n487\n00:23:22.520 --> 00:23:25.750\nYeah, it shows you've really got to be on top of your industry and know what's\n\n488\n00:23:25.750 --> 00:23:26.120\ngoing\n\n489\n00:23:26.120 --> 00:23:32.800\non for sure.\n\n490\n00:23:32.800 --> 00:23:36.270\nWe'll be back with the rest of my conversation with Cyrus Friedheim in just a\n\n491\n00:23:36.270 --> 00:23:36.840\nmoment.\n\n492\n00:23:36.840 --> 00:23:42.480\nBut one of my favorite turnaround stories comes from Alberto Carvalo, who\n\n493\n00:23:42.480 --> 00:23:43.320\nhelped lead\n\n494\n00:23:43.320 --> 00:23:48.370\nan incredible transformation in the Miami-Dade County public schools when he\n\n495\n00:23:48.370 --> 00:23:50.400\nserved as superintendent.\n\n496\n00:23:50.400 --> 00:23:51.600\nWe did not bemoan.\n\n497\n00:23:51.600 --> 00:23:55.510\nWe did not go into the corner and just cry over the fact that charter schools\n\n498\n00:23:55.510 --> 00:23:56.480\nwere coming,\n\n499\n00:23:56.480 --> 00:23:58.200\nbecause we knew they would come.\n\n500\n00:23:58.200 --> 00:24:01.000\nWhat we did do is that we put choice on steroids.\n\n501\n00:24:01.000 --> 00:24:05.800\nAnd if choice is what parents want, we're going to reinvent ourselves into the\n\n502\n00:24:05.800 --> 00:24:06.600\nbest providers\n\n503\n00:24:06.600 --> 00:24:07.600\nof choice period.\n\n504\n00:24:07.600 --> 00:24:11.960\nIt's a great reminder when things aren't going well in an organization, you've\n\n505\n00:24:11.960 --> 00:24:12.680\ngot to have\n\n506\n00:24:12.680 --> 00:24:15.000\nthe courage to define reality.\n\n507\n00:24:15.000 --> 00:24:18.160\nIt's the only way things can actually get better.\n\n508\n00:24:18.160 --> 00:24:23.870\nGo back and listen to my entire conversation with Alberto, episode 50, here on\n\n509\n00:24:23.870 --> 00:24:24.560\nHow Leaders\n\n510\n00:24:24.560 --> 00:24:31.520\nLead.\n\n511\n00:24:31.520 --> 00:24:34.890\nYou know, when you were talking about Lee Iacocca and his disdain for\n\n512\n00:24:34.890 --> 00:24:36.200\nconsultants, I have to\n\n513\n00:24:36.200 --> 00:24:37.880\ntell you, I was in that camp.\n\n514\n00:24:37.880 --> 00:24:41.680\nI really felt like too many people bring consultants in because they're lazy,\n\n515\n00:24:41.680 --> 00:24:42.560\nthey don't do the\n\n516\n00:24:42.560 --> 00:24:43.560\nwork themselves.\n\n517\n00:24:43.560 --> 00:24:46.520\nSo I was the last guy to hire a consultant.\n\n518\n00:24:46.520 --> 00:24:48.360\nWe did from time to time.\n\n519\n00:24:48.360 --> 00:24:52.640\nBut it took a lot to get me to pull the trigger on that.\n\n520\n00:24:52.640 --> 00:24:57.260\nWhat rigor do you think a leader should go through before bringing a consultant\n\n521\n00:24:57.260 --> 00:24:58.000\non board?\n\n522\n00:24:58.000 --> 00:25:03.120\nI remember asking that exact question of Dick Ferris.\n\n523\n00:25:03.120 --> 00:25:06.360\nDick was the CEO at United.\n\n524\n00:25:06.360 --> 00:25:11.430\nHe had been CEO for about a year and it was right after the industry had gone\n\n525\n00:25:11.430 --> 00:25:12.080\nthrough\n\n526\n00:25:12.080 --> 00:25:13.720\nderegulation.\n\n527\n00:25:13.720 --> 00:25:19.590\nA former partner of mine at Booz Allen was a buddy of his and when Dick asked\n\n528\n00:25:19.590 --> 00:25:20.200\nhim, he\n\n529\n00:25:20.200 --> 00:25:22.320\nsaid, \"Who should I call?\"\n\n530\n00:25:22.320 --> 00:25:23.880\nHe said, \"Me.\"\n\n531\n00:25:23.880 --> 00:25:27.240\nSo I went over and saw him and we had a great relationship.\n\n532\n00:25:27.240 --> 00:25:30.560\nSo later on I said, \"Number one, why did you do this?\n\n533\n00:25:30.560 --> 00:25:31.560\nWhy did you go to the outside?\"\n\n534\n00:25:31.560 --> 00:25:35.440\nHe was not a natural guy that would go to the outside.\n\n535\n00:25:35.440 --> 00:25:39.320\nHe wasn't an intellectual that wanted a second opinion or anything like that.\n\n536\n00:25:39.320 --> 00:25:45.470\nHe was a hard driving tough, very similar to Lee Iacocca in the way he operated\n\n537\n00:25:45.470 --> 00:25:45.840\nand\n\n538\n00:25:45.840 --> 00:25:46.840\nbehaved.\n\n539\n00:25:46.840 --> 00:25:50.920\nHe said, \"You know, I am now telling all my friends.\n\n540\n00:25:50.920 --> 00:25:54.160\nWe've been working together for at least nine months at that point.\"\n\n541\n00:25:54.160 --> 00:26:00.200\nHe said, \"I find one of the first things a CEO should do is find a consultant\n\n542\n00:26:00.200 --> 00:26:00.640\nto be\n\n543\n00:26:00.640 --> 00:26:08.000\nhis partner, to talk to, to bump ideas off of, to occasionally do a project.\n\n544\n00:26:08.000 --> 00:26:12.400\nBut it's just a perspective that rarely exists within the company.\n\n545\n00:26:12.400 --> 00:26:16.800\nYou can have a board member you do that with, that oftentimes works.\n\n546\n00:26:16.800 --> 00:26:20.300\nYou can have somebody else on the outside, doesn't have to be in the consulting\n\n547\n00:26:20.300 --> 00:26:21.040\nbusiness.\n\n548\n00:26:21.040 --> 00:26:25.360\nBut if you've confined a consultant, his view was, \"That's what you should do.\n\n549\n00:26:25.360 --> 00:26:30.340\nThere's got to be tremendous trust and respect mutually between the two for it\n\n550\n00:26:30.340 --> 00:26:31.600\nto work.\"\n\n551\n00:26:31.600 --> 00:26:36.350\nSo I strived throughout my career to have exactly that relationship with every\n\n552\n00:26:36.350 --> 00:26:36.720\nCEO I\n\n553\n00:26:36.720 --> 00:26:38.520\nworked with.\n\n554\n00:26:38.520 --> 00:26:41.040\nWhen we clicked, it was superb.\n\n555\n00:26:41.040 --> 00:26:42.040\nThat makes a lot of sense.\n\n556\n00:26:42.040 --> 00:26:45.470\nAgain, it's that trust factor that you're talking about and belief in each\n\n557\n00:26:45.470 --> 00:26:45.960\nother and\n\n558\n00:26:45.960 --> 00:26:48.160\nthe added value you can provide.\n\n559\n00:26:48.160 --> 00:26:50.200\nYou were at Booz Allen for a long time.\n\n560\n00:26:50.200 --> 00:26:51.480\nYou paid your dues.\n\n561\n00:26:51.480 --> 00:26:53.280\nYou had great results.\n\n562\n00:26:53.280 --> 00:26:55.960\nYou wanted to head the firm, but it didn't happen.\n\n563\n00:26:55.960 --> 00:26:57.840\nHow did you get over that disappointment?\n\n564\n00:26:57.840 --> 00:26:59.400\nThat happens to all of us.\n\n565\n00:26:59.400 --> 00:27:02.800\nSome things happen in our career where it just doesn't work out.\n\n566\n00:27:02.800 --> 00:27:03.800\nWhat advice can you give?\n\n567\n00:27:03.800 --> 00:27:07.180\nHow did you personally get over the disappointment and what advice can you give\n\n568\n00:27:07.180 --> 00:27:07.760\nothers?\n\n569\n00:27:07.760 --> 00:27:09.040\nIt's a huge thing.\n\n570\n00:27:09.040 --> 00:27:13.520\nAnd it's a thing that lasts kind of as long as you let it.\n\n571\n00:27:13.520 --> 00:27:17.790\nAnd you can divert yourself from it by bearing yourself in your work, which I\n\n572\n00:27:17.790 --> 00:27:18.280\ndid.\n\n573\n00:27:18.280 --> 00:27:21.760\nYou can divert yourself with your family, which I did.\n\n574\n00:27:21.760 --> 00:27:23.520\nIt still takes time.\n\n575\n00:27:23.520 --> 00:27:25.800\nIt's like losing a loved one.\n\n576\n00:27:25.800 --> 00:27:27.280\nIt takes time.\n\n577\n00:27:27.280 --> 00:27:33.210\nIf you can get through the instinctive reaction of I quit, then I think you can\n\n578\n00:27:33.210 --> 00:27:34.520\nmake it because\n\n579\n00:27:34.520 --> 00:27:40.160\nI have a strong belief that whatever you're doing in your career, the title on\n\n580\n00:27:40.160 --> 00:27:40.880\nthe door\n\n581\n00:27:40.880 --> 00:27:45.440\nis not nearly so important to you, to your family, to your life as being happy\n\n582\n00:27:45.440 --> 00:27:46.080\nwith what\n\n583\n00:27:46.080 --> 00:27:50.160\nyou're doing and loving the work you're doing and being turned on by it.\n\n584\n00:27:50.160 --> 00:27:53.920\nSo I concluded that if I never become a CEO, that's the way it is.\n\n585\n00:27:53.920 --> 00:27:54.920\nI love what I'm doing.\n\n586\n00:27:54.920 --> 00:27:55.920\nI love it every day.\n\n587\n00:27:55.920 --> 00:27:57.280\nI love it every week.\n\n588\n00:27:57.280 --> 00:28:02.200\nI put in monstrously ridiculous hours, but that's because I loved what I was\n\n589\n00:28:02.200 --> 00:28:02.920\ndoing.\n\n590\n00:28:02.920 --> 00:28:04.560\nAnd so I just stayed on.\n\n591\n00:28:04.560 --> 00:28:08.040\nAnd as I look back over it, I say, you know, and I look back over my whole life\n\n592\n00:28:08.040 --> 00:28:08.600\n, even from\n\n593\n00:28:08.600 --> 00:28:12.000\nthis point from here, I say, you know, it went great.\n\n594\n00:28:12.000 --> 00:28:14.080\nI couldn't have asked for anything more.\n\n595\n00:28:14.080 --> 00:28:15.480\nNot everybody should stay.\n\n596\n00:28:15.480 --> 00:28:16.760\nAnd I respect that.\n\n597\n00:28:16.760 --> 00:28:20.010\nBut I didn't do it and I didn't leave and I'm glad I didn't have the guy had a\n\n598\n00:28:20.010 --> 00:28:20.440\ngreat\n\n599\n00:28:20.440 --> 00:28:21.720\ncareer following.\n\n600\n00:28:21.720 --> 00:28:25.970\nSo you let your passion and the love for what you were doing really drive your\n\n601\n00:28:25.970 --> 00:28:26.680\ndecision.\n\n602\n00:28:26.680 --> 00:28:29.240\nAnd it's not always greener on the other side.\n\n603\n00:28:29.240 --> 00:28:30.240\nThat's exactly right.\n\n604\n00:28:30.240 --> 00:28:34.030\nI don't know what would have happened if I had moved more quickly, but I know\n\n605\n00:28:34.030 --> 00:28:34.880\nwhat happened\n\n606\n00:28:34.880 --> 00:28:35.880\nwhen it didn't move.\n\n607\n00:28:35.880 --> 00:28:38.600\nAnd it turned out I got the CEO spots anyway.\n\n608\n00:28:38.600 --> 00:28:39.600\nYeah, that's right.\n\n609\n00:28:39.600 --> 00:28:43.600\nWell, that's a great transition because you ultimately move from consulting and\n\n610\n00:28:43.600 --> 00:28:44.040\nI can't\n\n611\n00:28:44.040 --> 00:28:46.600\nresist this, you know, how many times you ever heard this?\n\n612\n00:28:46.600 --> 00:28:49.920\nYou become the top banana, the CEO at Chiquita.\n\n613\n00:28:49.920 --> 00:28:51.600\nHow did that happen?\n\n614\n00:28:51.600 --> 00:28:54.720\nAnd what did you do to really move that business forward?\n\n615\n00:28:54.720 --> 00:29:00.920\nHow it happened was my son, Steven, was in the, he was a hedge fund guy and he\n\n616\n00:29:00.920 --> 00:29:01.920\nwas with\n\n617\n00:29:01.920 --> 00:29:05.920\nAk Zif, which is one of the major, was at that time one of the major hedge\n\n618\n00:29:05.920 --> 00:29:06.520\nfunds.\n\n619\n00:29:06.520 --> 00:29:10.640\nAnd he was hired to set them up in fixed income.\n\n620\n00:29:10.640 --> 00:29:15.840\nThey had made a major investment in Chiquita and the thing went down.\n\n621\n00:29:15.840 --> 00:29:17.880\nAnd so they were looking for board members.\n\n622\n00:29:17.880 --> 00:29:22.510\nWell, there were four investors that had taken them through and out of\n\n623\n00:29:22.510 --> 00:29:23.680\nbankruptcy and my\n\n624\n00:29:23.680 --> 00:29:25.280\nson was one of them.\n\n625\n00:29:25.280 --> 00:29:28.600\nAnd so they each got a pick of one board member.\n\n626\n00:29:28.600 --> 00:29:32.920\nI was just about to retire from Booz Allen and he asked me if I wanted to be on\n\n627\n00:29:32.920 --> 00:29:33.920\nthe board\n\n628\n00:29:33.920 --> 00:29:37.810\nand I said, sure, I didn't know anything about their business or why they were\n\n629\n00:29:37.810 --> 00:29:38.560\nbankrupt,\n\n630\n00:29:38.560 --> 00:29:43.020\nbut going into an interesting situation with something and I had enough\n\n631\n00:29:43.020 --> 00:29:44.240\nturnaround experience\n\n632\n00:29:44.240 --> 00:29:47.480\nto know what the pitfalls were of it.\n\n633\n00:29:47.480 --> 00:29:52.630\nBut he was the one who put me up and I became one of five directors, outside\n\n634\n00:29:52.630 --> 00:29:53.800\ndirectors.\n\n635\n00:29:53.800 --> 00:29:59.530\nWe started working about a month or so before the company went back into the\n\n636\n00:29:59.530 --> 00:30:00.440\nmarket and\n\n637\n00:30:00.440 --> 00:30:02.200\nout of bankruptcy.\n\n638\n00:30:02.200 --> 00:30:07.370\nAnd during that time, I did a lot of intensive homework trying to figure out,\n\n639\n00:30:07.370 --> 00:30:08.400\nwell, why did\n\n640\n00:30:08.400 --> 00:30:09.720\nit go bankrupt?\n\n641\n00:30:09.720 --> 00:30:10.720\nWhat does it need to do?\n\n642\n00:30:10.720 --> 00:30:13.720\nHow do we get it back on its feet?\n\n643\n00:30:13.720 --> 00:30:18.500\nAnd during that time, we decided that one of the outside directors should be\n\n644\n00:30:18.500 --> 00:30:19.720\nthe chairman.\n\n645\n00:30:19.720 --> 00:30:24.430\nAnd so I was the only one that was about not to have a job because I was\n\n646\n00:30:24.430 --> 00:30:25.560\nretiring from\n\n647\n00:30:25.560 --> 00:30:27.040\nBooz Allen.\n\n648\n00:30:27.040 --> 00:30:28.320\nAnd so they said, you want to do it?\n\n649\n00:30:28.320 --> 00:30:29.320\nI said, sure.\n\n650\n00:30:29.320 --> 00:30:35.720\nI'd never been the chairman of a board of a major company before, but why not?\n\n651\n00:30:35.720 --> 00:30:40.970\nWe then met with the CEO a couple of times and Orange Lights started to go off\n\n652\n00:30:40.970 --> 00:30:41.240\nand my\n\n653\n00:30:41.240 --> 00:30:43.280\nhead as well as in the other directors.\n\n654\n00:30:43.280 --> 00:30:48.560\nAnd we concluded we can't just move ahead with the current CEO.\n\n655\n00:30:48.560 --> 00:30:53.760\nSo again, we took a look around the table and they pointed to me and said, well\n\n656\n00:30:53.760 --> 00:30:54.240\n, how\n\n657\n00:30:54.240 --> 00:30:55.400\nwould you like to do that?\n\n658\n00:30:55.400 --> 00:30:58.870\nAnd I said, well, that's a little different deal, but I had done enough study\n\n659\n00:30:58.870 --> 00:30:59.320\nat that\n\n660\n00:30:59.320 --> 00:31:03.960\npoint to believe that it was possible to turn it around.\n\n661\n00:31:03.960 --> 00:31:08.010\nAnd so I said, okay, for two years, that was the idea because I was already 66\n\n662\n00:31:08.010 --> 00:31:08.400\nat the\n\n663\n00:31:08.400 --> 00:31:09.400\ntime.\n\n664\n00:31:09.400 --> 00:31:12.840\nAnd you had great success and what did you do to turn it around?\n\n665\n00:31:12.840 --> 00:31:14.640\nWhat I did is what a consultant would do.\n\n666\n00:31:14.640 --> 00:31:19.410\nI dove in to find out everything I could possibly know and why it went bankrupt\n\n667\n00:31:19.410 --> 00:31:19.720\nand\n\n668\n00:31:19.720 --> 00:31:21.160\nwhat is necessary.\n\n669\n00:31:21.160 --> 00:31:25.710\nAnd we came up with a plan that the board agreed to very quickly, I think,\n\n670\n00:31:25.710 --> 00:31:26.320\nwithin a\n\n671\n00:31:26.320 --> 00:31:29.920\nfew months of joining and off we went.\n\n672\n00:31:29.920 --> 00:31:35.250\nAnd that was really the genesis of the term commit and deliver because at our\n\n673\n00:31:35.250 --> 00:31:36.120\nfirst annual\n\n674\n00:31:36.120 --> 00:31:41.370\nmeeting, which was one year later, we had committed to all these several items\n\n675\n00:31:41.370 --> 00:31:41.680\non the\n\n676\n00:31:41.680 --> 00:31:46.840\nturnaround plan and had achieved virtually all of them.\n\n677\n00:31:46.840 --> 00:31:50.900\nAnd so we titled the report commit and deliver, which says we committed we were\n\n678\n00:31:50.900 --> 00:31:51.480\ngoing to do\n\n679\n00:31:51.480 --> 00:31:55.560\nthis a year ago and we're here to tell you we did it.\n\n680\n00:31:55.560 --> 00:32:00.960\nThere was no one action we took that I think turned it all around.\n\n681\n00:32:00.960 --> 00:32:05.080\nIt was a series of actions in what turned out to be a well crafted and\n\n682\n00:32:05.080 --> 00:32:06.560\nsuccessful plan.\n\n683\n00:32:06.560 --> 00:32:10.160\nYou know, when you became CEO, you're now in charge of the whole ball of wax.\n\n684\n00:32:10.160 --> 00:32:14.000\nHow do you like that control and the ability to execute your ideas?\n\n685\n00:32:14.000 --> 00:32:16.260\nBecause you know, I've talked to a lot of consultants and one of their big\n\n686\n00:32:16.260 --> 00:32:16.840\nfrustrations\n\n687\n00:32:16.840 --> 00:32:20.560\nis that they come up with the ideas, but then the client doesn't execute.\n\n688\n00:32:20.560 --> 00:32:24.870\nWell, as one of my colleagues that I have brought over from Booz Allen to join\n\n689\n00:32:24.870 --> 00:32:25.080\nus as\n\n690\n00:32:25.080 --> 00:32:30.260\nan executive said, the difference between consulting and managing the\n\n691\n00:32:30.260 --> 00:32:31.360\nenterprise is\n\n692\n00:32:31.360 --> 00:32:35.310\nyou're playing with live ammunition because the consultant, he can always toss\n\n693\n00:32:35.310 --> 00:32:35.880\nover the\n\n694\n00:32:35.880 --> 00:32:40.520\nrecommendation and you know, it's up to the CEO to execute.\n\n695\n00:32:40.520 --> 00:32:45.590\nWell, if you're the CEO, as you well know, better than almost anybody, it's up\n\n696\n00:32:45.590 --> 00:32:46.040\nto you\n\n697\n00:32:46.040 --> 00:32:47.040\nto do it.\n\n698\n00:32:47.040 --> 00:32:51.800\nAnd so it was a lot smoother and easier than I thought it would be.\n\n699\n00:32:51.800 --> 00:32:56.840\nAnd then you go full circle, you were a paper boy when you were a kid and you\n\n700\n00:32:56.840 --> 00:32:57.640\ngo from being\n\n701\n00:32:57.640 --> 00:33:03.150\na paper boy for the Chicago Sun times to actually becoming the CEO of the\n\n702\n00:33:03.150 --> 00:33:04.160\nChicago Sun\n\n703\n00:33:04.160 --> 00:33:05.160\ntimes.\n\n704\n00:33:05.160 --> 00:33:08.480\nYou know, the newspaper business is absolutely rugged.\n\n705\n00:33:08.480 --> 00:33:10.240\nHow do you keep it in print today?\n\n706\n00:33:10.240 --> 00:33:12.560\nI mean, how do you make that brand survive?\n\n707\n00:33:12.560 --> 00:33:17.240\nI was on the board for a year before becoming the CEO.\n\n708\n00:33:17.240 --> 00:33:23.290\nThe guy that took over as CEO when Conrad Black was kicked out, didn't want to\n\n709\n00:33:23.290 --> 00:33:23.720\nmove\n\n710\n00:33:23.720 --> 00:33:24.720\nto Chicago.\n\n711\n00:33:24.720 --> 00:33:28.000\nHe was an investment banker and he really wasn't running the company.\n\n712\n00:33:28.000 --> 00:33:33.080\nAnd so we all agreed that we needed to have somebody full time on site.\n\n713\n00:33:33.080 --> 00:33:38.680\nAnd so we started doing a search and during the course of that search, we had a\n\n714\n00:33:38.680 --> 00:33:39.440\nmeeting\n\n715\n00:33:39.440 --> 00:33:44.970\nwhere we asked the management team to come and report exactly what should be\n\n716\n00:33:44.970 --> 00:33:45.320\ndone.\n\n717\n00:33:45.320 --> 00:33:51.040\nAnd it was quite clear that the company was already in a downward trajectory.\n\n718\n00:33:51.040 --> 00:33:54.680\nAnd if it didn't do something fast, it'd be out of business.\n\n719\n00:33:54.680 --> 00:33:58.720\nAnd so I did kind of the same thing I did with Chrysler, which is spent the\n\n720\n00:33:58.720 --> 00:33:59.480\novernight\n\n721\n00:33:59.480 --> 00:34:03.690\nduring that conference we had with the management team coming up with my view\n\n722\n00:34:03.690 --> 00:34:04.360\nof what it would\n\n723\n00:34:04.360 --> 00:34:07.160\ntake and presented it the following day.\n\n724\n00:34:07.160 --> 00:34:12.160\nAnd we all agreed that we needed to make the change of CEO sooner than later.\n\n725\n00:34:12.160 --> 00:34:14.160\nAnd so the next meeting they put me in.\n\n726\n00:34:14.160 --> 00:34:19.440\nI have to say I went in with eyes wide open and I knew as one of my associates,\n\n727\n00:34:19.440 --> 00:34:20.160\nnot with\n\n728\n00:34:20.160 --> 00:34:24.180\nthe sun times, but another friend said, you know, you're trying to catch a\n\n729\n00:34:24.180 --> 00:34:25.040\nfalling knife\n\n730\n00:34:25.040 --> 00:34:30.000\nbecause the newspaper publishing business is just head and straight south,\n\n731\n00:34:30.000 --> 00:34:30.440\nwhich was\n\n732\n00:34:30.440 --> 00:34:31.440\ntrue.\n\n733\n00:34:31.440 --> 00:34:35.480\nBut what we did was recognizing that situation.\n\n734\n00:34:35.480 --> 00:34:40.000\nWe came up with a series of actions that we had to take to be able to balance\n\n735\n00:34:40.000 --> 00:34:41.440\nthe ship.\n\n736\n00:34:41.440 --> 00:34:46.400\nBut we realized after a while, we would cut our costs in a month later, the\n\n737\n00:34:46.400 --> 00:34:47.440\nlost revenues\n\n738\n00:34:47.440 --> 00:34:49.160\nate up the benefit.\n\n739\n00:34:49.160 --> 00:34:55.760\nWe would outsource every imaginable thing to wherever we could that worked.\n\n740\n00:34:55.760 --> 00:35:00.440\nAnd I think we were a leader in that, but it still didn't stop the fall.\n\n741\n00:35:00.440 --> 00:35:05.860\nAnd so it kind of at the end, I said, you know, guys, we can't continue really\n\n742\n00:35:05.860 --> 00:35:06.440\nas a public,\n\n743\n00:35:06.440 --> 00:35:08.200\nindependent public company.\n\n744\n00:35:08.200 --> 00:35:13.240\nSo we've got to figure out how to sell it to some investors who aren't looking\n\n745\n00:35:13.240 --> 00:35:13.960\nfor earnings\n\n746\n00:35:13.960 --> 00:35:18.800\nper share who believe in the newspaper industry as I did.\n\n747\n00:35:18.800 --> 00:35:21.200\nIt was one of the major reasons I took it over.\n\n748\n00:35:21.200 --> 00:35:22.200\nI love Chicago.\n\n749\n00:35:22.200 --> 00:35:26.980\nI've been in and out of Chicago my entire life had made a huge commitments in\n\n750\n00:35:26.980 --> 00:35:27.480\nthe way\n\n751\n00:35:27.480 --> 00:35:31.880\nof my personal time and philanthropy to Chicago.\n\n752\n00:35:31.880 --> 00:35:36.120\nAnd I believed strongly that two newspapers were better than one.\n\n753\n00:35:36.120 --> 00:35:38.240\nAnd so that's why I did it.\n\n754\n00:35:38.240 --> 00:35:42.230\nAnd I was looking for somebody and finally found that somebody who had the same\n\n755\n00:35:42.230 --> 00:35:42.560\nkind\n\n756\n00:35:42.560 --> 00:35:45.400\nof attitude and a big pocketbook.\n\n757\n00:35:45.400 --> 00:35:47.880\nSo we sold it to that guy.\n\n758\n00:35:47.880 --> 00:35:49.760\nUnfortunately, he died a year later.\n\n759\n00:35:49.760 --> 00:35:55.590\nThe company's been sold a couple of times was sold again to a not-for-profit in\n\n760\n00:35:55.590 --> 00:35:56.200\nthe media\n\n761\n00:35:56.200 --> 00:35:57.200\nbusiness.\n\n762\n00:35:57.200 --> 00:36:01.600\nSo it'll now be part of that not-for-profit media organization.\n\n763\n00:36:01.600 --> 00:36:03.360\nAnd I think we'll continue.\n\n764\n00:36:03.360 --> 00:36:09.110\nSo I'm delighted. I think that while I certainly did not intend to take it into\n\n765\n00:36:09.110 --> 00:36:10.240\nbankruptcy when\n\n766\n00:36:10.240 --> 00:36:14.600\nI first arrived, but I concluded that was the only way to survive.\n\n767\n00:36:14.600 --> 00:36:17.860\nThe newspaper business, the way you kept the Sun-Times alive then is you\n\n768\n00:36:17.860 --> 00:36:18.640\nbasically took\n\n769\n00:36:18.640 --> 00:36:22.770\na private and got somebody who really believed in it like you and kept it in\n\n770\n00:36:22.770 --> 00:36:23.440\nprint.\n\n771\n00:36:23.440 --> 00:36:24.880\nIs that a fair summary of that?\n\n772\n00:36:24.880 --> 00:36:26.440\nThat's basically what happened.\n\n773\n00:36:26.440 --> 00:36:29.870\nWhen you look at the newspaper business, what should leaders have done or was\n\n774\n00:36:29.870 --> 00:36:30.680\nthere anything\n\n775\n00:36:30.680 --> 00:36:35.680\nthat they could do that would have kept the demise from happening?\n\n776\n00:36:35.680 --> 00:36:41.120\nWas the category itself salvageable or was just the decline totally inevitable?\n\n777\n00:36:41.120 --> 00:36:46.770\nWell, there will be newspapers probably 10 years from now, but there'll be\n\n778\n00:36:46.770 --> 00:36:47.040\nfewer, more\n\n779\n00:36:47.040 --> 00:36:52.440\nlimited in what they do and completely different than what they are today.\n\n780\n00:36:52.440 --> 00:36:56.820\nAnd those few might be ones like the Wall Street Journal where there's a\n\n781\n00:36:56.820 --> 00:36:58.160\ndedicated audience.\n\n782\n00:36:58.160 --> 00:37:05.120\nEarly in my time, we did a study of readership, not of us, but just in general.\n\n783\n00:37:05.120 --> 00:37:10.600\nAnd we found that the cohort of 60 and above, 75% of them read newspapers on a\n\n784\n00:37:10.600 --> 00:37:12.480\nregular basis.\n\n785\n00:37:12.480 --> 00:37:17.760\nThat number went down dramatically as you took each decade below that.\n\n786\n00:37:17.760 --> 00:37:22.960\nSo the decade of the people in their 50s was less than 50%.\n\n787\n00:37:22.960 --> 00:37:26.880\nAnd for kids coming out of college was less than 10%.\n\n788\n00:37:26.880 --> 00:37:29.520\nNow that was 10 years ago.\n\n789\n00:37:29.520 --> 00:37:35.100\nAnd my guess is that the kids coming out of college now rarely subscribe to a\n\n790\n00:37:35.100 --> 00:37:35.960\nnewspaper\n\n791\n00:37:35.960 --> 00:37:38.640\nof any kind, including the Wall Street Journal.\n\n792\n00:37:38.640 --> 00:37:43.360\nI know my own kids who are now in their 50s read everything online.\n\n793\n00:37:43.360 --> 00:37:47.440\nAnd their kids are not going to be doing anything different.\n\n794\n00:37:47.440 --> 00:37:54.290\nWhat happened with the internet, which was very different from TV, radio, other\n\n795\n00:37:54.290 --> 00:37:54.920\nforms\n\n796\n00:37:54.920 --> 00:38:02.160\nof technology that made incursions on the newspapers job as the primary source\n\n797\n00:38:02.160 --> 00:38:03.960\nof information.\n\n798\n00:38:03.960 --> 00:38:09.300\nThe television, you only get one thing at a time and it's not necessarily what\n\n799\n00:38:09.300 --> 00:38:09.800\nyou want\n\n800\n00:38:09.800 --> 00:38:13.360\nto hear or what you want to see or what you want to know.\n\n801\n00:38:13.360 --> 00:38:15.600\nBut the internet has everything.\n\n802\n00:38:15.600 --> 00:38:21.450\nAnd so there's basically nothing that is important to you that you don't know\n\n803\n00:38:21.450 --> 00:38:22.080\nbefore\n\n804\n00:38:22.080 --> 00:38:24.720\nyou see the morning paper.\n\n805\n00:38:24.720 --> 00:38:27.160\nSo it isn't hot off the press.\n\n806\n00:38:27.160 --> 00:38:28.480\nPeople find things out.\n\n807\n00:38:28.480 --> 00:38:35.160\nSo their core reason for them as the purveyor of news is gone.\n\n808\n00:38:35.160 --> 00:38:39.080\nThe primary purveyor of news now is the internet.\n\n809\n00:38:39.080 --> 00:38:40.520\nAnd so it survived.\n\n810\n00:38:40.520 --> 00:38:45.110\nThe newspapers have to do something else to make themselves relevant and\n\n811\n00:38:45.110 --> 00:38:46.280\nimportant enough\n\n812\n00:38:46.280 --> 00:38:49.960\nfor people to subscribe and advertise in it.\n\n813\n00:38:49.960 --> 00:38:53.150\nAnd get even more focused on a core audience that makes them unique and\n\n814\n00:38:53.150 --> 00:38:53.920\ndifferent.\n\n815\n00:38:53.920 --> 00:38:54.920\nExactly.\n\n816\n00:38:54.920 --> 00:38:58.550\nAnd of course one of the things that happens with that is that the way that\n\n817\n00:38:58.550 --> 00:38:59.520\nmost newspapers\n\n818\n00:38:59.520 --> 00:39:03.840\nhave focused on audiences is on political philosophy.\n\n819\n00:39:03.840 --> 00:39:07.800\nAnd so you have papers that cater to the right and to the left.\n\n820\n00:39:07.800 --> 00:39:09.680\nAs a result, it's hardly news anymore.\n\n821\n00:39:09.680 --> 00:39:14.960\nIt's just opinion and stories that support a political point of view, which is\n\n822\n00:39:14.960 --> 00:39:15.520\na shame\n\n823\n00:39:15.520 --> 00:39:20.910\nbecause newspapers I think from the time our country has created have been a\n\n824\n00:39:20.910 --> 00:39:21.960\ncrucial part\n\n825\n00:39:21.960 --> 00:39:24.800\nof our freedom and informing the public.\n\n826\n00:39:24.800 --> 00:39:27.670\nYeah, the newspapers are going to be around, but there's no question the\n\n827\n00:39:27.670 --> 00:39:28.280\ninternet just\n\n828\n00:39:28.280 --> 00:39:30.920\nbasically obsely did the category.\n\n829\n00:39:30.920 --> 00:39:33.600\nYou know, Cyrus, I don't think you've ever really retired.\n\n830\n00:39:33.600 --> 00:39:35.000\nI like to say I didn't retire.\n\n831\n00:39:35.000 --> 00:39:36.000\nI refired.\n\n832\n00:39:36.000 --> 00:39:40.480\nBut what advice can you give people when they move into so-called retirement?\n\n833\n00:39:40.480 --> 00:39:45.960\nI look at retirement from your full time, your last full time job or your\n\n834\n00:39:45.960 --> 00:39:46.680\ncareer as one\n\n835\n00:39:46.680 --> 00:39:50.160\nof the more important transitions that individuals make.\n\n836\n00:39:50.160 --> 00:39:53.680\nAnd particularly those who have had some level of success.\n\n837\n00:39:53.680 --> 00:40:00.100\nI look at it as a gift from God for however long we got to do whatever it is on\n\n838\n00:40:00.100 --> 00:40:00.880\nthe earth\n\n839\n00:40:00.880 --> 00:40:02.440\nthat we are here for.\n\n840\n00:40:02.440 --> 00:40:06.600\nBut it's a gift that we should embrace and use effectively.\n\n841\n00:40:06.600 --> 00:40:08.920\nYou've done it superbly.\n\n842\n00:40:08.920 --> 00:40:13.000\nBut I think having a mission is extremely important.\n\n843\n00:40:13.000 --> 00:40:16.520\nThere was a nun who put it best to me.\n\n844\n00:40:16.520 --> 00:40:22.760\nMr. Jean, who was the mascot of Loyola University's basketball team back about\n\n845\n00:40:22.760 --> 00:40:25.040\nfive years ago.\n\n846\n00:40:25.040 --> 00:40:27.240\nAnd she was 95 at the time.\n\n847\n00:40:27.240 --> 00:40:29.440\nShe's 100 and something now.\n\n848\n00:40:29.440 --> 00:40:34.160\nAnd she attended all the games and just was a personality.\n\n849\n00:40:34.160 --> 00:40:39.560\nThe news covered her as much as they did Loyola's team, which in their first\n\n850\n00:40:39.560 --> 00:40:40.880\nNCAA appearance\n\n851\n00:40:40.880 --> 00:40:46.120\nin basketball for at least a half a century, they got to the final four.\n\n852\n00:40:46.120 --> 00:40:48.520\nAnd a lot of people credited her for it.\n\n853\n00:40:48.520 --> 00:40:50.960\nI met her about a year later.\n\n854\n00:40:50.960 --> 00:40:54.800\nAnd first thing she said is, \"You want to take a selfie with me?\"\n\n855\n00:40:54.800 --> 00:40:56.280\nAnd I asked her one question.\n\n856\n00:40:56.280 --> 00:41:00.680\nI said, \"You know, I'm just so impressed with the energy you have for life.\"\n\n857\n00:41:00.680 --> 00:41:05.380\nAnd she said, \"You kind of looked at me and Sonny, better to wear out than rust\n\n858\n00:41:05.380 --> 00:41:05.960\nout.\"\n\n859\n00:41:05.960 --> 00:41:08.360\nAnd I believe that of all of us.\n\n860\n00:41:08.360 --> 00:41:12.000\nWe owe it to society to continue going.\n\n861\n00:41:12.000 --> 00:41:16.340\nBecause if somebody who's got the talent and the energy and the good health and\n\n862\n00:41:16.340 --> 00:41:16.840\nsits on\n\n863\n00:41:16.840 --> 00:41:20.800\nthe sidelines, I think that's just a waste of an extraordinary asset.\n\n864\n00:41:20.800 --> 00:41:23.360\nSorry, it's just been so much fun catching up with you.\n\n865\n00:41:23.360 --> 00:41:26.570\nI want to have a little bit more fun here before we cut this off by having a\n\n866\n00:41:26.570 --> 00:41:27.160\nlightning\n\n867\n00:41:27.160 --> 00:41:28.480\nround of Q&A with you.\n\n868\n00:41:28.480 --> 00:41:29.720\nAre you ready for this?\n\n869\n00:41:29.720 --> 00:41:30.720\nOkay.\n\n870\n00:41:30.720 --> 00:41:31.720\nOkay.\n\n871\n00:41:31.720 --> 00:41:33.920\nWhat word best describes you?\n\n872\n00:41:33.920 --> 00:41:34.920\nOnly one.\n\n873\n00:41:34.920 --> 00:41:36.080\nOnly one.\n\n874\n00:41:36.080 --> 00:41:37.680\nI think inquisitive.\n\n875\n00:41:37.680 --> 00:41:41.440\nIf you could be one person for a day, who would it be and why?\n\n876\n00:41:41.440 --> 00:41:43.440\nThe answer is nobody.\n\n877\n00:41:43.440 --> 00:41:44.440\nAnd why?\n\n878\n00:41:44.440 --> 00:41:46.480\nBecause there's a give up that I couldn't do.\n\n879\n00:41:46.480 --> 00:41:49.400\nYou know who that give up is my family.\n\n880\n00:41:49.400 --> 00:41:53.020\nBecause every other person that I've thought of, because I know you've asked\n\n881\n00:41:53.020 --> 00:41:53.800\nthat question\n\n882\n00:41:53.800 --> 00:41:55.960\nbefore, I said, \"Well, that'd be great.\n\n883\n00:41:55.960 --> 00:41:57.520\nThat'd be terrific.\n\n884\n00:41:57.520 --> 00:42:00.360\nBut I'd have to give up my family and I can't do that.\n\n885\n00:42:00.360 --> 00:42:01.480\nSo it's got to be me.\n\n886\n00:42:01.480 --> 00:42:02.480\nI'm stuck with it.\"\n\n887\n00:42:02.480 --> 00:42:04.040\nI love that answer.\n\n888\n00:42:04.040 --> 00:42:05.720\nWhat's your biggest pet peeve?\n\n889\n00:42:05.720 --> 00:42:06.920\nHypocrisy.\n\n890\n00:42:06.920 --> 00:42:10.000\nWhat's something about you that few people would know?\n\n891\n00:42:10.000 --> 00:42:15.320\nMy mother wanted me to become a professional pianist like Eddie Duchin.\n\n892\n00:42:15.320 --> 00:42:18.880\nNow, I'm not sure if your audience has ever heard of Eddie Duchin, but he was\n\n893\n00:42:18.880 --> 00:42:19.360\nquite the\n\n894\n00:42:19.360 --> 00:42:21.640\nrage in the '40s.\n\n895\n00:42:21.640 --> 00:42:25.480\nWhat's your favorite newspaper today and do you read it digitally?\n\n896\n00:42:25.480 --> 00:42:30.300\nThe answer is the Wall Street Journal and I read it both digitally and I do get\n\n897\n00:42:30.300 --> 00:42:31.560\na subscription.\n\n898\n00:42:31.560 --> 00:42:34.200\nDo you have any hidden talent, Cyrus?\n\n899\n00:42:34.200 --> 00:42:39.400\nI've asked that of my wife and she said she doesn't think so.\n\n900\n00:42:39.400 --> 00:42:46.320\nI used to be a good golfer, but I'm no competitor for you anymore.\n\n901\n00:42:46.320 --> 00:42:48.800\nAs we close, I have one more question for you.\n\n902\n00:42:48.800 --> 00:42:52.800\nWhat's the single most important bit of advice you'd given aspiring leader?\n\n903\n00:42:52.800 --> 00:42:59.080\nI guess if I have just a one-liner, it's you are your most important project.\n\n904\n00:42:59.080 --> 00:43:00.080\nI heard that.\n\n905\n00:43:00.080 --> 00:43:04.350\nI'll confess that I heard it from someplace else who got it from somebody else,\n\n906\n00:43:04.350 --> 00:43:04.560\nbut I\n\n907\n00:43:04.560 --> 00:43:05.760\nbelieve it.\n\n908\n00:43:05.760 --> 00:43:10.280\nThe someplace else was General Mattis, the Secretary of State, because he was\n\n909\n00:43:10.280 --> 00:43:10.880\nasked that\n\n910\n00:43:10.880 --> 00:43:13.360\nquestion and I believe it's absolutely correct.\n\n911\n00:43:13.360 --> 00:43:15.080\nYou are your most important project.\n\n912\n00:43:15.080 --> 00:43:20.140\nYou're going to determine whether you succeed or fail, whether you're happy or\n\n913\n00:43:20.140 --> 00:43:20.440\nsad.\n\n914\n00:43:20.440 --> 00:43:21.920\nIt's not the circumstances.\n\n915\n00:43:21.920 --> 00:43:27.240\nWe're all knocked around by circumstances and everybody has their problems, but\n\n916\n00:43:27.240 --> 00:43:27.520\nwhat\n\n917\n00:43:27.520 --> 00:43:32.050\nyou got to do, whatever your problems are, somebody else has had it worse and\n\n918\n00:43:32.050 --> 00:43:32.640\njust suck\n\n919\n00:43:32.640 --> 00:43:38.240\nit up and take control of yourself and that is the best I can give.\n\n920\n00:43:38.240 --> 00:43:42.360\nWell, Cyrus, I really enjoyed your book, \"Cabit and Deliver\" on the front lines\n\n921\n00:43:42.360 --> 00:43:43.080\nof management\n\n922\n00:43:43.080 --> 00:43:47.440\nconsulting and I appreciate you taking the time to be on this show with me.\n\n923\n00:43:47.440 --> 00:43:49.000\nWell, it's been an honor.\n\n924\n00:43:49.000 --> 00:43:50.000\nThank you.\n\n925\n00:43:50.000 --> 00:43:53.000\nI've listened to your podcasts and they're all terrific.\n\n926\n00:43:53.000 --> 00:43:55.000\nThank you very much.\n\n927\n00:43:55.000 --> 00:44:06.320\nWell, it's a real treat to catch up with such a legendary titan of business.\n\n928\n00:44:06.320 --> 00:44:11.330\nCyrus' stories are always so fun, but you know, if you're listening, you're\n\n929\n00:44:11.330 --> 00:44:11.600\ngoing to\n\n930\n00:44:11.600 --> 00:44:14.440\nget a whole lot of wisdom too.\n\n931\n00:44:14.440 --> 00:44:19.210\nOne thing that's clear to me is that Cyrus understands the power of an outside\n\n932\n00:44:19.210 --> 00:44:20.360\nperspective.\n\n933\n00:44:20.360 --> 00:44:22.000\nI mean, let's face it.\n\n934\n00:44:22.000 --> 00:44:27.280\nWe all have blind spots and we can't fix them without help from the outside.\n\n935\n00:44:27.280 --> 00:44:31.080\nThe companies that falter and fail are usually the ones who never recognize\n\n936\n00:44:31.080 --> 00:44:32.440\ntheir blind spots\n\n937\n00:44:32.440 --> 00:44:35.720\nor who don't ask for help addressing them.\n\n938\n00:44:35.720 --> 00:44:40.280\nSo this week, I want you to ask yourself where you could benefit from an\n\n939\n00:44:40.280 --> 00:44:42.040\noutside perspective.\n\n940\n00:44:42.040 --> 00:44:46.860\nIt could be for your company, for a particular product, or hey, even for your\n\n941\n00:44:46.860 --> 00:44:47.840\nown leadership\n\n942\n00:44:47.840 --> 00:44:48.840\nstyle.\n\n943\n00:44:48.840 --> 00:44:53.640\nThen I want you to consider what an outside voice could offer you and the fresh\n\n944\n00:44:53.640 --> 00:44:54.440\nperspective\n\n945\n00:44:54.440 --> 00:44:56.160\nyou could get from it.\n\n946\n00:44:56.160 --> 00:44:59.520\nDo you need a mentor, a consultant?\n\n947\n00:44:59.520 --> 00:45:02.080\nFind that partner you trust and respect.\n\n948\n00:45:02.080 --> 00:45:05.830\nAnd I just know you're going to unlock so much more potential for your\n\n949\n00:45:05.830 --> 00:45:06.920\norganization and\n\n950\n00:45:06.920 --> 00:45:09.960\nfor you as a leader as well.\n\n951\n00:45:09.960 --> 00:45:12.160\nSo do you want to know how leaders lead?\n\n952\n00:45:12.160 --> 00:45:16.920\nWhat we learned today is that great leaders get an outside perspective.\n\n953\n00:45:16.920 --> 00:45:21.790\nComing up next on How Leaders Lead is Kelly Coffey, the CEO of City National\n\n954\n00:45:21.790 --> 00:45:22.480\nBank.\n\n955\n00:45:22.480 --> 00:45:27.890\nEvery time I built a strong team and then was able to move to whatever my next\n\n956\n00:45:27.890 --> 00:45:28.800\nchallenge\n\n957\n00:45:28.800 --> 00:45:33.950\nwas, but not take away from that business I just built, meaning not grab some\n\n958\n00:45:33.950 --> 00:45:34.560\nof those\n\n959\n00:45:34.560 --> 00:45:35.840\nleaders and move them over.\n\n960\n00:45:35.840 --> 00:45:39.760\nBecause why I don't like to take away from something I put so much blood and\n\n961\n00:45:39.760 --> 00:45:40.360\nsweat and\n\n962\n00:45:40.360 --> 00:45:43.720\ntears into to build to build the next thing.\n\n963\n00:45:43.720 --> 00:45:48.480\nSo be sure to come back again next week to hear our entire conversation.\n\n964\n00:45:48.480 --> 00:45:52.320\nThanks again for tuning in to another episode of How Leaders Lead where every\n\n965\n00:45:52.320 --> 00:45:53.160\nThursday you\n\n966\n00:45:53.160 --> 00:45:57.760\nget to listen in while I interview some of the very best leaders in the world.\n\n967\n00:45:57.760 --> 00:46:01.560\nI make it a point to give you something simple on each episode that you can\n\n968\n00:46:01.560 --> 00:46:02.360\napply to your\n\n969\n00:46:02.360 --> 00:46:05.880\nbusiness so that you will become the best leader you can be.\n\n970\n00:46:05.880 --> 00:46:15.880\n[BLANK_AUDIO]\n\n971\n00:46:15.880 --> 00:46:44.880\n[ Silence ]","

David Novak 0:04

Welcome to How leaders lead where every week you get to listen in while I interview some of the very best leaders in the world, I break down the key learning so that by the end of the episode, you'll have something simple you can apply as you develop into a better leader. That's what this podcast is all about. Today's guest is Cyrus freetime, the former CEO, both Chiquita, and the Chicago Sun Times, and an absolutely legendary management consultant. Now, look, I gotta tell you, I have always been pretty slow to hire consultants, too many people bring him in, because they just aren't willing to do the hard work themselves. They want the consultant to tell people what they have to do, that's really hard to do. But I also know this, every business needs an outside perspective, that is truly the only way you can diagnose and fix your blind spots. So you got to find it one way or the other. Because those blind spots are going to cost you if you don't really understand what they are. And this conversation is so great, because Cyrus is going to show you how to use this outside perspective to grow your business. As a consultant, he's turned around countless organizations, he served on dozens of boards. And of course, he's faced his own leadership challenges as CEO of Chiquita, and the Chicago Sun Times. He really has seen it all. And there's so much we can learn from him about the power of an outside perspective. So here's my conversation with my good friend, and soon to be yours, Cyrus freetime.

You know, your book commit and deliver, which is actually by the way, you know, it's a subhead is on the frontlines of management consulting. And speaking to the front lines, I understand you work directly with one of the most iconic leaders in American history, Lee Iacocca, and you helped him turn around Chrysler, tell us about your role.

Cyrus Freidheim 2:05

I'd been in the firm for about 13 years or so. And so I had gone through the ranks and was a senior partner at that point, and had done a lot of work in automotive. And I had three years of direct experience with Ford. So among the senior partners, I probably knew as much about her had as much experience in the auto industry as any, the Secretary of the Treasury, Bill Miller called our Chairman, my boss, Jim Farley, and said we got a real problem here. Chrysler's failing, and the President wants to help them. But we don't know if they're going to survive. And would you come in, take a look at their plan, and tell us whether the plan works. And so Jim called me in and we talked about it. The issue wasn't would we do it was how can we do it? And with no lead time, and oh, by the way, he wanted to do it in two weeks. And so we agreed we're going to do it. We identified the team that I wanted. And off, we went to

David Novak 3:09

Detroit. Now, I understand before you agreed to take on the Chrysler project, you had a few non negotiables, from your perspective, and one of which was you wanted Iacocca to call you and meet with you before you would begin the job. What drove that? Tell us about that? That's interesting.

Cyrus Freidheim 3:26

After two weeks, there was a stunning conclusion. And their conclusion was they didn't have a plan. What they had were all the normal planning tools, you know, a product plan, a marketing plan, sales plan, engineering people that all these plans, but the company was sinking fast, bleeding cash, and losing sales, and nothing that pulled together and said, okay, in order to survive, what we need to do is ABCDE, and nothing like that. So we called up Miller and said, we finished in these fine, what do you find? And we said, just what I told you? And he said, Hmm, can you put the plan together? And we said, you know, you got to be kidding. And if two weeks is almost up? And he said yes. And so we did. I presented that plan to the top management. And at that point, Iacocca was the president. John Ricardo was the chairman. But poor John Ricardo was almost in the state of shock. It was clear that he no longer was going to be able to lead the company. Iacocca had been hired a year earlier, and we all knew that he was the heir apparent, and it was just a matter of time before he would be appointed. So given the situation, I gave him three conditions. I said were willing to do it. Condition one was Iacocca becomes Chairman immediately. Their board elected him that afternoon. I said number two, you got to rehire Salomon Brothers. But with Jim Wolfensohn in as the head of the team now, good friend. And the third condition was that Iacocca call me, and the reason for that is that I knew from my personal experience that he really didn't like consultants. I guess he tolerated marketing consultants or engineering consultants, but anybody who hired a management consultant liquid and do their job, and they ought to be fired. So you know, to be consistent, how can you do it? Right? But I knew if he personally didn't hire us, nobody would pay attention to us, they'll just say the government is making us take these people. So that's kind of a cost of getting the loan. Don't worry about them. You don't have to answer their phone calls. And I said, there's no way in the world we're going to get into a situation like that. So I said to Dick Dilworth, who was the lead director? So that's the third condition? Well, of course, he said, Great. All set, let's go as a no, no, it took almost three weeks. And remember, at this point in time, Chrysler was in such bad shape, the damn ship was sinking right in front of them. And so I Coco finally called me. And I went over. And so I'm, it was delightful. And we got along very well during the entire assignment. But I don't think it would have worked if we didn't do that.

David Novak 6:19

Yeah, to get him on boarded. So everybody would truly listen to what needed to be done. Absolutely. Give us an example of what you saw in Lee Iacocca that made him such a special leader, because he was ranked very high up there

Cyrus Freidheim 6:32

for leadership in a tough situation. I guess I might put him as first of those who I've worked with. And I've worked with lots and lots and lots of leaders. What is it? Well, number one, people trusted him. For example, he went to the Union, and asked them for a pay cut. I can't remember how much it was, but it was significant. He, of course, first took a cut himself, put himself on $1 a year. And then he asked the unions not to go that far. But he asked the unions to, to take a big cut. And he said, I promise you that when we turn this thing around, and we will, we'll snap you back. And then he had to go back a second time. And that was really tough. But he got it both times because the unions trusted him. And you know, in the world, then and I suspect even now, to have that level of trust between management in the union is really extraordinary. The second thing he did was basically the same thing with the banks. He convinced all of them to sign up for a haircut. He convinced the dealers who were not taking cars, to start taking cars and to pay him for. And so it was just a remarkable performance of a man who was clearly in command, whom people trusted. And so he got things done, but very few people could have.

David Novak 7:59

So I was when I read your book, maybe ask myself, you know, what makes companies like Chrysler get in trouble in the first place? And how can others avoid it?

Cyrus Freidheim 8:08

There are as many reasons as there are companies. I don't know how many companies I worked with during my whole career, but it was probably in the hundreds. And I've never seen the perfect company. I've never seen a company that didn't make serious mistakes that didn't have too much cost that created the wrong product that didn't pay attention to their customers into the dozens of normal reasons. But clearly, the only reason you go bankrupt is if you run out of cash. And what happened in this particular case, is that they just were fooling themselves for some period of time. I'm not sure why was it to make sure the investors stick with them? Or what I don't know. But they were doing things with accounting that were wrong. For example, they kept production up, even though sales had dropped. So what did they do they put the vehicles either stuffed them into the dealerships, encountered them as sales, or they put them into what they call the sales bank, and then put them into inventory. So it didn't show up. You had to be a real expert in accounting, to have caught it just by reading reports. That's what happened to him. And as a result of those things, as you can easily understand cash is a separate animal from putting things in inventory. You don't get any cash for that. And so they were just hemorrhaging cash. But why does those sorts of things happen? Certainly leadership is an issue. There's an institutional organization that has to be clicking, so that something like that is discovered. There are all different reasons. I've worked with a number of failing companies over time. As a matter of fact, over time, I suspect that the principal area that I focused on was companies in major transitions and over half of the well over half of them were company Is that we're in trouble, and therefore, required to turn themselves around in some major way. But I don't see any real common denominator in what caused it.

David Novak 10:10

You know, you say getting the facts right. And uncovering and facing hard truths are always the first step towards solving the problem. Why does so many leaders struggle to orient themselves around the brutal facts of their business?

Cyrus Freidheim 10:24

Well, I think the good ones do it. And you'd ask well, why not everybody? First of all CEOs are, you know, there's no CEO school. And so each one, it's kind of like being a father, you know, you're there, and you suddenly figure out where I was what I got to do. And a lot of CEOs are appointed for a variety of different reasons. Not all of them come with a full set of skills and talents. But even if a person is up to date on all the financials, as you point out correctly, the hard facts on how the product is doing, how the people are developing, on a lot of other of the key pillars of success in any business, require that facts based, tough analysis and understanding. You have a number of CEOs that are instinctive, rather than analytical. As a matter of fact, I'd say of the two characteristics, good instincts might even be more important. I've never seen a company that succeeded without a CEO that had good instincts. I have seen companies that have succeeded with a GOP guy not being a good analyst. But in those cases, he had people who could do analysis for him. And matter of fact, now that's why Booz Allen Hamilton existed, because a lot of the CEOs, you know, just didn't know or didn't know how to figure out answers or want a second opinion, or wanted just a partner. And so, you know, we made an industry out of it. But I think the it's the analytical skill, that misses I think, rather than the instinct on issues, like not paying attention to hard facts,

David Novak 12:04

you became a renowned expert in the the automobile business, and what do you think of Elon Musk as a leader and what he's doing at Tesla today?

Cyrus Freidheim 12:13

Well, I'm not close enough to know, you know, this is a further disqualification. I thought three years ago, it was a must short. I'd have been taken to the cleaners so many times, if I ever went ahead with that instinct. I do know the guy is extraordinarily visionary. The thing that really is stunning, is how somebody from the outside can do something that is so obviously necessary, in the industry itself. And just blow by the whole industry is just stunning. Now, the automotive industry, whiffed once before this, and that is on Japan, when I went around both in Europe and in the United States. The Japanese were quite clearly in the marketplace, everywhere, with products that people were buying. But fundamentally, they were pandas, cheap imitations. This was throughout the 60s and early 70s. But if you looked at the needle of market share, both in Europe and the United States, it was moving up, even at the time in 1979, when the Chrysler event occurred, it was still below 10%. And so nobody cared. Much. I remember that going to Chrysler, and one of their top guys told me, it was not Iacocca. We're not worried about Japan, because they produce these teeny little cars and Americans want big gas guzzlers. And that's what we produce. Well, you know, really wrong really, really wrong, as we now know, where the Japanese have at least a third, maybe more of world market. And that much there's number one seller in the United States. So the second major error should never have occurred, they should have been all over the electric car, but they weren't. So I guess this kind of a problem is characteristic, not just of automotive. But what Tesla did is it didn't produce a car, it produced a computer on wheels, which was a fundamentally different way to think about a car. And it's a marvelous car, you probably driven one out there, they're really marvelous automobiles. Absolutely. The problems that he's had have all been not on the technology, but rather on the ability to produce a car, you know, took forever to get the production up to where it is today. And every now and then the stock dropped because he wasn't getting the production, but the quality of the vehicle, the responsiveness, the driving pleasure, are all really top notch. But Detroit was sleeping at the switch. Yeah,

David Novak 14:55

it's plenty of people in categories just they're so insular. They don't really look look outside and see what's possible. When you look back at your consulting career, Cyrus, what was the most fun project you had?

Cyrus Freidheim 15:08

There were a ton of them that were fun. Matter of fact, I was in a situation for all those years, when I got up in the morning, I had half a dozen things to do at least. And they were all going to be terrific. I enjoyed them. The top of the list was working directly with clients. So I don't have one favorite. Chrysler's certainly was one of the most notable, and one of the most satisfying. But there were lots of others that had other characteristics that made it enjoyable.

David Novak 15:37

It sounds like you're talking about your children, you know, you can't pick one.

Cyrus Freidheim 15:40

Yeah, I could pick one. But it wouldn't be true.

David Novak 15:45

What's the most challenging project you ever had, besides Chrysler, I'll throw

Cyrus Freidheim 15:49

out one that wasn't actually consulting, but it was at a board company was micro age. And they were a part of fortune 500, they were the largest reseller of computers and other technical equipment. And I'd been on the board for about six or eight months, and had done my homework. And it came clear to me that the company was strategically Miss fit for where they were going. Too much of the sales, well over half, were in commodity segments of the market, low margin, and becoming more and more competitive. And there was really no brand power that microwaves had, they had a good distribution system, but no real brand power to control the market. And the margins started to fall. So I concluded that they had to sell it. And if they didn't, that the company would likely go into bankruptcy in the near to medium term. So this was a big deal, because the question is, how does a board member make that point, when the company is going along, there was a small board, there were seven people, and three of them had been with the CEO, through the long march, they had been bankrupt once before. And the CEO pulled them out. The other three, including myself, were not. And so what I did is something that I've never heard of before. And I'm certainly not recommending it for any outside board member. But I called an executive session of the board, excluding the CEO, and prepared a presentation laid the whole thing out. And I thought it was compelling. They said, Well, what should we do, I said, Well, he has to sell this. And I knew one of the potential buyers, because I had worked with him before. And so I offered to help in any way. And I told them board as one of your guys should become chairman, go sell that. And then we don't have to fire the CEO. Well, one of the board members talked to the chairman about it, he basically said no, would split the board, three, four. Now, what I should have done, and this is a terrible mistake I made in my career, I should have resigned right then and there. And I believe that if you ever are in a situation with an organization where either you're you're for reasons of values, or other disagreements, which are major, and you cannot resolve them, you should resign gracefully, but immediately, and that was burned in my brain after I fell and didn't do it. So that was probably my biggest single challenge. That had to

David Novak 18:29

be some very interesting babies, I can see even in those. Now, you mentioned earlier, you been a part of a lot of turnarounds. And a lot of times when companies have gone awry, give us the keys to what you think it takes to get a business out of the ditch.

Cyrus Freidheim 18:45

I think that an outsider can add real value in a situation like this. Because typically, when I entered the scene, things were really bad, like in the case of Chrysler, and there are several others that I could pick off for you. And so the first thing they need is the answer to your first question, which was, how did they get there. And that requires a level of understanding of what the dynamics are in both app business in that industry. And those times, which the current management team typically haven't been able to do. And as a result, you get on a trajectory. And as you well know, if trajectories are very important, whether they're going up or down, they tend to continue in the same direction, unless you change course, in some fairly major way. And so it's finding that out first, and then simply coming up with the set of things that are necessary to correct the problems, to change the trajectory. And in every case, they're different. And a couple of cases that I had, there was no way out. And I remember some of the tougher discussions with CEOs was saying the right thing to do for you now is to liquidate what you got. And if you wind up with some money If the end then go by something, if you don't well then close the doors. And that's a very tough thing for any CEO to do, whether he's the founder or just the current guy in the chair, but it's something that has to be done.

David Novak 20:13

It takes a lot of courage, Cyrus to really take that head on with the CEO, have you always been able to have productive conflict and really take somebody on like that? What does it take to develop that skill?

Cyrus Freidheim 20:25

In my case, it happened very early. It was in my first year of my consulting career. And there was one particular guy in the office of partner who was kind of the terror. You know, nobody wanted to work with him because he was just too rough and tough. So I was a little older than most of the new guys, because I had spent four years in the Navy, and then went to business school. And most of the other guys had gone to business school relatively quickly. And so they were a couple of years younger. So I'm sure that helped me a little bit. I said to the guy who assigns consultants to projects, I said, Look, I'd like to work with Joe, though senior partner. They said, why? And I said, well, because, you know, I hear he's really a good consultant, you might be a little rough around the edges, but he's really good and smart. So I went in to see him and the interviewer was ridiculous. You know, what do you want to do? What are you here for? Who do you think you are kind of thing, but we got along very well. So what I would do, and I was working alone on the project, and it was for a buddy of his who headed up a company called a Burton Dixie Mattress Company. And Burton Dixie was a really important name, about 20 years before that, and it just slid down as new competitors came in, they didn't update their products, they wound up from being the brand slumber on to a commodity that was sold for motel sixes and stuff like that. I went through all the actions of figuring out, was there any cost, we could reduce any product we could change? And it turned out that the mattress business was dead. And they had made it over the last few years by selling automotive seats. And they sold them by packing a frame with systole cycles, like hey, you know, so I went around and saw the automotive companies and asked them what their plans were. And they say, Oh, we're we're switching to foam. And I said, I beg your pardon. And so we're switching to foam. As matter of fact, it's going so well. We've been doing it for about a year. And we've decided to really accelerate. Well, my poor old Burton Dixi had no capability in that area, and would cost too much to get it. And it was over. And so I told Joe, and he said, Oh, dear, but he handled it the first time. And I watched him and how he did it. And it was very graceful. And at the end, nobody was crying. Nobody was bleeding. And he went on, and I think they might have gone out to dinner that night. So that was my lesson. And I've used it from then on.

David Novak 23:03

So this tough guy was able to tell the client in a gentle way that it's hostile a visa big guy. Yeah, right.

Cyrus Freidheim 23:09

Of course, my reaction on the auto seat says How could they not have known right? I mean, your client is moving from your product is something else, and you're gonna have nothing in a year,

David Novak 23:22

it shows you've really got to be on top of your industry and tell what's going on for sure.

We'll be back with the rest of my conversation with Cyrus freetime in just a moment. But one of my favorite turnaround stories comes from Alberto Carvalho who helped lead an incredible transformation in the Miami Dade County Public Schools when he served as superintendent, we did not be Mone we did not go into the corner and just cry over the fact that charter schools were coming because we knew they would come. What we did do is that we put choice on steroids. And if you said if choice is what parents want, we're going to reinvent ourselves into the best providers of choice period. It's a great reminder when things aren't going well in an organization, you've got to have the courage to define reality. It's the only way things can actually get better. Go back and listen to my entire conversation with Alberto episode 50 here on how leaders lead

you know, when you were talking about Lee Iacocca and his disdain for consults, I have to tell you I was in that camp. I really felt like too many people bring consultants in because they're lazy, they don't do the work themselves. So I was the last guy to hire a consultant we did from time to time, but you know, it took a lot to get me to pull the trigger on that. What rigor Do you think a leader should go through before bringing a consultant on board?

Cyrus Freidheim 24:57

I remember asking that that question of Dick Ferris. Derek was the CEO at United. He had been CEO for about a year. And it was right after the industry had gone through deregulation. A former partner of mine at Booz Allen was a buddy of his. And when Dick asked him, he said, Who should I call? It said me. So I went over and saw him. And we had a great relationship. And so later on, I said, number one, why did you do that? Why'd you go to the outside because he was not a natural guy that would go to the outside, he wasn't an intellectual that wanted a second opinion or anything like that. It was a hard driving tough, very similar to Lee Iacocca in the way he operated and behave. And he said, You know, I am now telling all my friends, we've been working together for at least nine months at that point, he said, I find one of the first things a CEO should do is find a consultant to be his park, to talk to, to bump ideas off of, to occasionally do a project. But it's just a perspective that really exists within the company. And you can have a board member, you do that with that often time works, you can have somebody else on the outside doesn't have to be in the consulting business. But if you can find a consultant, his view was, that's what you should do. Now, there's got to be tremendous trust and respect, mutually between the two, for it to work. So I strived throughout my career to have exactly that relationship with every CEO I worked with. And when we clicked, it was superb.

David Novak 26:40

That makes a lot of sense. And again, it's that trust factor that you're talking about and belief in each other and the added value you can provide. You know, you were at Booz Allen for a long time you paid your dues, you had great results, and you wanted to head the firm, but it didn't happen. As you get over that disappointment. That happens all of us some things happen in our career where you know, just doesn't work out. What advice can you give? How do you personally get over the disappointment? And what advice can you give others?

Cyrus Freidheim 27:07

It's a huge thing. And it's a stain that lasts kind of as long as you let it. And you can divert yourself from it by burying yourself and your work, which I did. You can divert yourself with your family, which I did. But it still takes time. It's like, you know, losing a loved one, you know, it takes time. But if you can get through the instinctive reaction of I quit, then I think you can make it because I have a strong belief that whatever you're doing in your career, the title on the door is not nearly so important to you to your family to your life, as being happy with what you're doing and loving the work you're doing, and being turned on by it. So I concluded that if I never become a CEO, that's the way it is. I love what I'm doing. I love it every day. I love it every week, I put in monstrously ridiculous hours. But that's because I loved what I was doing. And so I just stayed on. And as I looked back over it, you know, and it looked back over my whole life, even from this point, from here, I say, you know, it went great. I couldn't have asked for anything more. Not everybody should stay. And I respect that. But I didn't do it. And I didn't leave. And I'm glad I didn't think I had a great career following

David Novak 28:21

so you let your passion and the love for what you were doing really drive your decision. And it's not always greener on the other side.

Cyrus Freidheim 28:28

That's exactly right. I don't know what would have happened if I had moved more quickly. But I know what happened when it didn't move. And it turned out that got the CEO spots anyway.

David Novak 28:39

That's right. Well, that's a great transition because you ultimately moved from consulting and, and I can't resist this. She had, how many times you ever that she'd become the top banana, the CEO at Chiquita, how'd that happen? And what did you do to really move that business forward? That how

Cyrus Freidheim 28:54

it happened was my son Steven was in the he was a hedge fund guy. And he was with ox Ziff, which is one of the major was at that time, one of the major hedge funds and he was hired to set them up in fixed income. They had made a major investment in Chiquita, and the thing went down. And so they were looking for board members. Well, there were four investors that had taken them through and out of bankruptcy. And my son was one of them. And so they each got a pic of one board member. I was just about to retire from Booz Allen. And he asked me if I wanted to be on the board. And I said, Sure. I didn't know anything about their business or why they were bankrupt. But going into an interesting situation was something and I had enough turnaround experience to know you know what the pitfalls were of it. But he was the one who put me up and I became one of five directors outside directors. We started working about a month or so before the company went back into the mark. Get out of bankruptcy. And during that time, I did a lot of intensive home work, trying to figure out well, why did it go bankrupt? What does it need to do? How do we get it back on its feet. And during that time, we decided that one of the outside directors should be the chairman. And so I was the only one that was about not to have a job, because I was retiring from Booz Allen. And so they said, you want to do it? I said, Sure. I'd never been, you know, the chairman of a board of a major company before, why not, we then met with the CEO a couple of times, and orange lights start to go off in my head, as well as in the other directors. And we concluded, we can't just move ahead with the current CEO. So again, we took a look around the table. And they pointed to me and said, Well, how would you like to do that? And as well as a little different deal, but I had done enough study at that point, to believe that it was possible to turn it around. And so I said, Okay, for two years, that was the idea. Because I was already 66 At the time,

David Novak 31:09

and you had great success. And what do you do to turn it around?

Cyrus Freidheim 31:12

What I did is what a consultant would do, I dove in to find out everything I could possibly know and why it went bankrupt and what is necessary. And we came up with a plan that the board agreed to very quickly, I think within a few months of joining, and off we went. And that was really the genesis of the term commitment deliver. Because at our first annual meeting, which was one year later, we had committed to all these several items on the turnaround plan, and had achieved virtually all of them. And so we titled The report, commit and deliver, which has we committed we're going to do this a year ago. And we're here to tell you we did it, there was no one action we took that I think turned it all around. It was a series of actions in what turned out to be a well crafted, successful plan. You know,

David Novak 32:06

when you became CEO, you're now in charge of the whole ball of wax? And how do you like that control and the ability to execute your ideas, because, you know, I've talked to a lot of consultants, and one of their big frustrations is that they come up with the ideas, but then the client doesn't execute.

Cyrus Freidheim 32:20

Well, as one of my colleagues that had brought over from Booz Allen to join us, as an executive said, the difference between consulting and managing the enterprise is you're playing with live ammunition. Because as a consultant, you can always toss over the recommendation and, and you know, it's up to the CEO to execute well, if you're the CEO, as you well know, better than almost anybody. It's up to you to do it. And so it was a lot smoother and easier than I thought it would be.

David Novak 32:51

And then you go full circle. You were a paperboy. When you're a kid, and you go from being a paperboy for the Chicago Sun Times, to actually becoming the CEO of the Chicago Sun Times. You know, the newspaper business is absolutely rugged. And you keep it in print today. I mean, How'd you make that brand survive,

Cyrus Freidheim 33:12

I was on the board for a year before becoming a CEO, the guy that took over as CEO, when Conrad Black was kicked out, didn't want to move to Chicago, he was an investment banker. And he really wasn't running the company. And so we all agreed that we needed to have somebody full time on site. And so we started doing a search. And during the course of that search, we had a meeting, where we asked the management team to come and report exactly what should be done. And it was quite clear that the company was already in a downward trajectory. And if it didn't do something fast, it'd be out of business. And so I did kind of the same thing I did with Chrysler, which is spent the overnight during that conference we had with the management team, coming up with my view of what it would take and presented as the following day. And we all agreed that we needed to make the change of CEO sooner than later. And so the next meeting they put me in, I have to say I went in with eyes wide open. And I knew is one of my associates not with the sometimes but another friend said, you know, you're trying to catch a falling knife, because the newspaper publishing business is just heading straight south, which was true. But what we did was recognizing that situation, we came up with a series of actions that we had to take to be able to balance the ship. But we realized after a while, we would cut our costs and a month later the last revenues ate up the benefit. We would outsource every imaginable thing to wherever we could. That worked. And I think we were a leader in that, but it still didn't stop the fall. And so it kind of at the end, I said, you know, guys, we can't continue really as a public independent public company. So we've got to figure out how to sell it to some investors who aren't looking for earnings per share who believe in the newspaper industry is I did, it was one of the major reasons I took it over. I love Chicago, I've been in and out of Chicago, my entire life, had made huge commitments in the way of my personal time and philanthropy to Chicago. And I believed strongly that two newspapers were better than one. And so that's why I did it. And I was looking for somebody and finally found that somebody who had the same kind of attitude, and a big pocket book, so we sold it to that guy. Unfortunately, he died a year later, the company has been sold a couple of times was sold, again, to a not for profit in the media business. So it'll now be part of that not for profit media organization, and I think will continue. So I'm delighted. I think that while I certainly did not intend to take it into bankruptcy when I first arrived, but I concluded that was the only way to survive the newspaper

David Novak 36:14

business where you kept the Sun Times alive. That is you basically took a private and got somebody who really believed in it like you and kept it in print. Is that a fair summary of that? That's basically what happened. When you look at the newspaper business, what should leaders have done? Or was there anything that they could do that would have kept the demise from happening was the category itself salvageable, or was just the decline totally inevitable?

Cyrus Freidheim 36:41

Well, there will be newspapers probably 10 years from now. But there'll be fewer, more limited in what they do, and completely different than what they are today. And those few might be ones like the Wall Street Journal, where there's a dedicated audience. Early in my time, we did a study of readership, not of us, but just in general. And we found that the cohort of 60, and above 75% of them read newspapers on a regular basis, that number went down dramatically as you took each decade below that. So the decade of the people in their 50s was less than 50%. And for kids coming out of college was less than 10%. Now, that was 10 years ago. And my guess is that kids coming out of college now, rarely subscribe to a newspaper of any kind, including the Wall Street Journal. I know my own kids who are now in their 50s Read everything online. And their kids are not going to be doing anything different. What happened with the internet, which was very different from TV, radio, other forms of technology that made incursions on the newspapers job as the primary source of information. And television, you're only get one thing at a time. And it's not necessarily what you want to hear or what you want to see or what you want to know. But the internet has everything. And so there's basically nothing that is important to you, that you don't know before you see the morning paper. So it isn't, you know, hot off the press, people find things out. So their core reason for them as the purveyor of news is gone. The primary purveyor of news now is the internet. And so it did survive. But newspapers have to do something else, to make themselves relevant, and important enough for people to subscribe and advertising.

David Novak 38:49

And get even more focused on a core audience that makes them unique and different.

Cyrus Freidheim 38:53

Exactly. And reverse. One of the things that happens with that is that the way that most newspapers have focused on audiences is on political philosophy. And so you have papers that cater to the right and to the left. As a result, it's hardly news anymore. It's just opinion, and stories that support a political point of view, which is a shame because newspapers, I think, from the time of our country has created have been a crucial part of our freedom, and informing the public.

David Novak 39:24

Yeah, the newspapers are going to be around but there's no question the internet just basically obsoleted the category. You know, sorry, I don't think you've ever really retired. I like to say I didn't retire I refired. You know, but what advice can you give people when they move into so called retirement,

Cyrus Freidheim 39:40

I look at retirement from your full time, your last full time job or your career as one of the more important transitions that individuals make, and particularly those who have had some level of success. I look at it as a gift from God. For however long we got to do whatever It is on the earth that we're here for. But it's a gift that we should embrace and use effectively. You've done it superbly, but I think having a mission is extremely important. There was a nun who put it best to me, sister Jean, who was the mascot of Loyola University, his basketball team back about five years ago. And she was 95. At the time, she's 100, and something now, and she attended all the games and just was a personality. The news covered her as much as they did loyalist team, which in their first NCAA appearance in basketball for at least a half a century, they got to the Final Four, and a lot of people credited her for it. I met her about a year later. And first thing she said is you want to take a selfie with me. And I asked her one question I said, you know, I'm just so impressed with the energy, you have a life. And she said, kind of looked at me and sunny, better to wear out and rust out. And I believe that of all of us, we owe it to society to continue going. Because if somebody has got the talent and the energy and the good health, and sits on the sidelines, I think that's just a waste of an extraordinary asset.

David Novak 41:20

Sorry, this has been so much fun catching up with your I want to have a little bit more fun here. Before we cut this off by having a lightning round of q&a with you. Are you ready for this?

Cyrus Freidheim 41:29

Okay, okay.

David Novak 41:30

What word best describes you?

Cyrus Freidheim 41:33

Only one with only one? I think inquisitive?

David Novak 41:37

If you could be one person for a day, who would it be? And why?

Cyrus Freidheim 41:41

The answer is nobody. And why? Because there's a give up that I couldn't do, you know, that they give up is my family. And because every other person that I've thought of, because I know you've asked that question before. I said, Well, that'd be great. That'd be terrific. But I'd have to give up my family and I can't do that. So it's got to be me. I'm stuck with it.

David Novak 42:02

I love that answer. What's your biggest pet peeve?

Cyrus Freidheim 42:05

hypocrisy?

David Novak 42:06

What's something about you that few people would know?

Cyrus Freidheim 42:09

My mother wanted me to become a professional pianist? Like Eddie do chin. Now, I'm not sure if your audience has ever heard of Eddie Dujuan. But he was quite the rage in the 40s.

David Novak 42:20

What's your favorite newspaper today? And do you read it digitally?

Cyrus Freidheim 42:25

The answer is the Wall Street Journal. And I read it both digitally and I do get up subscription.

David Novak 42:31

Do you have any hidden talents? Iris?

Cyrus Freidheim 42:33

I've asked that of my wife? And she said she doesn't think so. I used to be a good golfer. And but I'm no competitor for you anymore.

David Novak 42:45

You know, as we close, I have one more question for you. What's the single most important bit of advice you'd give an aspiring leader?

Cyrus Freidheim 42:52

I guess the one if I have just a one liner? It's you are your most important project. And I heard that I'll confess that I heard it from someplace else who got it from somebody else. But I believe it. The someplace else was General Mattis in a weird way he was Secretary of State, because he was asked that question. And I believe it's absolutely correct. You are your most important project, you are going to determine whether you succeed or fail, whether you're happy or sad. It's not the circumstances, we're all knocked around by circumstances. And everybody has their problems. But what you got to do whatever your problems are, somebody else has had it worse. And just suck it up and take control of yourself. And that is the best I can give.

David Novak 43:37

Well, Cyrus, I really enjoyed your book, covet and deliver on the frontlines of management consulting. And I appreciate you taking the time to be on the show with me.

Cyrus Freidheim 43:47

Well, it's been an honor. Thank you. I've listened to your podcasts, and they're all terrific, thank you very much.

David Novak 44:01

Well, it's a real treat to catch up with such a legendary titan of business. Cyrus's stories are always so fun. But you know, if you're listening, you're gonna get a whole lot of wisdom to one thing that's clear to me is that Cyrus understands the power of an outside perspective. I mean, let's face it. We all have blind spots, and we can't fix them without help from the outside. The companies that falter and fail are usually the ones who never recognize their blind spots, or who don't ask for help addressing them. So this week, I want you to ask yourself where you could benefit from an outside perspective. It could be for your company for a particular product, or hey, even for your own leadership style. Then I want you to consider what an outside voice could offer you and the fresh perspective you could get from it. Do you need a mentor? A consultant find that part Are you trust and respect? And I just know you're going to unlock so much more potential for your organization and for you as a leader as well. So do you want to know how leaders lead? What we learned today is that great leaders get an outside perspective. Coming up next on how leaders lead is Kelly coffee, the CEO of Citi National Bank,

Kelly Coffey 45:22

every time I built a strong team, and then was able to move to whatever my next challenge was, but not take away from that business I just built meaning not grab some of those leaders and move them over because I don't like to take away from something I put so much blood and sweat and tears into to build to build the next thing.

David Novak 45:43

So be sure to come back again next week to hear our entire conversation. Thanks again for tuning in to another episode of how leaders lead where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be

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