In the Arena
Mitt Romney, the consultant credited with helping spearhead Bain & Company's turnaround in the early 1980s, just completed spearheading a turnaround of another sort. This time it involves the reputation of the Salt Lake Olympic Games.
A Former Bainie Helps Salt Lake Games Leave Scandal Behind
Three years ago, when Mitt Romney was approached to take charge of the Salt Lake Organizing Committee in the wake of a bribery scandal, the city of Salt Lake was hoping to close an embarrassing chapter in its history. Today, that chapter is all but a footnote in a grand and energizing tale driven largely by Romney, a former Bain partner who served as the firm's interim chairman before starting up Bain Capital. Last month, as Romney added another feather to his already crowded headdress, we couldn't help but ask what's next for Mr. Fix-It.
CM: To be successful, these Games have needed to overcome both controversy and the threat of terrorism.
Romney: My challenge has changed over the time period I've been here at the Salt Lake Olympic Committee.
The first challenge was overcoming a severe crisis of confidence. There had been a big scandal, and the public was appropriately disgusted.
The second came after a thorough review of our financial condition showed that we were in the hole and that these Games would be detrimental to the taxpayers and potentially to creditors.
The third challenge has been the War on Terror, and the concern on the parts of our sponsors, athletes, and spectators about their safety.
CM: What was the first order of business upon your arrival?
Romney: The first challenge was to put in place a team that you have a great deal of confidence in. I went back to one of my colleagues from Bain & Company, Fraser Bullock. He was living in the Salt Lake area running a venture capital company. I asked if he'd join as our chief operating officer, and he agreed. We also found another former colleague from Bain living in Utah, and asked him to join the team as a senior officer responsible for all our of Games services activities. Throughout, we tried to find the best talent we could.
The second challenge was to make sure people in our organization knew we were going to abide by the highest level of ethical conduct. We put in place a series of ethical conduct policies and reports which we required of all managers and members of our team. We also opened our records and meetings to the public, to help restore public confidence.
CM: How did you attack the financial pitfalls?
Romney: There's a lot of other accessory activity that has become attached to the Olympics over the years. We did our best to cut that away, reduce it, eliminate it where possible. The outcome has been better than we would have ever imagined. We were able to cut our costs by some $200 million, we have a record number of sponsors, and we have raised 80 percent more money from domestic sponsors than Atlanta — which was on a much greater scale as Summer Games. In facing the most recent challenge, we're proud to be supported by a uniform commitment from the highest level of government.
CM: What can you tell us about security at the Games, in light of the events of September 11th?
Romney: The responsibility for planning for the security of the Olympics lies with the Secret Service, the FBI, and the Federal Emergency Management Agency. They had put in place a very comprehensive program before September 11th that required some $270 million of federal, state, and local Olympics resources. Following September 11th, that plan was completely reviewed in light of the lessons of that tragedy. The result of the review was to severely restrict airspace around the Games, to increase the level of security around certain venues that we had previously designated lower-risk areas, and, finally, to bring in military and law enforcement personnel to manage our entry points.
The purpose of the last change was to replace volunteers and minimum-wage personnel at checkpoints with law enforcement and military personnel. Those are probably the biggest changes following September 11th. The additional cost was $40 million, so our total security budget for 17 days is now $310 million.
CM: From what you have said, I'm envisioning cubicles of federal and state law enforcement people and local police working side by side. Is that an exaggeration?
Romney: Actually, what it is is a communications and control room that has about 100 computer screens. They're not separated by cubicles, and are all on tables facing toward the front. The FBI is sitting next to the Salt Lake police, for example — literally every agency is there, and communication is instantaneous among the people because they're all in the same room. All the agencies are working together, and I think that's a model you'll see expanded beyond national special security events into other matters of homeland security.
CM: What's next for Mitt Romney?
Romney: I have decided to stay in the world of public service. The Olympics are not in some people's minds a public service. But in mine, I see the Olympics as one of the great statements of peace on the world stage. After these Games, I'll be looking for other ways to make a contribution. I was fortunate enough in the world of consulting and then venture capital to earn more money than I needed. So now I'll be able to devote my time and effort to things I believe deeply in.
The Beer Necessity
It was back in the late 1970s that Jim Koch realized he had had his fill of consulting work. After eight years at Boston Consulting Group, the consultant was able to convince the firm's management to let him serve clients only part-time, as he, like his father before him, pursued his dream of becoming a master brewer.
Besides helping extend Koch's tenure at BCG, the unique work arrangement allowed his BCG colleagues to enjoy some of his dream's dividends, such as various evenings of beer-tasting as Koch closed in on a recipe. The success of The Boston Beer Company is today attributed to Koch's coveted Samuel Adams beer as well as to other strategic innovations the company's founder and CEO incorporated along the way. Besides fine brewing, Koch is credited as having upended the rules of beer marketing by pursuing the market's "twenty-somethings," who have remained his beer's most loyal drinkers even into their late thirties.
The Web Titan
Meg Whitman arrived at Bain & Company in 1981 after a short stint with packaged goods behemoth Procter and Gamble. The Bain newcomer quickly found a career path to sharpen her analytical skills, and a pool of deep industry sector knowledge she could dive into. It would be eight years before Whitman — now a tried and true Bainie — decided to jump back into industry inside Disney's Consumer Products unit, where as senior vice president she opened Disney's first stores in Japan.
After Disney came a string of top management positions with Stride Rite, where she helped revive the Keds brand and Florists' Transworld Delivery (FTD), where she led the launch of FTD's Internet strategy. At Hasbro, she was responsible for the global marketing of the Playskool and Mr. Potato Head brands.
But ultimately it was eBay that turned Whitman into a CEO rock star.
The former Bainie joined eBay in early 1998 as president and CEO, and is today credited with being the mastermind behind its successful transformation from a Web site selling collectibles such as PEZ dispensers to a global marketplace.
Coming on board when eBay had only 19 employees, Whitman helped to develop the firm's work ethic and egalitarian culture. Today the company has 2,500 employees.
It's been more than a decade since Whitman roamed Bain's hallways, but she still remains loyal to the firm she credits with having endowed her with critical skills.
"In an industry that moves very fast, you have to be able to identify the 20 percent of analysis that will provide 80 percent of the insight. That was what I learned at Bain & Company," says Whitman, in a quote on Bain's Web site. It's insight, perhaps, that has helped stave off competitors such as Yahoo! and Amazon — who have long been nipping at eBay's heels. With a sure footing in the U.S., eBay is now poised to become a global brand.
Three McKinseyites & a Bainie
In the late 1970s, a practicing attorney by the name of Kenneth Chenault ended a law career in New York City to pursue business as a consultant with Bain & Company. Several years later, he found himself at American Express answering to a tough-minded former McKinseyite by the name of Lou Gerstner.
Legend has it that IBM's future chairman gave the former Bainie a mere six months to justify the existence of the company's barely profitable merchandise services unit. After not only justifying the unit but also turning it around, Chenault would win Gerstner's favor and find himself an entry gate to the CEO track. Later, Chenault would win favor with another former McKinseyite, Harvey Golub. As chairman and CEO of Amex, it would be Golub who would tap the up-and-coming Chenault to succeed him as chief executive there.
Another former McKinseyite allegedly impressed by the one-time Bainie is Delta CEO Leo Mullin, who faced off with Chenault during recent renegotiations concerning the co-branding of the Delta/Amex SkyMiles card. Mullin told Fortune magazine: "He's tough-minded, but there's a great sense of warmth and fairness."
One wonders how such qualities ever escaped McKinsey's adroit recruiters.
George David, United Technologies Corp. CEO
(Boston Consulting Group)
Not many CEOs can boast that one of their products landed a leading role in a Hollywood film — without paying millions in clever product placement fees. George David, chairman and CEO of United Technologies Corp. (which owns Sikorsky Aircraft) can. Two Sikorsky-made transport helicopters are featured in Black Hawk Down.
Next on the former BCGer's agenda is finding similar gigs for the $27 billion company's other subsidiaries. Anyone "up" for Airplane, the Sequel, with Pratt & Whitney? How about The Ups and Downs of Otis Elevators?
Indra Nooyi, Pepsico President and CFO
(Boston Consulting Group)
As a recent graduate of the Indian Institute of Management, Calcutta, Indra Nooyi already knew when she arrived at Yale University in 1978 that business would be her career. It was a career that began with a stint as a consultant in 1980, when she joined Boston Consulting Group. But the stint soon stretched to six years, as she continued to extract all the experience her client work could afford her. In 1986, she joined Motorola as vice president of corporate strategy and planning, and she later took on a similar role at Asea Brown Boveri. Nooyi landed at Pepsico as a senior vice president in 1994, and she has since ascended to the office of president and CFO. The BCG alum is today the highest-ranking Indian-born woman in corporate America.
Sidebar: Of Dubious Distinction
In an alphabetical listing of former consultants, the name Skilling might fall a place or two behind the name Shaheen, but the two former industry CEOs now share a list all their own. While their impact on the fate of their companies can likely be debated, no one disagrees that their falls have been equally spectacular.
Before joining Enron, Jeff Skilling was a senior partner at McKinsey and oversaw the firm's worldwide energy and North American chemical consulting practices. He first began advising Enron as a client in 1982 and earned major kudos with the hard-charging energy giant's management when he helped hatch a complex financial instrument that could allegedly produce a safe fixed-price contract within a price-sensitive deregulated natural gas market. Skilling joined Enron in 1990 as head of trading, and was promoted to president and chief operating officer in 1996. He resigned last August.
Sidebar: Where Are They Now?
• Jill Kanin-Lovers (Towers Perrin), Senior Vice President, Human Resources, Avon • Oscar Bernardes (Booz), CEO, Bunge International Ltd. • John McCarter Jr. (Booz), President & CEO, The Field Museum, Chicago • Stephen Socolof (Booz), VP, New Ventures Group, Lucent Technologies • Torsten Kreindl (Booz), Partner, Copan GmbH • Robert Bakish (Booz), Executive Vice President, Planning & Business Development, MTV Networks • Hamad Biglari (McKinsey), Leader, Corporate Strategy, Citigroup • Peter Foy (McKinsey), Deputy Chairman, P&O Princess Cruise Lines • James Gorman (McKinsey), Executive Vice President & President of U.S. Private Client Group, Merrill Lynch • Marc Particelli (Booz), CEO, Modem Media • Susan Engel (Booz), Chairman & CEO, Department 56, Inc. • Barbara Kux (McKinsey), Executive Director of Central European Sales, Ford Motor Company • Ray Lane (Booz), General Partner, Kleiner, Perkins, Caulfield • Steven Heyer (Booz), President of Coca-Cola Ventures
Gregory Owens, Manugistics CEO
(Accenture)
When Gregory J. Owens changed jobs three years ago, his new clients probably looked an awful lot like his old ones. That's because many of them most likely were. As global managing partner of Accenture's (formerly Andersen Consulting's) supply chain management practice — the largest practice of its kind in the world — Owens had an extensive client list of Fortune 500 companies. But at 39, Owens, who joined the consulting firm in 1990, raised eyebrows by becoming chairman and CEO of Manugistics Group., Inc., a supply chain software company as well-known for its erratic financial performance as it was for its software.
During his first year as CEO of Manugistics, Owens led the company to record annual revenues. Moreover, during its most recent fiscal year, the software company doubled its annual license fee income. So far, there appears to be nothing erratic about Owens' performance.
Abigail Johnson, Fidelity Management & Research President
(Booz-Allen & Hamilton)
Abigail Johnson, a Booz-Allen alum, was named president of Fidelity Management & Research Co., the investment advisor to the Fidelity family of mutual funds, last year. Johnson, the daughter of Fidelity Chairman Edward C. "Ned" Johnson III, joined the privately held company in 1988. Observers say she is poised to take over once her father steps down.
Scott Cook, Intuit Chairman
(Bain & Co.)
In 1983, while Scott Cook managed consulting assignments in banking and technology for Bain & Co., his wife painstakingly paid the bills by hand. It gave him an idea. He and Intuit co-founder Tom Proulx, a computer programmer, developed Quicken and released it a year later. Today, Cook, who served as the company's president and CEO from 1983 to 1994, is the chairman of the executive committee of the board.
Meena Mansharamani, a former vice president for A.T. Kearney's consumer practice, is now vice president of strategy, mergers & acquisitions at Pepsico.
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