I knew I’d enjoy Gerald Levin’s speech once I asked his permission to cover it for the Harbus. “I don’t mind at all,” he said, with his characteristic deadpan delivery. “I’m a great supporter of journalism.”
It was in this informal, familiar style that Levin (pronounced “Le-Vin”) addressed a packed Spangler Auditorium on Tuesday, April 16. Speaking on the topic of “Leadership and Values,” Levin reflected on his thirty plus years at the various entities of AOL Time Warner, including his ten years as CEO of Time Warner.
Levin credits several sources for what he calls his “moral leadership.” First, when Levin attended Haverford College, 50 of the 125 students in his class were expelled within the first three weeks of classes for failing to adhere to the school’s strict Honor Code. That taught him a compelling lesson. Second, he labels himself “a product of the early ’60s.” Third, Henry Luce, one of the founders of Time, Inc., wrote in his will that, “Time, Inc. should be operated not only in the interest of the shareholders, but in the public interest.” Levin has taken that dictum to heart and feels that his sense of “obligation to inform and educate the world,” is something he grew up with.
One of the main principles he has tried to inculcate in his company is “Value Creation,” although he claims he is “a demon on managing companies through the financial functions” (notably through his “celebration of monthly reports”). He noted that although “value” is obviously a financial measure necessary to compare industry multiples, it is imperative that there be qualitative differences among companies as well.
Years ago and against the resistance of his skeptical colleagues, Levin suggested forming a values committee at Time Warner. When “vetting the idea,” he considered that, “People find meaning outside the corporation, in their families, volunteer work and other outside activities. When they get to work, something clicks off.” Levin wanted to instill a code of values within the corporation, and wanted employees to “really believe it and make it central.”
However, Levin noted, “I tried to indicate that being a CEO is tone-setting, but really, you’re impotent.” To remedy this, Levin created the Values and Human Development Committee to ensure that decisions were made according to shared principles throughout the companies. In addition, he launched a series of 30-person leadership seminars (in which more than 1,100 employees have now participated), complete with case studies. L’il Kim’s music lyrics was his favorite topic. His goal: to build respect for idiosyncratic behavior and freedom at the risk of controversy. Having taken these measures while the company was “doing better,” only bolsters the company in tougher financial times.
In fact, Levin considers the CEO’s role as a global moral leader crucial, especially today. He cited the “political vacuum” and the prevalence of “political correctness” as causes of the lack of great leaders, even in the academic community, and urged, “If ever we need leadership with fundamental human values, it’s now.”
Given his deep understanding of the people and cultures around the world, “…because I’m the CEO of AOL Time Warner, not because of my personality or anything else,” and his resulting meetings with heads of state, he underscored his appreciation for the “humanity underlying important differences.”
In addition, since “we can create new media” and have the first worldwide communication infrastructure, we have to be mindful of the global community. Levin and Steve Case formed the “Global Business Dialogue” to deal with issues of consumer trust and property protection of the Internet.
“There is still an Internet, by the way,” he quipped. According to an upcoming Media Metrix study, he noted that there are 112 million people on the Internet that spend an average of 70 minutes per day on AOL. He then muttered disbelievingly, “AOL: a $10 billion revenue business currently being valued at zero.”
Levin stressed the need to have companies and governments around the world “hammer out public policy for this new medium.” The key? Mutual trust.
Levin pointed to a recent deal whereby AOL Time Warner acquired a Mandarin channel in China in exchange for a Mandarin-language television station in the U.S. as an example of successful globalization.
He urged the audience to “avoid American imperialism.” In fact, the reason he likes music so much (“which hasn’t been completely Napsterized yet, but it’s on its way,” he added) is because it is “truly a global business,” and can reinforce local talent all over the world. Incidentally, Levin believes that Mandarin will be “the biggest language of the Internet.”
Levin outlined three principles for the process of choosing a successor, a timely topic given that in 30 days Dick Parsons is set to take over the reins as CEO of AOL Time Warner. Levin said that the challenge, while trying to come up with the “psychographic of an ideal CEO,” was that “it’s tough because you normally project yourself.” In one of many self-deprecating remarks, he added, “I’m charismatically challenged and I didn’t want anyone else to play that role.” He was “absolutely persuaded” that choosing a successor had as much to do with character as with a marketing or deal-making prowess. He stressed the importance of possessing “the ability to affect people,” and asserted, “Management is a humanist art.”
Principle #1: The element of surprise. Once a CEO announces his impending retirement, his every move is under scrutiny as the public and employees try to guess who he will pick to succeed him. But for Levin, “no one really knew, unless they did some sort of mortality calculation.”
Principle #2: If you know who your successor is and he/she is ready, that’s the right time. Levin stated, “If you get fixated on your legacy, you’ll be mistaken. You get the view that only you can take the company through the current changes. But this papal infallibility is just not the case.”
Principle #3: Leave. Get off the board. Don’t be an officer. Otherwise, “it’s just damn embarrassing, because inevitably there’s change; change is the most important thing.”
After reviewing his principles, Levin joked, “By the way, you know the reason why it’s easy to accept retirement? When I started out at work, a friend said to me, ‘You’re either going to retire, you’re going to die, or you’re going to be fired.’ Compared to the alternatives, I don’t mind retiring so much.”
Levin’s post-AOL Time Warner plans are to use his board seats on the New York Stock Exchange and the Federal Reserve Bank to “fundamentally change corporate governance and reassess the inner workings of boards.” Dubbing Enron “the Watergate of the capitalist system,” Levin concluded that, “There is a lot amiss in our financial system, and although it’s head and shoulders above all others, it still has flaws.” He aspires to find a “rational forum” for exploring these ideas.
Quickly glancing at his notes scribbled on the back of an 8 1/2″ x 11″ plain manila envelope, Levin addressed the HBS audience specifically.
“You represent the future,” he said. “The role of the CEO, and having wisdom judgment and good character, are terribly important.” He said, “It’s all well and good to have a grasp of finance, but there’s something really fundamental that needs to take place in the value systems of CEOs and CFOs.” He argues that the culture of the company is extremely critical.
“You need to have a set a values in the company so you understand there is a higher purpose and order to things,” especially amidst management changes and business shifts. He added, “I don’t think I’ve been particularly successful in much of this.”
Citing Johnson & Johnson as one of the strongest examples of a value-based company, Levin pointed not only to Jim Burke’s deft handling of the Tylenol case, but also how Burke has dedicated the rest of his career to the Partnership for a Drug-Free America.
by discussing the events of September 11th and how AOL Time Warner’s values guided the company through an extremely difficult time. When AOL Time Warner was installing computers in the Family Assistance Centers near Ground Zero, their employees ended up serving as “the human backdrop for the families,” comforting them in the days immediately proceeding the events. Levin was duly horrified when a member of his staff questioned what the margin erosion would be due to the additional coverage dedicated to 9/11. “I thought it was ridiculous. I didn’t answer. Whatever it costs. That’s what we do.”
Levin provided security to his employees, and emphasized the importance of “just being visible, and not being some macho suit, although I don’t even wear suits anymore.”
“When you act instinctively, like Mayor Guiliani, you’re not following a management thesaurus,” Levin said. “When you read all these case studies, you should go back and take a look at how all these leaders perform and where that comes from.”
Although he may not agree, Gerald Levin undoubtedly contributed to all of our learning by sharing his own personal experiences and serves as a glowing example of what we can only hope to be: a global moral leader.