The New York Times in Leadership

Case Study:

“Taking the Lede”

Todd Murphy, Ph.D. Associate Director Center for Leadership

Northwestern University Intro

In some respects, and might be considered peers: Born within two years of each other, Ivy League-educated, wealthy, powerful. Yet their differences are far more profound. She is the scion of a prominent East Coast family. He was born to a teenage mom in New Mexico, and later took the surname of his stepfather, a Cuban immigrant who adopted him. She was given the reins of one of the nation’s most recognized institutions, the fourth generation of her family to be in charge. He started an online bookstore in a garage. She was charged with preserving the legacy of , the newspaper that broke the Watergate scandal. He is the master innovator of online commerce, the creator of .com, a retailing behemoth with seemingly limitless growth. So when their paths crossed, it was not the meeting of two contemporaries. Rather, it was a passing of the torch from one era to another. It now remains to be seen if Bezos can accomplish what Weymouth couldn’t: successfully lead the Washington Post into the digital age.

The Steward of A Legacy

The granddaughter and namesake of legendary Post publisher , Weymouth grew up in a rarefied atmosphere. Raised in New York’s Upper East Side, she attended the exclusive Beardsley School and studied with the School of American Ballet. Thanks to her mother’s society connections and work as a reporter, she traveled extensively, dined at Club d’Alep, met the Syrian aristocracy, discussed fashion with Vogue editor Diana Vreeland and politics with left-wing British journalist Alexander Cockburn. When it came time to go to college, it was off to Harvard. Afterwards, she spent a year at Oxford studying literature, before finally landing at Stanford Law. Her first job after law school was at Williams & Connolly. One of their clients just happened to be the Washington Post. In 1996, the Post asked for temporary legal help and Weymouth volunteered. When the position became permanent, her career at the paper had begun. She later became the vice president in charge of advertising. And in 2008, her uncle, Donald E. Graham, who is chairman and CEO of the Washington Post company, named her the newspaper’s publisher. At the time, Graham dismissed any suggestions of nepotism: “What’s important is that the person who holds it is very capable.” “It’s great that Katharine’s in the family, but it’s even greater that she has shown she is very good. She’s been in highly relevant jobs, and she’s been great at them.”

If her lineage did help her get the job, it also meant she would have to carry the heavy burden of the Post’s legacy. As Robert G. Kaiser, a Post associate editor who worked there for 50 years said: “She has a burden. Your biggest anxiety, as I know from personal experience with Kay (Katharine Graham) and Don (Donald Graham), is: ‘Am I going to screw this up? Am I the one who is going to be remembered as the goof-off who couldn’t keep it together?’ ”

1 Managing A Painful Tension

When Weymouth took over, she faced a multi-layered challenge. Not only did she have to make sure the paper survived, it had to retain a cache and heritage that had been built over decades. This had to be done while also adapting to the new realities of the digital age. It was a critical time for the paper. The web had not only robbed them of paying readers, it had also (and more critically) siphoned away paying advertisers, the lifeblood of every newspaper. Compounding these factors was a severe economic downturn that further cut in to what remained. In assessing these circumstances, the new publisher was realistic about the challenge, but upbeat about the future. ““I’m very clear-eyed about the task ahead of us,” she said. “It’s going to be really hard. But I think that we’re well positioned. We have incredible penetration, a great newspaper, a great Web site and great people.” She had good reason to be optimistic. At the time, the Post was still one of the nation’s leading papers; its Web site had 8.5 million readers, third among newspaper sites, according to Nielsen/NetRatings. The printed paper ranked seventh in weekday circulation, at 635,000 as of mid-2007, and fourth in Sunday circulation, at 894,000.

Weymouth made her first move before she even had the job, telling her uncle she would not take the helm unless she could integrate the digital and print operations. A few years into her tenure, she commented, “Don was hellbent against it, and probably still is.” Shortly after taking over, she picked , from , as her new editor. He would be primarily responsible for doing the hard work of maintaining the standards of the paper as he confronted the harsh realities of the digital age. While understanding that one of the few advantages held by legacy media is that it is perceived to adhere to more rigorous standards, Brauchli refused to be held hostage to the past. “There are a lot of nostalgia- drenched people in the journalism field who look back at what newspapers were and have a fairly static view of what they should be,” he said in an interview. “Just because The Washington Post used to be a certain way doesn’t mean The Washington Post has to be that way in the future.” Consistent with this outlook, Brauchli set about instituting sweeping changes.

As expected, Brauchli and Weymouth, integrated the print and digital sides in the first half of 2009. Journalists whose primary responsibilities were to the Web site now worked next to print reporters in The Post’s headquarters. The Post newsroom was reoriented to think about one primary goal: bringing the most visitors to Washingtonpost.com. They expanded their Web presence by trying to meld what was great about the old Post with new traffic-baiting tactics of online start-ups — creating new, high-minded blogs like ’s “Wonkblog,” along with “Celebritology 2.0” where news about the Kardashian sisters and Justin Bieber could be found. That led many inside the paper to wonder if online growth would come at too high a cost.

Editors began to stress online metrics and freely borrowed from online competitors like and The Huffington Post. Raju Narisetti, one of two managing editors

2 brought in by Mr. Brauchli, brought large flat-screen monitors into the newsroom that projected in real time what the most popular stories were online. He also installed a new internal publishing system that required reporters to identify Google-friendly key words and flag them before their stories could be edited. Additionally, there were now 35 different daily reports that tracked traffic to different parts of the Web site. Editors received a midday performance alert, telling them whether the site was on track to meet its traffic goals for the day. If it appeared that they might miss their goal, editors ordered up fresh content. Traffic wasn’t the only factor that editors examined when determining whether to kill or expand a blog. They would look at where online visitors were when they read the site. If their computers were registered with a government suffix — .gov, .mil, .senate or .house — editors knew they were reaching the readers they wanted. “That’s our influential audience,” Mr. Narisetti said. “If a blog is over all not doing that great but has a higher percentage of those, we say don’t worry about it.” To further emphasize this reorientation, Post employees were regularly schooled in the lingo of Web traffic. In memos to the staff, Mr. Brauchli was as likely to cite terms like page views, unique visitors and social media referrals as he was to laud a journalistic achievement.

In February, 2012, Brauchli claimed, “Growing everywhere is a sign that we are adapting effectively to what our readers want,” and he had the numbers to back it up. Averaging 19.6 million unique visitors a month, according to comScore, it was the second-most-visited American newspaper Web site, behind that of . Even better news was that this was happening as the Post maintained its journalistic standing. Under Brauchli, the paper had won five Pulitzer prizes, and published articles like an investigation into the insurance giant AIG and its role in the economic collapse of 2008. Encouraging metrics and high journalistic standards seemed to indicate a successful online reorientation. Yet another side of the equation would have to be adjusted before the digital reinvention would be complete - downsizing.

In an interview, Mr. Narisetti was asked if he believed that the newsroom would be the same size at the end of 2012. “One thing no editor in any newsroom in this country can avoid saying is that it will be smaller,” he said. The newsroom, once with more than 1,000 employees, now stood at less than 640 people, depleted by buyouts and staff defections. The newspaper’s Style section, once one of the most coveted assignments in American journalism, had shrunk from nearly 100 people to a quarter of that size. Bureaus in New York, Los Angeles and Chicago were gone. There were so many Friday afternoon cake-cutting send-offs for departing employees that editors had to coordinate them so they didn’t overlap. Signaling that further cuts would be required, Narisetti added that if his bosses asked him how many people he needed to put out the paper, “the chances are we wouldn’t say 630 people.”

After working the cost side of the ledger and reaching diminishing returns, there was still one more move to make: In 2013, The Washington Post would begin charging for online content. This came after years of denial from Donald Graham

3 that the Post would ever do so. Stating his reservations to Walter Isaacson at an Aspen Institute event, Graham explained:

“The New York Times or Wall Street Journal … can say we’re going to charge, but we’re not going to charge you if you subscribe to the newspaper. The Washington Post circulates in print only around Washington, D.C., but way over 90 percent — I think over 95 percent of our Internet audience is outside Washington, D.C. We can’t offer you that print or online choice. So, the pay model would work very differently for us.”

As reasonable as this sounded, the greater reality was that the paper could no longer rely on the ad revenue it had feasted on in the past. The advertising business was gone and it was not coming back, forcing traditional dailies to adopt a new model built on reader subscriptions. With this, not one aspect of the enterprise was left unchanged. Weymouth had seemingly made every possible move to adapt to the new reality.

The Master of Disruption

Rather than adapt to the online revolution, Jeff Bezos chose to be its architect. After graduating from Princeton, he went to Wall Street, ending up at D. E. Shaw & Company, a hedge fund. He began Amazon when he took note of two things: how fast the Internet was growing as it became a consumer medium in the early 1990s, and how well-suited the book business was to selling online. One Web site could offer all the hundreds of thousands of titles in print in a way that a land-based store never could. As recounted in ’s recent book, in 1995, when Amazon.com started out simply as an online bookseller, it was so small that every time someone made a purchase “a bell would ring on Amazon’s computers, and everyone in the office would gather around to see if anyone knew the customer.” In 2012, its 17th year of operation, and having long ago moved from simply selling books to offering just about everything, Stone reported that the company “cleared $61 billion in sales” and it would probably become “the fastest retailer in history to surpass $100 billion.” This spectacular growth was based on two principles: 1) Think for the long term, and 2) Put the customer first.

Give The People What They Want

When asked in 2009 how he would define what Amazon is, Bezos responded “We start with the customer and we work backward.” He further explained the “working backward” mentality to Newsweek’s :

It is to say, rather than ask what are we good at and what else can we do with that skill, you ask, who are our customers? What do they need? And then you say we’re going to give that to them regardless of whether we currently have the skills to do so, and we will learn those skills no matter how long it takes. Kindle is a great example of that.

4 No one who has worked closely with Bezos would dispute that he refuses to waste time on anything that isn’t about the customer, including his employees. This has its up and down sides. As tech companies grow old and big, they strive to keep the energy and boldness of the start-up they once were. They almost always fail. Amazon is the exception. “If a new product was launching, sometimes the day would never end,” a former employee said. As an Amazon joke has it, work-life balance is for people who do not like their work. Some have been richly compensated for this level of dedication. In Seattle, employees who are partly paid in stock have been rewarded with its 600 percent climb in the last five years. But out in the warehouses, where most of Amazon’s 90,000 employees work, the benefit remains to be seen. Starting pay is about $12 an hour and workers can quickly lose their jobs if they slow down. It was so hot in Allentown, Pa., in May 2011 that some workers at the Amazon warehouse there collapsed. Another company with different attitudes might have installed air-conditioning, or simply sent workers home during heat spells. Amazon chose instead to station ambulances and paramedics out front during five days of excessive heat, according to The Morning Call, the Pennsylvania newspaper that broke the story. Fifteen workers were taken to area hospitals after they fell, and as many as 30 more were treated by paramedics at the warehouse. Workers quoted by the paper said the heat index in the facility, a measure that includes humidity, was as high as 114 degrees. Amazon had little to say to the newspaper, even when it later installed air-conditioning. Had they chosen to speak, they might have pointed out that the episode only proves that their commitment to the customer is beyond question. Throughout the ordeal, East Coast customers never had to worry that they might not get their new coffeemaker, or headphones, or Kindle Fire.

Built For Tomorrow

In 1997, the year Amazon.com went public, Bezos was explicit about his commitment to the long term. He warned shareholders “we may make decisions and weigh tradeoffs differently than some companies” and urged them to make sure that a long-term approach “is consistent with your investment policy.” Amazon’s management and employees “are working to build something important, something that matters to our customers, something that we can tell our grandchildren about,” he added. On one level at least, Amazon had been true to its word. By 2011, with a stock soaring 12,200 percent since its public offering, it remained one of the world’s leading growth companies. In late October 2011, it reported quarterly revenue growth of 44 percent to almost $11 billion, which came on the heels of 80 percent growth a year earlier. But operating earnings sat at $79 million. While that was in line with most estimates, Amazon offered a forecast for the fourth quarter of 2011 in which it said it might lose as much as $200 million or earn as much as $250 million. The reason Amazon was earning so little while selling so much was that it was spending so much on long-term growth. In 2011, it opened 17 new fulfillment centers — airport hangar-size storage and shipping facilities. It also aggressively cut prices. Its profit margin for the quarter was just 2.4 percent. By comparison, Wal- Mart’s margins are 6 percent on revenue of $440 billion.

5 All of this was in line with Bezos’ long-term strategy, which he believed gave him a competitive edge: “If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people,” Mr. Bezos told reporter Steve Levy November 2012 interview in Wired. “But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow— and we’re very stubborn.” Morgan Stanley analyst, Scott Devitt, observed “Amazon is marching to a different drumbeat, which is long term. Are they doing the right thing? Absolutely. Amazon is growing at twice the rate of e-commerce as a whole, which is growing five times faster than retail over all. Amazon is bypassing margins and profits for growth.” Bezos’ commitment to the customer and the long term enabled him to build Amazon into one of the largest retailers in the world.

Facing Present Reality

Despite metrics that seemed to indicate that the Washington Post had successfully reinvented itself as a digital player, circumstances were not what they appeared. For years, the paper had been buoyed by Kaplan Educational Testing, one of the Washington Post Company’s most profitable divisions. Cash from this operation helped keep the Post afloat and masked the true depth of its problems. In 2010, the veil began to be lifted when the Obama administration began to restrict the often predatory practices of for-profit colleges, including Kaplan. As a result, its revenue dropped from $406 million in 2010, to $27 million two years later. When this cushion was removed, it was clear that the Washington Post could not stand on its own. In a final attempt at survival, Katharine Weymouth put its District of Columbia headquarters up for sale in the hopes of generating some cash. But in the end, both she and Washington Post Company CEO realized there was nothing more they could do. If the Washington Post was going to continue, it would do so under different leadership. In a statement that rocked the industry, Don Graham announced that they would sell: “I, along with Katharine Weymouth and our board of directors, decided to sell only after years of familiar newspaper-industry challenges made us wonder if there might be another owner who would be better for the Post.” In an interview, he said “The newspaper business continued to bring up questions to which we have no answers.” And concluded “We knew we could survive, but we always felt that our ownership should do more than help the paper survive.” In an e- mail, Weymouth added, “we have always understood that this is a public trust and our focus was on ensuring that it would remain strong for generations of readers to come.”

Still, the announcement was greeted by what many staff members described as “shock,” a reaction shared in newsrooms across the country as one of the crown jewels of newspapers was surrendered by one of the industry’s royal families. And when the buyer turned out to be Jeff Bezos, no one minded admitting astonishment.

6 Neither his managerial style, nor his entrepreneurial success, nor his passion for secrecy seemed to necessarily transfer over to his newest possession.

Seizing Authorship of The Future

In Mr. Bezos, The Post now had a very different owner, a technologist whose fortunes have risen even as those at The Post and most newspapers had struggled. Yet this was precisely why he might be well suited to rescue the paper. In an interview, Weymouth commented “If journalism is the mission, given the pressures to cut costs and make profits, maybe (a publicly traded company) is not the best place for the Post.” Ken Doctor, an analyst at Outsell, said that the Post sale reflected a broader trend of newspaper ownership returning to local investors rather than large, publicly traded enterprises. “Newspapers are not really much creatures of the marketplace anymore,” said Mr. Doctor. “They’re not throwing off much in profits. They need shelter from the pressure of quarterly financial statements and reports.” Bezos personally purchased the paper, not on behalf of Amazon.com the company. And with a personal worth that Forbes estimated to be $28 billion (with a “b”), the $250 million purchase was the equivalent of pocket change. Thus, he would be under no pressure to show a profit. “Jeff Bezos doesn’t need The Washington Post to make money tomorrow or even in five years,” said Glenn Kelman, the chief executive of Redfin, a real estate site that, like Amazon, is based in Seattle. “He’s proven that he’s able to think over a geological time scale.”

Bezos would also be well positioned to bring the cultural change some believed would be required for the Post to truly reinvent itself. James M. Brady, who was the executive editor of The Post’s Web site from 2004 to 2008, said that traditional news outlets had struggled to build and experiment with the digital arms of their organizations while retaining the values that built the company. “We all tried to do it on the news side, but when you’re dealing with declining revenues and still trying to put out a daily news product, there’s not much money left for the developer side,” he said. “We should have done it anyway, but at the time we were trying to preserve the core product, the daily newspaper.” Of course, innovation is an area where Mr. Bezos would be primed to flex his expertise in analyzing data to find ways to engage a younger audience. And Mr. Bezos’ money could come in handy when it comes to adding to the newspaper developers, engineers, designers and others who could radically change the way the organization looks and runs.

Finally, given the need for change, research indicates that Bezos’ singular control might be exactly what the Post needs at this time. In an economic study now considered classic, Harold Demsetz and Kenneth Lehn found that concentrated ownership works better in highly volatile environments, where rapid change and external forces make it difficult for public shareholders to monitor and judge the performance of managers. In such “high agency cost” environments, it may be more efficient for a single owner or a dominant shareholder to keep an eye on how managers are dealing with rapid change and disruptive innovation. “Newsrooms are very conservative,” said Bill Buzenberg, executive for the Center for Public Integrity.

7 “They have difficulty changing and certainly they have difficulty selling out their core principles.” This is probably true. It would also be true that few newsrooms have ever been confronted with an owner whose zeal for disruption is matched by his obsession with tinkering until he gets it right. As Steve Yegge, a former employee, once put it, “He just makes ordinary control freaks look like stoned hippies.”

In his first visit to the Post, Bezos said he intended to bring to the newspaper some of the same approaches that had been successful for Amazon: “We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: Put the customer first. Invent. And be patient,” he said. “If you replace ‘customer’ with ‘reader,’ that approach, that point of view, can be successful at The Post, too.” Such remains to be seen.

8 “Taking the Lede”

Discussion Guide

The Steward of A Legacy

- From a leadership perspective, what advantages and disadvantages did Katharine Weymouth have as she stepped into the role of publisher of the Washington Post?

The Master of Disruption

1. As Jeff Bezos began to build Amazon.com, what value was there to establishing his two foundational principles? 2. Can you name similar foundational principles for any organization you have been part of or have led? 3. In what ways did/do you see these principles you mention in #2 being followed in your organization? How have they shaped the organization? 4. Have you been part of an organization where stated principles differ from those that are practiced? Why does this happen? 5. As a leader, how can you ensure that the stated foundational principles are the same as those that are practiced?

Managing A Painful Tension

1. As Weymouth and Brauchli set about adapting the Washington Post to the digital age, what guidelines or principles did they use to decide what they would change and what they would not? 2. What indications were there that not everyone agreed on what should be preserved and what could be changed? 3. Web traffic statistics and Pulitzer prizes seemed to show that the Washington Post was successfully transitioning into the digital age. How do we know if these are or aren’t the proper criteria to use? What other criteria might Brauchli consider? Why? Why is this important?

Building for Tomorrow

1. Why did Bezos’ adopt such a long-term strategy? 2. What is his goal in creating Amazon? 3. In what way is it to his advantage to be explicit about this? 4. In what way could it be to his disadvantage?

Give the People What They Want

1. How does Bezos’ describe his “working backward” approach? 2. How does this compare with the prevailing wisdom that you should “play to your strengths”?

9 3. How does it fit or not fit with with the “Hedgehog Concept” Jim Collins describes in Good to Great? 4. Has Bezos’ “working backward” approach been successful? 5. How can this success be explained by the “Hedgehog Concept”? 6. Based on what you know about Amazon, what would you identify as its core strengths? How do they play to them? 7. Does Amazon remain true to its core principles? Should they adjust them?

Facing Present Reality

1. Did Weymouth, Graham, and the board at Post give up? 2. What more, if anything, should Weymouth have done to lead the Post through this adjustment? 3. Are there ever instances where circumstances that are impossible to overcome, no matter how well someone leads? 4. How does one discern when this is the case? 5. In what sense was the decision to sell an abdication of a leadership role? In what sense was it a courageous act of leadership?

Seizing Authorship of The Future

1. At the beginning of the story, who seemed to have all the advantages? 2. Who actually had them? 3. What can you learn from this? 4. With a personal worth of $28 billion, it really did cost Bezos almost nothing to buy the Washington Post. In what way might this affect Bezos’ interest in the Post and how he chooses to run it? 5. The case lists several strengths that Bezos will bring that could help him be successful where Weymouth et al. were not. How might these same strengths work against him? 6. In what way do Weymouth and Bezos differ in their perspective on the circumstances faced by the Washington Post? How would this shape way they approached leading the Post? 7. How much can the Washington Post change before it is no longer the Washington Post?

10 Sources

Alden, William. “Bezos Buys a Landmark in Washington”. The New York Times. August 6, 2013.

Bilton, Nick. “Is Amazon Working Backward?”. The New York Times. December 24, 2009.

Carr, David. “A Publisher Stumbles Publicly At The Post”. The New York Times. July 4, 2009.

Carr, David. “Pay Wall Push: Why Newspapers Are Hopping Over the Picket Fence”. The New York Times. December 7, 2012.

Carr, David. “The Washington Post Reaches the End of the Graham Era”. The New York Times. August 5, 2013.

Fleischer, Victor. “A Trophy Owner Also Familiar With Turmoil”. The New York Times. August 19, 2013.

Haughney, Christine. “Washington Post Says It Will Seek New Home”. The New York Times. February 1, 2013.

Haughney, Christine. “Bezos, Amazon’s Founder, to Buy The Washington Post”. The New York Times. August 5, 2013.

Haughney, Christine. “Bezos Makes First Visit to Washington Post as Owner”. The New York Times. September 3, 2013.

Kakutani, Michiko. “Selling as Hard as He Can”. The New York Times. October 28, 2013.

The New York Times. “Daily Report: For Washington Post, a Promise of Innovation”. The New York Times. August 7, 2013.

Perez-Pena, Richard. “Washington Post Names Publisher”. The New York Times. February 8, 2008.

Peters, Jeremy W. “A Newspaper, and a Legacy, Reordered”. The New York Times. February 11, 2012.

Sorkin, Andrew Ross. “Newspapers Are Billionaires’ Latest Trophies”. The New York Times. August 5, 2013.

Stewart, James B. “Amazon Says Long Term And Means It”. The New York Times. December 16, 2011.

11 Stewart, James B. “After Post Sale, Spotlight Shines More Intensely on The Times”. The New York Times. August 9, 2013.

Stolberg, Sheryl Gay. “The Next Edition”. The New York Times. August 2, 2013.

Streitfeld, David, and Christine Haughney. “Expecting the Unexpected From Jeff Bezos”. The New York Times. August 17, 2013.

Wingfield, Nick, and David Streitfeld. “A Mogul Gets a Landmark in the Capital”. The New York Times. August 5, 2013.

Wortham, Jenna, and Amy O’Leary. “Bezos Brings Promise of Innovation to Washington Post”. The New York Times. August 6, 2013

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