THE BUSINESS KNOWLEDGE NETWORK THE CONFERENCE BOARD newsletter summer 2002 Sharon Patrick on the Conference Board Strategic Model of Martha Forms Blue-Ribbon Governance Group Stewart Living Omnimedia The Conference Board’s newly-formed Com- mission on Public Trust and Private Enter- prise has begun to examine critical corporate Sharon Patrick is President and Chief governance issues and will issue its first Operating Officer of Martha Stewart report and recommendations this fall. Living Omnimedia Inc. The creator of The co-chairs of this blue-ribbon group MSLO’s “Omni” business model and a are Peter G. Peterson, Chairman of The major force in the profitable growth of Blackstone Group and Chairman of the Fed- the company, Patrick is responsible for eral Reserve Bank of New York, and John the company’s strategic development W. Snow, Chairman of CSX and former and transactions, and runs MSLO’s S Chairman of the Business Roundtable. day-to-day business operations. “Misconduct by highly visible corpora- A Trustee of The Conference Board, tions is eroding shareholder value for all cor- Patrick was Martha Stewart’s consultant porations and public confidence in critical beginning in 1993, a founding partner of elements of our economic system,” they MSLO with Stewart in 1996, and declared. assumed her current position in 1997. The Conference Board’s long-standing She received an MBA from the Harvard Sharon Patrick Business School, and a bachelor’s degree reputation for independent fact-finding and in history from Stanford University. She the experience, accomplishments, and rep- was interviewed by Randall Poe in The Q. What did you learn from Harvard, utation of Commission members provide the Conference Board’s New York offices. McKinsey, and Rainbow that has helped Commission with a unique charter to gen- you most in managing Martha Stewart Q. Are you still following the business erate meaningful change. Omnimedia? model you designed back in 1994? Patrick: Yes, the “Omni” model is based Patrick: McKinsey taught me to respect ana- The Conference Board’s Commission on on years of personal research from the lytics and the fundamental economics Public Trust and Private Enterprise McKinsey practice days, and since 1994 underlying any business enterprise. Both Co-chair: we have followed it with great discipline. Harvard and McKinsey taught me that when Peter G. Peterson, Chairman, The Blackstone Group You don’t change your plans the way you you understand the underlying economics, John W. Snow, Chairman of CSX change your clothes. We believe in our the financials will follow. I have never built Members: approach because it works. business plans on financials but on the basic John H. Biggs, Chairman, President and CEO, Q. How do you spend most of your economics of the business and then let these TIAA-CREF working days? economics drive the financials. Rainbow John Bogle, Founder and former Chairman, Patrick: I spend about half my day on trans- taught me a lot about managing risks. Both Vanguard Group, Inc. actions and the other half operationally exe- Chuck Dolan (the founder of Cablevision) Charles A. Bowsher, former Comptroller General cuting our strategy. We heavily use media and Martha Stewart are great risk takers. Arthur Levitt, former SEC Chairman to cross promote and leverage our “how Q. How do you control costs in such a Andrew S. Grove, Chairman of Intel Corporation to” ideas for the home and generate demand high-content company as yours? Ralph Larsen, former Chairman and CEO of for our merchandise. We call it “turning Patrick: As an idea company, we have Johnson & Johnson dreamers into doers.” A substantial part of designed rules in executing our strategy. One Professor Lynn Paine, Harvard Business School my time is spent with business segment rule is that since the development of any idea Warren Rudman, Partner, Paul, Weiss, Rifkind, Wharton & Garrison executives to help them accomplish our is a high fixed-cost activity, spreading it to Paul Volcker, former Chairman of the L earnings and other goals. CONTINUED PAGE 2 Federal Reserve System THE CONFERENCE BOARD The Business Knowledge Network CONTINUED FROM PAGE 1 the widest possible audience will lower per-unit costs to Conference Board the point where you achieve great economies and thus economics. And, with passion, that’s exactly what we do. Expands Links with Q. As you keep growing in good times and bad, what are the biggest hurdles ahead? Patrick: One challenge is to prioritize all the opportuni- Poland’s Leaders ties coming our way. Martha Stewart developed and we The Conference Board brought together more than 30 The Honorable are pioneering the category called “living” and “lifestyle.” CEOs and managing directors from Poland’s leading com- We have eight different content areas in the domestic arts— Diana E. Murphy, panies to share ideas and experiences in a special meet- ranging from weddings, baby and children to gardens Chair, United ing in Poland. All are members of the Board’s Polish and home—where we have both authority and expertise. States Sentencing Council of Chief Executives. We have opportunities in TV, publishing, merchandising, Commission, Top economic and financial authorities examined the and the Internet. We need to decide how much we can Judge, U.S. Courts challenges facing Polish companies in their rapid drive handle at one time in these core business segments. of Appeals, at the to improve their competitiveness. Also explored: new Another challenge is to achieve clarity and consistency in strategies to improve political stability and improve work- Board's Business all retail channels in which we operate so that we do not ing conditions in central and eastern Europe. Ethics Conference. confuse our customers. Finally, we’re a small-cap com- The Council of Chief Executives is one of four Con- pany growing very quickly into a mid-size company, and ference Board units in Poland. Another Council is we are challenged to internally manage our growth. designed for Hungary’s top executives. Q. How do you view The Conference Board’s role A growing roster of companies are taking part in Con- in helping you manage your business? ference Board activities—including ABB, Alcatel, Bank Patrick: We view The Conference Board as one of our Pekao S.A., BRE Bank S.A., Deutsche Bank, CGU, Eric- partners. The Conference Board provides us with an abil- sson, Hewlett Packard, KPMG, Philip Morris, PKN Orlen, ity to learn and to bounce ideas back and forth. Our com- Richter Gedeon, MOL, Philips, Siemens, Tesco, Teleko- pany constantly benefits from the best practices reports munikacja Polska SA, and Thomson. the Board does, and we’ve found Conference Board peo- ple always willing and available to provide our execu- tives with rich information which has improved so many Miles White, of our policies and procedures. Chairman and CEO, Companies Struggle Q. Do you use The Conference Board’s research? Abbott Laboratories, Patrick: We’ve found the Board to be a great source to addressing a confirm such things as salary growth rates. We always with Web Strategies Conference Board check with The Conference Board on that. We’ve bene- To cut costs and enhance productivity, more and more meeting. fited from a wide range of knowledge, from learning about companies are turning to the Web for branding, confer- latest security and other business practices following the encing, and other key communications activities. But September 11 attacks to staying on top of new HR trends. many firms are finding that their systems are too expen- Our general counsel, our CFO, and our senior HR exec- sive and don’t always meet their needs. utive all sit on Conference Board councils. This gives us In an Executive Action report, The Conference Board a connection to the larger economic and business world provides a timely look at how companies are investing and provides a terrific benefit in exposing our executives in, and building, new communications networks. to the larger world. The Conference Board is now linking concerned exec- Q. How would you describe your life working with utives in a working group to examine Web conferencing Martha Stewart? and collaboration systems. For more details, e-mail Leah Patrick: An adventure! It’s always demanding—perfection Averre at [email protected]. goes with the brand territory. It’s much like working with Bruce S. Ramo, the air traffic controllers. In both organizations, it’s a Vice President and zero-defect world. But I like that kind of environment. Director, Office It brings out the best in you, it’s always interesting, and of Ethics and it’s definitely rewarding. Compliance, Motorola Inc., at The Conference Board's Business Ethics meeting. Timberland Fosler: Hong Kong employees build a playground Can Profit by as part of the company’s Technology Use community out- Hong Kong should move aggressively to make greater reach program. use of technology in order to boost productivity. Timberland was That was the message of Gail Fosler, Conference Board a winner of Chief Economist, to top executives in Hong Kong. “The this year’s challenge is to develop high-end, globally compatible Ron Brown Award service companies and industries that leverage technol- for Corporate ogy,” said Fosler. She cited recent Conference Board research showing Leadership, the a strong and growing link between technology-using only Presidential industries and productivity and said it was the key rea- Award recognizing son for the United States’ productivity lead over the rest companies for Outsourcing’s of the world. outstanding achievement Slippery Slope in employee Leading outsourcing experts told corporate executives to and community It’s Investment, create firm objectives and be careful before rushing into relations. outsourcing.