FALL/WINTER 2004 STERNbusiness BRAND N E W S Global Brand Managers Speak: Visa, MTV, J&J Stigmatized CEOs Martha’s Woes Rolex Rolls On Toyota Motors Ahead Paul Newman’s Salad Days Are Fannie and Freddie Too Big? Investors to CEOs: Ditch the G-IV! May I Help You? Customer Assistance Strategies That Work a letter fro m the dean It’s rare to discuss are proud to offer strong programs in a range of branding in the context of disciplines: from economics to marketing, from a university, or of a busi- management to information systems. ness school. After all, we We strive constantly to invigorate Stern by don’t have customers or recruiting new faculty, by bringing a broad range of products. We don’t try to guest scholars and executives to share their experi- gain market share by ences with us, and by finding new ways to connect rolling out periodic mar- and re-connect with members of our far-flung com- keting campaigns. And munity. This September, we are welcoming 11 new yet, in one important way junior faculty to campus. We are also delighted that our efforts are inextricably linked to the process that Steve Florio, the former president and chief execu- companies go through when trying to build a brand. tive officer of Condé Nast Publications, is coming to We have a strategy in place to ensure that NYU teach at NYU Stern this fall. Our long-running CEO Stern signifies and embodies certain values and Series and the popular Author Lecture Series both attributes in the minds of all our stakeholders – continue, with the appearance of business leaders students, faculty, staff, colleagues, and our counter- such as Larry Bossidy and Robert Rubin, respective- parts in the private sector. Beyond that, we strive to ly. And in October, our Global Alumni Conference in communicate our values consistently and frequently Paris will feature presentations on topics ranging to our different constituencies. from the future of the European Union to the global What are the components of the NYU Stern luxury market. brand? A spirit of rigorous interdisciplinary inquiry; SternBusiness is an integral part of these efforts an openness to the city that is our home, and to the to explore, raise questions, and establish connections global context in which we live and work; a commit- in New York – and beyond. And this issue proves ment to excellence in teaching; and the ambition to that members of our community have significant grow, expand, and deepen our knowledge base intellectual contributions to make on the important through research. subject of branding. I hope you enjoy it. The Stern brand has been built over a century of sustained effort. We have deep roots in finance and accounting. But over the decades, as we have grown, and as our human and financial resources have Thomas F. Cooley grown, we have expanded our horizons. Today, we Dean contents FALL/WINTER 2004 Brand News Stern ChiefExecutive Series Interviews with 42 Tom Freston, Viacom, Page 2 Helping Carl Pascarella, Visa USA, Page 4 Hands William Weldon, Strategies for Assisting Shoppers Johnson & Johnson, Page 6 in Malls and Online by Eric A. Greenleaf, 18 Vicki G. Morwitz The Scarlet F and Russell S. Winer 12 Brand Equity When Good Executives Go Bad by Daniel Gross by Batia M. Wiesenfeld, Kurt Wurthmann and Donald C. Hambrick 48 Endpaper by Daniel Gross 24 What Makes Rolex Tick The Watch Maker’s Success Secrets by David Liebeskind 28 Car Talk NYU Stern Alumnus Tatsuro Toyoda of Toyota Motor Corporation Returns to Campus STERNbusiness 14 A Very Bad Thing A publication of the Stern School of Business, New York University Martha Stewart’s Meltdown 30 Flights of Fancy President, New York University I by Peter N. Golder Do Stocks Suffer When CEOs John E. Sexton Use Private Jets? Dean, Stern School of Business I Thomas F. Cooley by David Yermack Chairman, Board of Overseers I William R. Berkley Chairman Emeritus, Board of Overseers I Henry Kaufman Associate Dean, Marketing and External Relations I Joanne Hvala 36 Editor, STERNbusiness I Daniel Gross The Trouble with Fannie and Project Manager I Lisette Zarnowski Freddie Design I Esposite Graphics The Hazardous Growth of Two Mortgage Giants Letters to the Editor may be sent to: by Lawrence J. White NYU Stern School of Business Office of Public Affairs Illustrations by: Bryan Leister, Juliette Borda, 44 West Fourth Street, Suite 10-160 Jud Guitteau, Ken Orvidas, Steven Salerno, New York, NY 10012 Michael Caswell, Robert O’Hair www.stern.nyu.edu sternChiefExecutiveseries Tom Freston co-president and co-chief operating officer of Viacom Tom Freston, co-president and co-chief operating officer of Viacom, received his MBA from NYU Stern in 1969. He has been with the pioneering music channel MTV since its found- ing in 1981 and served as CEO of MTV from 1987 until last spring. MTV Networks, a division of Viacom, operates cable networks MTV, VH1, Nickelodeon, Country Music Television, Spike TV, Comedy Central and TV Land. The company also controls MTV films in association with Paramount Pictures and licenses consumer products. MTV currently broadcasts to 314 million of the world’s households in 136 countries and territo- ries. MTV has branched out from its original fare of music videos to offer original programming, such as Real World and Newlyweds, and has engaged young audiences with its “Rock the Vote” and “Choose or Lose” campaigns. In June 2004, Freston was promoted to co-president and co-chief operating officer of Viacom, and is now responsible for the company’s cable, publishing and theme park units. RR: What television moments One was the notion that you Peter Drucker as one of my Then I decided I better get a influenced you growing up in should experience as many professors. job. I wanted to do something Connecticut? different things as you can, really creative. So I got a job at TF: I grew up in the '50s and that travel would be a very RR: Do you remember an ad agency, Benton & '60s, which must seem like important journey to take in anything that he specifically Bowles. They put me on a ancient history now, and I saw your life. taught you? Proctor & Gamble business. I those iconic moments: Elvis's TF: I always remember him was assigned to the Charmin first time on TV and the RR: So what motivated you to talking about innovation. toilet paper account. But I was Beatles and the Kennedy go to business school in the Invention is creating something very alienated at the time. So assassination. But I spent first place? totally new. But the real thing after a year and a half I quit, more time listening to the TF: I couldn't really see in life is innovation, which is and I spent a year traveling radio, and I was really touched myself being a doctor or a taking two things that already around the world. I ended up by the Beat movement of the lawyer or a dentist. If I went to exist and putting them together in Asia, and I was just so late '50s, early '60s, and the business school I thought I in a new way. That's where enthralled with everything I rise of the counterculture. I could find something that I most businesses come from. saw there. So I made up my wasn't a hippie, but I was right liked, although it was really mind that I would like to live here in Washington Square hard for me to figure out what RR: What did you do when there and work, and figured Park. And the late '60s was a that would be. It was also you left here? out a way to support myself. real interesting time to be helpful at the time to get a TF: I took off a year and a half I came back to the States going to business school in deferment and stay out of the and sort of bummed around. I and found a friend who had New York City. There are cer- war in Vietnam. But I was very was a bartender in Aspen. some money. And in 1973, tain themes from those move- pleased to get into NYU. I Then I went to Mexico and with the advent of air freight, it ments that resonated with me. was lucky enough to have worked around the Caribbean. was possible to make some- 2 Sternbusiness Mr. Freston was interviewed by Randall Rothenberg, editor-in-chief of the quarterly business magazine Strategy+Business and editor-at-large at Advertising Age. thing in a country like India or Networks as a real brand-ori- pany, make it work more effi- documentaries on sports fig- Afghanistan, and sell it 24 ented powerhouse. ciently, and get everyone to do ures. It's off to a good start. hours later in New York City. a slightly better job. If you're in We set up factories to design RR: You went from new a world that changes a lot like RR: Would you call that pri- and make clothes in India and recruit, to a company that the media, the organization marily a research-based Afghanistan. I had a house in didn't exist, to CEO in about really has to mutate and move process? each place. We sold our seven years. What were the quickly, and it requires strong TF: It was based on research clothes through a network of touchstones along the way leadership. That doesn't just and then looking at product showrooms here and in that led you to the point of mean leadership from me, but availability.