November 1 1989 by John W. Amerman
It’s possible that even Ken doesn’t love Barbie as much as John W. Amerman does. The 57-year-old chairman and CEO of Mattel has good reason to be enamored with his 30-year-old doll: Barbies are now bought at a rate of 54,000 a day. More than 500 million have been sold and, according to Mattel, 90 percent of girls age in the
If Amerman has reason to be pleased with Barbie, Mattel’s stockholders have even more reason to be pleased with Amerman. Two years ago the big toy company was in big trouble. Costly new product development, ballooning expenses and lackluster marketing had put Mattel in the red; 1986 and 1987 were years with no dividends and ’87 saw the company lose a resounding $114 million on sales of $1 billion.
In February ’87, Amerman-then president of Mattel International was brought in to succeed CEO Arthur Spear. He acted quickly to turn the company around and succeeded: In 1988 Mattel reported a profit of almost $36 million on sales of almost $990 million. It looks as though 1989 will be even better. As Kidder,
Amerman’s strategy for the turnaround was painfully effective. At the company’s
Simultaneously, Amerman replaced Mattel’s previous emphasis on new products with one based on what he calls the “core products”: perennial best-sellers like Barbie, Hot Wheels and L’il Miss Makeup. Ogilvy & Mather, Mattel’s longtime advertising agency, invigorated the core brands’ appeal. Finally, in an exclusive and potent alliance, Mattel joined with its neighbor Disney to produce toys for infants and pre-schoolers, an important market that once eluded Mattel.
Amerman has also been team building. Noting that “confrontation” had previously been fostered at Mattel, he comments: “It can work that way. All you have to do is read Charles Revson’s book and you know it can work. But I happen to believe in team building, particularly in the toy business.”
John Amerman hasn’t always been into toys. Before joining Mattel in 1980 he had spent many years in marketing and managerial positions with Warner Lambert and Colgate-Palmolive, which he joined after graduation from
JOHN R. WALTER
Printing is the sixth largest industry in the
How do they do it? “It’s really marketing 101,” says the company’s new president and CEO, John Walter, 42. “You understand where your customers are and then you build a manufacturing facility amongst them-and then you service them to death.” Sounds simple, but it does help to already be a well-managed, relatively debt-free, consistently profitable behemoth, and to be, as Walter’s remark implies, “market driven”-Donnelley goes where the business is. Today it’s in
Take financial printing, for instance.
Five years ago the firm was barely in that profitable industry niche. When it decided to move in, it moved in strength, offering a worldwide satellite data transmission network, an impressive new building in the middle of the Wall Street area, and a set of new plants specifically designed for financial printing. Everything was in place on
“People don’t lose business on price,” says Walter. “People lose it because someone did a better job of selling. Pure and simple. I will not listen to someone who comes to me and says we lost the business because of price. That’s not the case. People buy from people.”
To those who complain that, as one financial magazine recently put it, “Donnelley steamrollers the competition,” Walter replies: “The best selling tool our competitors have is knocking Donnelley. Now that’s an unfortunate selling position to be in. You like to deal from strength instead of weakness.”
Selling was Walter’s career path at Donnelley, which he joined in 1969, just five days after getting his B.S. in business administration from
With a job that keeps him traveling 50 percent of the time, Walter devotes most of his free hours to his wife Carol and their two daughters. At his home in
Of prosperously ticking Donnelley, he says: “We’re in the marvelous position of being able to fix something that isn’t broken.”
The cautious but inexorable opening of
Burandt, the CEO of Moscow-based Y&R/Sovero, a joint venture with the largest Soviet international agency, certainly expresses optimism about his assignment: “It may be the best job in the advertising industry. It really is a chance to be the first advertising man on the ground in the last frontier.”
Y&R, which established the first agency in post-Mao
What will they do pending the arrival of products and brands? Says Burandt: “We will begin as a matchmaking company, a marketing consulting company. Then we’ll do PR work because we’re going to be introducing products people have never seen before. Then corporate advertising.” Burandt will be working with such Y&R clients as RJR Nabisco, Johnson & Johnson and Chevron. Y&R/Sovero has, in fact, already run its first ad in
The activities of the agency are still rather basic: acquainting its clients with the possibilities of perestroika, and the Russians with the mysteries of marketing.
To assist the Russians, Burandt, 46, also lectures on product development and advertising at a
Gary Burandt is no stranger to tough assignments: as a young navy officer in
Last May, with a flourish of parties, press releases and interviews, Finnair celebrated 20 years of regular flights between
If Finnair has a problem, it’s not passengers, it’s capacity. But it takes money to build new routes and buy new planes and, though the Finnish state owns the major part of Finnair, there are no direct government subsidies. The airline is expected to be profitable. Says Potila, “I do not care from which source it comes, but I need capital.”
Early in 1989, $60 million was gained from the public sale of 5 percent of the government’s 76 percent stock holding. The issue was 14 times oversubscribed, indicating a ready market for Finnair offerings. But the sale of the government’s stock is a delicate matter and, in any case, the state will never release more than 51 percent.
An alliance with a bigger carrier is another possibility: “I can see a joint venture with a foreign airline,” Potila speculates. “A cross-share holding could easily be organized.” But, he adds, “we will preserve our Finnish identity, even with foreign shareholders.”
Finnair will need a lot more cash or a big partner to hold on during the coming shakeout of 1992. Profitability aside, the airline is relatively small: though it is the sixth oldest airline in the world, it ranks fortieth in size.
Antti Potila, 50, was brought over as CEO in 1987 from Rauma Repola, a Finnish industrial conglomerate he headed for three years. Rauma Repola is twice the size of Finnair and was paying Potila a great deal more than he earns at the airline. However, there were other considerations: “The chief executive of Finnair has a very high status in the country,” says Potila. “It’s not only industrial people any more, it’s the whole society and even abroad.” Despite his new profile, he denies any political ambitions: “I’m completely neutral, a technocrat.”
Potila will have to use political skills, however, to turn Finnair from a state-owned to a competitive mentality. He’s brought in McKinsey & Co. and he’s encouraging management participation, something new at Finnair. And he’s patient: “Too fast a growth in the airline business is not too good, either. You get into service problems, your punctuality suffers.”
Married with one daughter, Potila lives in
Richard Branson, CEO and 95 percent owner of Virgin Atlantic Airways, is one of
Branson, 39, bought the barge for $150 in 1968 for use as both a home and an office. He was then 18 and had already begun his first business. Today his holdings, mainly The Virgin Group (notably the hugely successful Virgin Records), and The Voyager Group (which includes Virgin Atlantic), comprise the second largest private enterprise in
Virgin Atlantic was founded in 1984 as a low-priced transatlantic carrier. “When we started out five years ago,” Branson recalls, “I think most people thought that I’d lost my head: ‘What’s an entertainment entrepreneur doing starting an airline?”‘
It was a small airline-only two leased 747s to begin with-and its advertising budget was modest. But then there was the publicity flair of Richard Branson himself: skydiving, ballooning and speedboating across the
Today Virgin Atlantic has four 747s flying scheduled routes between
Branson claims he does not want a big airline, just a very good one. “We’ve watched the mistakes of the large American carriers, where size is all important,” he says. “I think in this particular business, size is dreadful.”
Some years ago Branson went public, but has since bought back the stock. “You can’t be a free entrepreneur as chairman of a public company,” he observes, “unless you’re willing to play the takeover game, buying and selling people and so forth, which doesn’t interest me. I’d much rather start companies from scratch, with people who will stick with you through thick and thin.”
Richard Branson now lives in a large
When Hilton sold its international subsidiary to TWA in 1967, no one knew about 1992, high-speed trains, or the remarkable new 747-400s that travel at rapid speeds non stop to almost anywhere in the world.
Now they do. “We can’t just sit back in our own little town, in our own little country, and not take into consideration what’s happening in the rest of the world,” says Gregory Dillon, president and COO of Hilton’s newly launched international subsidiary, Conrad Hotels.
Dillon, whose career began with Hilton some 20 years ago as assistant to the founder Conrad Hilton, has been expanding the chain at a dizzying pace to outdistance its biggest competitor, Intercontinental. By the end of the 1989, Conrad will have properties in
“We think that we can compete head-on in any given city or area,” he says citing the distinct advantage of having the multibillon-dollar Hilton Corp. to fall back on. How advantageous that is, is debatable since Hilton just put itself on the block last month. It was a move that shocked investors, since Barron Hilton just won a 10-year fight over his father’s estate, finally gaining full control of the company last May.
Dillon would not comment on how a possible sale would affect Conrad, but Bill Lebo, Hilton’s senior vice president, general counsel, said “Whoever buys Hilton will be buying the entire structure-everything that’s in place.”
So if it is truly “business as usual,” will Dillon make Conrad Hotels as profitable as Hilton itself, with its 70 percent occupancy rate, 95,000 rooms, 271 properties, and 1988 revenues of $953.6 millon? “Eventually,” he says, although he admits that it could take Conrad a while to catch up. (Analysts agree.)
But it’s a welcomed challenge for Dillon who in 1942, as an army airforce lieutenant, proved his leadership skills-skills he found handy in raising three boys and two girls. How does he keep his troops in order? “Maintain a strong position, and never compromise your standards.”-Lindis Courtney