When William J. White, chairman and CEO of Bell & Howell, met recently with representatives from his company’s banks about refinancing debt, he was in for a surprise. “The same banks were there, but different people,” he says. “The ones we knew well were in the high-risk, high-yield, leveraged departments.” Why the new faces? “We’d been moved to the good side of the banks now that we’re a better business risk,” says White, allowing himself a moment of pride.
He’s certainly entitled to it. When White, 58, came on board at Bell & Howell in February 1990, the company was staggering under a whopping $750 million in debt from a 1988 leveraged buyout.
As an added challenge, the Skokie, IL-based firm was transitioning from a maker of audiovisual equipment to an information and systems company with the goal of pursuing business in the electronic and online publishing industries-and taking on such market leaders as Dow Jones, Nexis, and Dialog. White admits the task seemed daunting, particularly given that he was not familiar with the industry; but his personal interest in computers and the Internet-he’s a self-avowed Web-surfer-as well as the great potential he believed Bell & Howell possessed to capture market share, were enough to convince him to take on the job.
“I was confident that if I could focus people on the importance of having steady cash flow and be sure I had the right people in key positions, that we would make it through,” he says, adding that previous experience had prepared him, including his most recently held position of CEO of Whitestar Graphics, a printing and graphics company.
With cash flow a priority, White’s mandate was clear: Cut costs. Over the next three years, he and his senior executives were successful at pursuing their goal-almost too successful. While they had managed to pare costs significantly, sales were so anemic that Bell & Howell looked like a candidate for that management buzzword: “corporate anorexia.” “It wasn’t until late 1993 that we woke up and said, ‘We’re doing a great job with operating earnings compounding at 12 percent to 15 percent, but our sales growth is only 4 percent,’ We knew there were a lot of costs we could still wring out, but you can’t do that forever.”
So White found himself leading Bell & Howell through a radical change in corporate culture. Incentives were revamped to reward sales instead of cash flow, and, with the return of the company to public ownership last year, senior management gave up cash bonuses for options tied directly to stock performance. Even the board of directors participates. “They’re paid entirely in options, so if the company doesn’t do well, they work for free,” says White.
In general, White’s managerial strategy dictates that success can best be achieved by empowering division managers. “I believe in having decentralized management, in letting our division presidents really feel that they are owners of their individual business by letting them make decisions with minimal approval at a corporate level.”
While he admits the transition hasn’t been painless-some executives who couldn’t adjust to a growth culture are gone-the results have been dramatic. Sales increased 7 percent in 1994, then an additional 14 percent to $820 million last year; and the momentum was still going in the first half of 1996 as revenues hit $415.1 million, up 10 percent over the same period in 1995. White’s only regret about the switch to a growth strategy: “We should have started sooner.”
But he isn’t spending much time looking back. He and his division presidents have hit the acquisition trail. Most recently, Bell & Howell purchased Data Times, an electronic publisher that will be folded into UMI, the company’s own electronic database publishing division. UMI, one of four Bell & Howell businesses (including a mail processing group, an information management business, and an electronic auto parts catalog), owns and distributes, via CD-ROM and the Web, the largest collection of magazine articles and newspapers after the Library of Congress. The growing division’s greatest challenge, says White, is to enhance content and distinguish itself among a plethora of Web-based information services.
Meanwhile, White has much to celebrate. Donald Frey, a retired
Chairman and Chief Executive
Family: Wife, Jane; children, Jim, Tom, Mia, Gretchen; and five grandsons.
Education: Northwestern University, Industrial Engineering; MBA, Harvard.
Board of directors: The Readers Digest Association.
Business philosophy: “I believe customer satisfaction comes from employee satisfaction. So we work hard to be sure that all our associates [employees] get excited about their jobs. Once that happens, it rubs off on customers. That’s the ultimate leverage.” Influence: Professor Georges Doriot,
Interests: Golf, tennis, sailing. “But my real hobby is working on teaching, which will probably be a future vocation.” (White is an adjunct professor at Northwestern University and a visiting lecturer at The Darden School of the University of Virginia and the University of Illinois at Chicago.)
Car: 1990 Black Porsche 911.
Books read recently: “Absolute Power,” by David Baldacci, and Inspector Morse mysteries by Cohn Dexter.