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From Experience, Freidheim Sees Silver Lining Ahead

Friedheim thumbnail 102x83When summarizing the current state of the economy, Cyrus Freidheim doesn’t mince words.

“It seems dark as hell right now, and it is. But it won’t be that way for long,” said Freidheim, who graduated from what is now the Tepper School in 1963.

Appearing as part of the W.L. Mellon Speaker Series before a packed auditorium of MBA students, Freidheim spoke with the authority of someone who has been down this road before.

“It’s a remarkable career,” said Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy, who once taught Freidheim and introduced him to the audience. “He not only ran Chiquita Banana, he ran it from near-bankruptcy to struggling survival to survival.”

In addition, Freidheim served as a former vice chairman of Booz Allen Hamilton and most recently was the president and chief executive officer of Sun-Times Media Group, parent company of the Chicago Sun-Times. Notably, the newspaper was still standing when Freidheim left, which Meltzer noted is no small feat in today’s newspaper market.

For his part, Freidheim credits the methodology and problem-solving skills he learned in business school — now thought of as the Tepper School’s “way of thinking” — with helping him untangle the often complex problems he encountered.

The first of several daunting challenges he outlined to his audience sounded remarkably familiar: While working at Booz Allen, he was called in as a consultant by Chrysler Corp. in 1979, when the automaker, which was facing bankruptcy, requested a government bailout.

When the Booz Allen team checked to see whether Chrysler had some survival plan in place, they discovered there was none. They were given two weeks to develop a plan and present it to Chrysler’s board, along with the U.S. Treasury and some members of Congress.

Lee Iacocca, who had just arrived at Chrysler, hated consultants. But Freidheim had a stipulation: If Iacocca wanted his advice, the chairman had to call Freidheim, not vice-versa, something Iacocca considered “an unnatural act,” according to Freidheim.

The two met at Iacocca’s home on a Saturday, so nobody would know a consultant was in the picture. And Chrysler was able to survive, even thrive, until it returned to some of its past errors, such as defense contracts and overextending its product lines, says Freidheim.

The second major challenge he described was his work with MicroAge, a redistributor of hardware and software and onetime Fortune 500 company. After joining its board, Freidheim became convinced the company was headed for trouble and needed a new strategy and leadership to survive.

The board disagreed with him, so Freidheim’s options were to leave or stay and try to change minds. He chose the latter, a decision he wishes he could get back since the company ultimately went bankrupt.

“I strongly suggest you think hard, and stand up and leave if that’s the only recourse that you have,” he told students.

Freidheim also described his experiences at the helm of the Sun-Times, a post he accepted in 2006, right about the time the newspaper market went into a nosedive.

“I understood: This was a basket case,” he said.

He agreed to take the job to create a safe landing for the newspaper and keep Chicago a two-newspaper town, a distinction held by a rapidly shrinking number of U.S. cities.

As president and CEO, he introduced a new management team and several cutbacks, ridding the newspaper from tax liabilities incurred under the previous owner, who was Canadian. The results were not staggering, but as he put it, “The Sun-Times lives on, and that was my objective.”

Freidheim urged students to develop a strong sense of ethics and aggressive fact-finding methods, which he said the Tepper School would give them “in spades.”

But the most important advice he could offer was also simple: Develop a strong sense of understanding the why, the causes, and the way out of any problem.

“The person [who] understands the best in any situation has a clear competitive advantage,” he said.
 

See a video of Mr. Cyrus' presentaiton.

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