What is a reader supposed to make of a management book which depicts a large rat on the cover, displays a rat next to every chapter heading, and explains in its first few pages that while few people actually like rats (“they are seen as dirty, aggressive and greedy”) rat-like behaviour is sometimes applauded because “rats have a talent for digging in and surviving against all odds”?

Did its author, Fred Hilmer, spend too much time around edgy creative types during his stint as CEO of the Fairfax newspaper group? Is he alluding to the rats in the Fairfax ranks who undermined him? Or is he just ratty?

None of the above. The rat infestation in Hilmer’s new book, The Fairfax Experience – What the Management Texts Didn’t Teach Me, (John Wiley, $32.95, published this week), refers to the way he views his years as CEO of the Fairfax newspaper empire – as a kind of grand business laboratory experiment that just happened to involve some of Australia’s most important, and vulnerable, newspapers.

Fred Hilmer is one of the most pilloried people in the Australian media business. His seven-year stint running Fairfax, ending in 2005, was dominated by public and private vitriol against him by media critics, his own staff and his competitors. Now comes his answer to these critics, a book he says reveals “what it takes for leaders of large organisations to achieve sustained success”.

“Sustained success” is the underlying theme of Hilmer’s largely unselfcritical analysis of his Fairfax period. It is his own story of how a thoughtful business school professor was co-opted to run “a troubled company in a cut-throat industry”, and how he delivered total returns of 9% a year to shareholders and provided Fairfax with “seven years of stability and independence, during which it could continue to maintain its main function of being a feisty, independent voice in our democracy”.

When he arrived at Fairfax, says Hilmer, the company was “in urgent need of stable management and renewed focus and direction”. It was, he asserts, a company “undergoing death by a thousand cuts as every aspect of its advantage was being eroded”, which lacked a strategy “or at best was pursuing a flawed one” and possessed “appalling” management processes. Oh, and a company operating in “a largely dysfunctional industry”.

A juicy target for a cerebral academic to apply his management theories, you might think, but life for the modest professor was far from joyful. “Being catapulted out of an advisory and research role into an active position in a troubled company brought home to me the chasm between theory and practice in a way no amount of studying could,” writes Hilmer. “Even with good theories, such as those on competitive advantage, you have to be able to make them work.”

Of course, not all newspaper CEOs come armed with good theories about competitive advantage. So while the author is able to write at length about his trajectory to success, the reader is left wondering how either party in this story — the theory-driven CEO or his bewildered minions — managed to coexist at all, let alone succeed. Hilmer paints himself, unintentionally, not as a rat but more like a rabbit in the headlights.

In what reads like a parody — which is how it must have seemed to many at Fairfax at the time — we read how the CEO of Australia’s leading newspaper company “made a mistake early on by admitting that I was not an avid reader of newspapers,” concluding that “it was the truth but I was foolishly honest”. And we read how the CEO of Australia’s leading newspaper company “could use terms like ROE (return on equity) and TSR (total shareholder return) and be confident that the board would understand,” but “if I went to the editorial floor or to one of our printing plants and slipped the same jargon into conversation it would poison communications.”

Whether or not he was out of his depth, it is hard not to conclude from this earnest and simplistic tale that Fred Hilmer was the wrong man in the wrong place at the wrong time. Armed with his library of management texts and his experiences in consulting and teaching, the naivete overflows when he discovers that “the people I had the biggest problems with were the seasoned Fairfax hands, rather than the people I appointed”, because “when you arrive at a company with a confronting agenda — namely, that the company’s two iconic newspapers are not going to be central to its future — it is hard to deliver the message without demoralising staff.”

By the final stages of his tenure, Hilmer informs us that he had “forty people or so working on a project modelling what would happen to the company’s newspapers if classified advertising revenues declined further.” Their conclusion? “All agreed that the business would not be sustainable in its current form and that the company would have to continue shedding staff.”

This, then, is an account of a lab rat. The highly instructive story of a business professor-turned-CEO who needed forty people to provide him with a catastrophe scenario that anyone armed with a basic knowledge of the media industry could have figured out in a few minutes, or less.

As for the real world, if he wants to study the management techniques of a newspaper boss who’s not a “CEO from the ‘B’ School whose first priority is the bottom line and staff cuts”, Fred Hilmer could do a lot worse than read this piece posted in Forbes today by media writer James Brady. The title says it all: Rupert’s Way.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey