January 25, 2010 12:01 am

New terrain

 
John Fahey

Revised outlook: John Fahey decided against engineering and went to usiness school, which led to his career in the media industry

A 2,000-year-old Chinese warrior guards the door. Downstairs, a seal is attempting to feed a dead penguin to what it thinks is a hungry photographer. The lights are low and the public is flocking to an exhibition of China’s famed terracotta warriors and browsing Arctic wildlife photographs.

This is where John Fahey, chief executive of National Geographic, works, and – with a museum on its ground floor – it is a world away from most other offices in Washington DC. From the top floor, Fahey, an alumnus of the University of Michigan MBA programme, is focused on taking a non-profit scientific and educational organisation, founded in the 19th century, and trying to ground it in the 21st.

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It was not supposed to be this way. As a student at Manhattan College in the early 1970s, Fahey studied civil engineering – he should be building interesting structures rather than working from them. He realised late on in his degree that it was the wrong choice.

“Conceptually, I was a good engineer. But when I had to go out and actually look at a structure and see what an I-beam looked like, I knew immediately it was not for me,” he says.

Business school was a pragmatic choice and one that paid off. Choosing where to study was straightforward: “I cannot tell you it was the most thoughtful decision-making process,” he admits. “I chose Michigan because it had a good reputation and it was a large school. It didn’t feel elitist, and to me that was pretty important back then.”

Most of Fahey’s subsequent career has been spent in the media industry. He was chief executive of Time Life, then a division of Time Warner, between 1989 and 1996. Working at National Geographic, which he joined as head of National Geographic Ventures, the for-profit division, before becoming chief executive of the group two years later, proved to be quite a contrast.

 
John Fahey

Chief executive John Fahey has acquired new business, such as cable TV channels, and brought innovations to the National Geographic magazine

“Very scary,” remembers Fahey, whose ready smile disguises the fact that he pulls no punches. “Particularly having come from Time Warner. When I arrived here, it felt so incredibly different. The culture was different. The things that were valued were different. Some were positive; many I thought were negative.”

“There was generally, at the individual level, less of a ‘what can I accomplish here?’ attitude than ‘how can I stay safe and protect myself?’ attitude,” he says. “It felt seriously like starting in a foreign country. It was just an organisation with a great deal of history, seeing its best days behind it.”

Cable television

One of the ventures that helped to turn the business around and “allowed us to rejuvenate the brand” was the cable TV business. National Geographic runs a joint venture with Rupert Murdoch’s Fox network to bring the organisation’s eponymous TV cable channels into homes across the world.

“The cable channels are doing remarkably well,” he says. “Unusually [for] a US-based organisation, we started outside the United States about 12 years ago. We started in the US about two years after that – very late in the game, but in fact we are doing incredibly well. We’ve got some real ratings momentum.”

At the National Geographic magazine, Fahey has challenged his editorial team to produce copy in more than 30 different languages. His innovations, however, have not been enough to mask the print business’s decline.

And, according to Fahey at least, there has been resistance to change. Staff were nervous about working with publishing partners and translators, and trying to produce the magazine in different languages.

He believes that a laudable goal to protect the quality of the magazine became too suffocating. A previous editor of the magazine told Fahey that another member of staff was not ready for promotion.

“He said: ‘He’s only been working on National Geographic for two years, and I can’t trust him.’ I said to him: ‘I’ve only been here two years and I’m your boss, so what does that say about me?’”

He is not convinced that a different attitude was fostered by an absence of a profit motive. But he does believe that the National Geographic’s staff had been confused about their goals – and hopefully are less confused now.

The profit motive

One task has been stressing the benefits to the group of making money. To that end, he prefers the terms “taxable” and “non-taxable” to anything referencing profit.

“In the non-taxable business you want to make as much money as possible, because it provides the fuel to expand the mission,” he says.

But there are limits to how far money can go at an organisation like National Geographic. One such limit is the level of salaries compared with purely profit-making media rivals. “We’re generally unable to pay at the level of media company competitors,” says Fahey.

“When we compare ourselves to the marketplace, we look at a particular job and ask what would they pay in a media and non-profit [equivalent] and weigh [the media job at] 70 per cent.”

“No one here is going to get super-rich.

So that is what you give up. What you get is a true sense of working for an organisation where you don’t have to answer to a shareholder group that is looking for quarterly returns. Even though on the financial side, we’re disciplined.”

How valuable has the MBA from the University of Michigan, now the Ross school, been to Fahey in this cultural maelstrom of acquiring new businesses and breathing life into the old print business?

“Clearly I’m not thinking, ‘gee, I learned that in business school and I’m using that today’, because so much time has transpired,” he says. “If I bring any value today, it is in large part because of the experience and wisdom of 35 years or so on the track.”

But there are lessons learnt at business school that he still recalls today. One is a famous decision-making case study about four graduates who meet up and end up going to a small town in Texas for no reason other than that each is trying to work out where the other wants to go.

“The purpose of the case study was to understand that you’ve got to go with your gut; to say what you feel; to take the lead; to say ‘let’s do this’; and if someone disagrees, you must honour that – but don’t all sit there working out what everyone else wants to do, because you’ll never get anything done.”

Hiring philosophy

In hiring employees, he values practical experience above academic qualifications but is attentive to a qualification from a top business school. Without it, he says, otherwise talented managers can sometimes labour.

“We have people that are good at their job and have good instincts about the business they’re in, but if you ask about the return on investment on something, you can tell that it gets a little glazy and you are missing a bit of the equation.”

Fahey has had a recent opportunity to reassess the practical benefits of business studies: his son is doing an MBA at Columbia University and Fahey has wondered himself about the return on investment. Looking at the syllabus, he has decided that it is worthwhile.

“Here’s a kid who never in a million years believed that he was going to be a business person. But he’s learning a hell of a lot, and what he’s learning is very valuable.”

National Geographic could well be a business school case study itself, posing the question: what should a valuable brand do when its print product faces assault from digital technology? The answer is not one-dimensional, says Fahey. The print medium can look to innovate but there are others that are naturally more resilient to change.

“Our cable networks are most protected from the digital revolution,” he says. “The National Geographic channel is very well distributed outside the United States.”

With a distribution of about 70m homes, it is a sizeable company within the broader group.

It lost a bidding war with Scripps Networks Interactive for the Travel Channel in November 2009, but it is still looking to grow.

“We’re going to look at opportunities, particularly worldwide, to see if we can build additional cable channels. Three channels would give us an established presence without fighting too much with one another,” he adds.

And the political realm? Unlike most large US companies, National Geographic does not spend a lot of time lobbying members of Congress to pass favourable legislation.

But there is a quandary. As an organisation whose mission is to “inspire people to care about the planet”, how close can it get to the politics of climate change, which have become increasingly polarised.

“My sense is we should stay as far away from advocacy in the media side of what we do as possible,” he says, but adds that most of his editors are concerned by the threat from climate change. “We’ve crossed the line a number of times.”

One area of politics in which he is happy to make a stand – as a private individual, he stresses – is the performance of Barack Obama, whose presidential campaign Fahey backed financially.

“I definitely backed the right guy,” he says. “He’s struggling but that’s because unfortunately the American public doesn’t always have the will to do the things that truly need to be done … it’s hard to do anything any more.”

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