Thomas Rabe, chairman and CEO of Bertelsmann – Europe’s largest media group by sales – is not afraid to make bold moves. Under his leadership, Bertelsmann merged its Random House unit with rival Penguin and took full control of BMG, a music rights company. He shares his thoughts on leadership, coordination and innovation.
Leaders League. What is the essence of leadership in a firm like Bertelsmann?
Thomas Rabe. Bertelsmann is a mass media company that provides other diverse services. For example RTL is the number one broadcaster in Europe and Random House is one of the top publishing houses in the world. Gruner + Jahr is a pioneering publisher of magazines in Europe and China. Arvato is a major world player in offshoring support services. And we haven’t even spoken about BMG, our music industry rights management company, or Bertelsmann Education Group. This type of organization requires a decentralized approach to leadership and so a large part of my mission is devoted to managing a network of leaders and entrepreneurs.
And how does one manage a network of leaders?
T.R. At Bertelsmann we have established a specific leadership model which has become part of our identity. It is by relying on this model that the directors will create incentives for the leaders of their business units and transmit their enthusiasm. These incentives will not be limited to the financial. The most important among them are those that allow individuals to find their place and have freedom. Therefore you must give them greater responsibility. The financial package is certainly a key aspect, but it is of secondary importance when it comes to motivating an entrepreneur to run your business. A director must provide a strategic framework to the entrepreneurs who work with the company, as well as intervene intelligently in its network of assets and human resources. The trick is to manage to maintain a balance between the independence of a leader and his access to the resources of the group. In the media industry it is equally fundamental to integrate local knowledge. Those supervising a country or a specific sector know better than anyone what the needs of the clients there are.
What, according to you, are the secret ingredients of leadership?
T.R. I don’t think there is one particular secret formula. I think that the difficulty is managing to be proficient in a wider range of areas, which go from communication to an ability to build strong relationships between teams. It is therefore essential that a director takes on this task to make sure that key individuals have good working relationships.
What is your approach to sharing the benefits and profits with your best managers?
T.R. Since 1970 our staff have benefitted from the financial dividends of our success. For example for the year 2012 we allocated 92 million euros to staff perks and bonuses. This is a sign of a partnership that functions well. This is equally the case for top management as well as for those who work for them.
From a leadership perspective, what are your long-term objectives at Bertelsmann?
T.R. My long-term objective is to make Bertelsmann the most enterprising media and services company possible, to have a structure where entrepreneurship becomes a reality and where modern forms of partnership can be set up. That way Bertelsmann can combine the advantages of a big company and all the while be attuned to the ideas of individuals. We hope to become a leading lab of creativity to meet the demands of entrepreneurs looking for partners with whom they can realize their ideas. Together we will grow, diversify, and expand faster internationally which will allow us to cement our status as a pioneer in the digital sector.
Can Bertelsmann and other industry leaders be drivers of the next digital revolution, or will that opportunity fall to the new startups?
T.R. Innovation is not a question of a company’s size. It’s a question of its freedom. Bertelsmann has always bet on decentralization and the delegation of responsibilities. You need only look at the decisions taken by the leadership of our business units, who are excellent judges of their markets, for proof of this.
Translated from French by Simon Mc Geady
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