James Arnold is a management consultant who specializes in reputation management. He has served more than 200 companies of the Fortune 500, as well as large government agencies and major nonprofits. Arnold also has experience in public affairs at local and national levels. Mr. Arnold served for 18 years as a trustee of the Page Society and is accredited by PRSA.
INTERVIEWER: Well good morning, I’m with James Arnold. It’s March 23, 2012 and we’re in New York City. Welcome Mr. Arnold. I’d like to start out with you talking a little bit about how life’s path got you to where you are today. The CEO of your own consulting group, Arnold Consulting group so just talk a little bit about that, how did you get here?
ARNOLD: Well thank you Cinda. Thanks a lot for inviting me to be here. I started off to be an English Literature professor, and along the way I got sidetracked. I had an assistantship—teaching assistantship—at Vanderbilt in the Graduate School of English Lit, and while I was there I began doing historical research, another love of mine, for the Hermitage, Andrew Jackson’s home on the outskirts of Nashville, and I had the good fortune to publish a number of articles. It was an exciting thing for me because I had direct access to Jackson’s papers. I could actually sit in his office; go through his notes, go through his papers, he even had a travelling liquor cabinet that we put on the coach that he was writing in and I could open that and one day I found myself sniffing his Brandy bottle to see if I could smell any Brandy in there. So, clearly I was excited by the physical proximity and the actual authenticity of looking at those documents. I found that at that time, which is before the National Endowment for the Humanities had come along and nurtured all of these kinds of things, but there was a lot of really good rich, textured things to be found and written about. So I wrote about a number of them, and as a result of that, I ended up never really completing my academic cycle. Was always going to finish that dissertation and get it done, but I was writing and doing something else that I liked. That brought me into the circle of a man named John Seigenthaler who was the editor of The Tennessean at that time, later the publisher and eventually the first editor of USA Today after Gannett bought The Tennessean. And he was a lover of history, and he read some of the things I wrote and he began to ask me to write stuff for the Sunday magazine in The Tennessean, and I would. Then I ended up having a gig on the noon show there, which was a television show on the NBC affiliate about middle Tennessee history, and I would go on and do a walkabout and tell people about things that were of interest. As a result of doing that, kind of out of the blue, in 1966 when I was still in graduate school, not yet out, I was asked to work on a gubernatorial campaign that Mr. Seigenthaler had a big interest in in Tennessee. And I did, I became an issues writer, I did a lot of issues research. Our candidate lost, but he lost in the primaries, so 1968 when Robert Kennedy decided to run for president—John Seigenthaler had been Robert Kennedy’s press secretary and he asked me if I wanted to go to Northern California and handle media in Northern California for Kennedy. I said sure. I mean I was all of 26 or 27, I had never really handled anything like that, but I thought how hard could it be? And while there, I got to know Jesse Unruh who was at that time the chairman of the Kennedy campaign for the state of California—former first speaker of the assembly, later after losing to Ronald Regan, (he) became the Treasurer of the State but was kind of a legendary character and a political figure—he was running the campaign and I ended up being attached to him. He was my boss in that part of California. So I became very involved in political activities and the Democratic Party, and of course the Kennedy campaign ended very sadly. I went back to Tennessee, kept on doing research and soon another campaign came along in 1970, same candidate for Governor, so I worked again, and we lost again. This time everybody lost. The real Al Gore as we call him—was Al Gore Jr.’s father, Al Gore Sr.—lost to a Republican from East Tennessee. Howard Baker had already been elected to the Senate, taking Estes Kefauver’s seat. My candidate for Governor, also we had in Tennessee for the first time since reconstruction a Republican Governor, and we also had two Republican United States Senators. So I was a little bit at loose ends, and Tennessee is an oddity of the states. It’s the only state where the President of the Senate of the State is also the Lieutenant Governor under the constitution. So you’re a real Senator, you have a vote, you have appointing powers and everything as the President of the Senate does in most states but, in Tennessee, you’re automatically made the Lieutenant Governor. So, I got a call one day from this man whom I barely knew who said, I’m thinking about running for Governor. And he was then the Lieutenant Governor, the highest ranking Democrat left in statewide office and he said, would you like to work for me on my staff and we can develop a plan. I did, I organized political campaigns for the Legislature, we had in 1972 an unfortunate nomination at the federal level when McGovern ran in Tennessee; George Wallace actually won the Democratic primary, so we had to organize legislative campaigns outside traditional lines of the Democratic Party. So we created an organization to do that, I ran that organization, we kept control of the legislature but the Democratic Party in the State lost a lot of seats and was pretty well decimated. In short order, I was elected President of the Young Democrats of Tennessee and I became the official, unpaid executive director of the Democratic Party. And my job in that was to put together a campaign for someone who could regain one of the Senate seats. And I did that, that man’s name was Jim Sasser. He became Senator for Tennessee shortly thereafter. My boss said to me, I don’t want to run for Governor I’ve changed my mind, I’m going to support someone else. I was getting a divorce, Jesse Unruh called me out of the blue and said we have founded a national organization whose mission is to improve State Legislature and it’s private-sector-based. It has a few legislatures involved, but most of the people come from organized labor or from Common Cause or they come from the League of Women Voters…they’re academicians, they’re newspaper people—would you like to talk to us about working for us? And I said sure why not, I’m available. Interestingly enough, they had a terrific job and now I’ll hit the road. The job was that they had received grant #3 from the Robert Wood Johnson Foundation and that grant was to create in ten states, what was called a Modeled Committee Staff Project in Health. These would be ten states that had no history of using professional staff in the legislature. So they were really dependent on the Executive Branch of the government for information, and they were states where traditionally the legislature was viewed as kind of like the board of directors and the Governor was the CEO and the CEO kind of proposed that the Legislature disposed and it was—rubber stamp is the term often used—and we picked those ten states on purpose because we wanted a demonstration that would be real. Not to go to a state like Illinois or California or New York that already had staff and a long history of having staff. But to really go to states where there was a clear agenda where there were health issues—public health issues in the state that needed to be addressed. This was a terrific program. I was hired to be its manager, I had a staff of 20 people in 10 state capitals and out of this program we passed the first HMO enabling legislation in the country. In nine of those states we passed the first EMS legislation creating statewide EMS systems, and a whole host of other very innovative—certificate of need legislation, area health education center legislation, all of those things very important at the state level. The purpose of this project of course, was to try to demonstrate to people that the legislature could do much more to fulfill its equal branch, as it were to the executive or to the judicial, in terms of making policy of the states. Legislature’s after all, the place where they grant you your birth decree and your death certificate I mean, so from the day you’re born to the day you die, states do a lot to control the quality of life for people who live there. I rose through the ranks of this organization, became its executive director and at one time was leading a staff of people who were working in 30 different states. We were working on alcoholism, drug abuse, on juvenile justice issues. Our mission was not to lobby the state but was to give them the professional tools. They selected the staff ultimately, we prequalified them, they worked for them, but they had to agree to certain process improvements and the way the legislature worked. Both the minority and the majority party had to sign the contract. They had to work as joint committees, not as separate committees you know, working across purposes with each other. They had to have citizen involvement. They had to have hearings, that way we’d be able to see all of that. I got very interested then in sort of, the cause—I guess the best way to say it—legislative improvement. That was my first big philosophical undertaking, to try to convince people that how the laws get made are as important as what laws get made because that process affects all the laws. And if one interest group can somehow or the other steamroll a legislative body to get legislation passed, two years later another interest group can steamroll it back the other way, something that will be important when I talk about one of my largest clients later on, and the National Congress. So, after a period of time, funding began to change for organizations like this one. The Congress passed much stricter tax laws, so that where we used to get a lot of soft money from the Ford Foundation or from Carnegie, as opposed to grant specific money, dried up. And in addition to that, we had a contract from Ford to try to merge the three significant membership organizations made up from the legislatures themselves. There was a leaders organization, there was a rank and file member organization, and then there was a staff organization for all fifty of the state legislatures. And our contract was to merge them all into what today is the National Conference of State Legislatures, NCSL which is the trade association for America’s 50 legislatures. Once we had finished that contract we decided, the board did—I think, using very good judgment—to go out of business. Unruh, I think, said it best he said, ‘you know we used to say that the legislatures of America were the sleeping 800lb gorilla and our job was to wake him up.’ And he said, ‘but now that I look back on it, I think the further job remaining is who’s going to civilize them now, now that they’re awake. How are we going to civilize them?’ I decided then to become a consultant. The industries that are most regulated at the state level are those that are clearly again; alcohol, tobacco, firearms and insurance. And I had developed fairly good relationships with some of the professional organizations who were involved in the regulation of insurance at the state level and one of them wanted to create—in the ten federal regions—they wanted to create a public affairs capability. They wanted to put public relations people there to work with their lobbyists in a way to shape public opinion with regard to the environment, which decisions were made about a state regulated insurance. So they gave me my first contract as an [insurance] consultant and I organized a public affairs program for the Alliance of Insurers, and as a result of doing that—it’s funny I’ve had good fortune in this way—the other two trade associations they were the stock companies, the mutual companies and then the independent companies, they all used more or less what are called independent agents to sell their insurance and those are small family businesses usually with the big eye. Their problem was that they were losing market share to what are called the direct writers, where the sales force is actually employed by the insurance carrier itself. And the reason this was important is because the marketplace in which insurance was being sold—property casualty insurance we’re speaking of specifically, which has great societal consequences. The issues of redlining for instance, grow out of property casualty insurance as does gender-based rating for automobile insurance grew out of that industry, so there were a lot of societal dimensions to what they do and to the way they do their business. They were concerned because as their market was changing, there were these undercurrents of unrest and it was sometimes important in states—out West in particular—to have to run a campaign. Somebody would put on the ballot an issue instructing the commissioner of insurance in their state to change the way automobile risks were rated, to eliminate gender bias in it at all. And so the companies would have to decide then, are we going to fight that or are we going to go along with that—what should be our decision? But what was changing it most was technology. Increasingly the companies wanted to sell more than just insurance. They wanted to be able to sell financial services. They wanted to be a financial services company. That’s why today you will find Prudential for instance, one of my earliest clients used to be Prudential Property and Casualty, today the entire company is just call Prudential Financial Services. That marketplace was changing so they wanted somebody to devise a plan that would keep the independent insurance agents strong and help them to recover market share, and I gave them a proposal to do that, which basically was to run an integrated advertising and public relations campaign across all the fifty states. I raised the funding from the carriers, about 25 million, pledged by the carriers. And then the independent agents themselves pledged another 5 million, so we had 30 million to start with. I came to New York, hired an agency, and picked the spokesperson. The spokesperson was Raymond Burr. It was his first client product that he’d ever endorsed and we used his image obviously both his Ironside and his Perry Mason in the advertising and I wrote the tagline that was used the—more than one company agent—to try to play up the credibility of the independent agents. During that time I got to know Chester Burger. I had met Chet before at a program for the insurance industry at which he was a speaker, we’d become friendly with each other and I needed a place to work while I was in New York and in fairly short order Chet reorganized my priorities. I began using his office and then he asked me, he kept saying, “What will you do when Perry Mason is through?” You can only do Perry Mason for so long. And I knew he was right about that, because what I discovered is that I have a genuine love for, I guess the pursuit of new business, the pursuit of a project, the pursuit of a challenge. I was good at building up an organization, I was good at finding grantors to support it, I’m good at recruiting people, good at selling an idea, but I wasn’t so good at just doing the routine maintenance of stuff month after month and year after year. And I knew he was right because I was becoming rather bored of it. For one thing I learned how large the ego of somebody like Raymon Burr can be and when you have to worry about whether the scotch bottles in his room are the right size or not, after a while you started thinking you know…I think there must be a more sane way to make a living than this. I had a contract, I wasn’t an employee of the organization and in time I just let the contract go and I pursued a contract with the lodging industry, who were interested in what amounted to, built around Memorial Day, national vacation week to promote travel. And so I stayed in Chet’s office and I put that program together and it was fun I just assembled the resources, got the ideas going, actually got a proclamation out of the White House through the Congress to make this National Travel Week. It’s travel month now, the month of May. And Chet and I became good friends and he began to ask me if I wanted to work on a project. Help him with a project, and I did. I learned a lot from him and I enjoyed the association a lot. In time I became a partner in his firm and as he anticipated retirement he asked me to take over as the CEO of the company and I did so and eventually I bought out his interests in the business and he left and so that would have been in 1991 when I changed the name of the company, at his insistence in fact from Chester Burger & Co. to Arnold Consulting. Since he was not going to be remaining in the business but was of council, he said he didn’t really want to have his name I guess, just existing in perpetuity in a business that he wasn’t responsible for. His very good advice to me was, and he said besides that you’re selling yourself, you shouldn’t be selling yourself using my name on the door, you really need to put your name on the door and do it that way. And that’s the story of how I got to be at least to 1991 and I’ve continued to do pretty much the same thing. We built Arnold Consulting Group up. At one time I had around 30 people, all of them senior consultants in the same way that Chet had always done it. He never wanted to bring anybody to work on a client who hadn’t had a lot of time in place and had basically been there and done that, because what he wanted to sell for a client was that we hear you, we understand what you’re dealing with, we’ve dealt with it before. We understand it and our people will help you solve your problem. His way of doing that was to always listen well to what the client said and then assemble a team of people from within the organization that had relevant experience, and then wait for the light bulb to go off, which always would. He was not big on promoting. His idea wasn’t that you get the client in the room and then you beat up on the client by how great your people are and who all you’ve done this for. He’s much more the kind of person who would say, as he always did in his proposals at the end of the proposal. But why take our word for it, here are a list of people we’ve done similar work for and while we don’t usually disclose whom our clients are, I have their permission in this case to use their names. Feel free to speak with them and ask how we did, whether or not we helped them. And he was always after us never to be self-promotional. If you have a meeting around the table to discuss a client’s needs which is usually called a request for qualifications meeting to say, how are you qualified to help me? Chet would always take the lead but he was always very controlling about not letting somebody say, ‘oh well I’ve done that before…we know how to do that...here’s who we’ve done that for.’ Chet would always say, “Well I seem to hear you saying that you have a problem about getting your senior management’s attention and, James you’ve had some experience with that haven’t you, how would you handle this?” That way he would keep you from starting to be self-aggrandizing or self-promotional which he didn’t want because he felt it was a turnoff to clients. And he put that in virtually everything he did and this all became very formative to me because it directed really the way I thought about how to do a business. In Chet’s world you began every letter with the word ‘you’. It had to be the subject of the first sentence in the letter because he wanted us always to have the ‘you’ perspective of the client or the person you were writing to. And I think rightly so. He would say, “You know if you have to write the first sentence and ‘you’ is the subject of the first sentence then you have to say something in the first sentence that will be of value to the ‘you’ that you’re writing to.” And he would say that’s what I want you to do. And all of his materials, whatever brochures that he had or anything, rather than going through the material saying, our mission…our purpose…our clients…our people, he would always say, we don’t want to say anything like that. This is not a brochure about us, this is a brochure about how we can help you so if anything it should say, ‘Clients we have served’ not ‘our clients.’ And that helped really to shape my view about what a consultant does. Now, the business I’m in and the business that Chet was in is very different from what a public relations agency or firm or an advertising agency would do. We don’t represent clients in a public forum. We’re not their advocate in a public forum. We work in fact, internal to the organization that we’re working with, with the top management of the organization to help them do the three things that management consultants do, which is to devise a strategy, to put the right structure in place, to carry out the strategy with the right systems there to support the structure and the strategy. So for us this means deciding what the problem or the problems are that the organization faces. What the best strategy is to meet that problem. Sometimes it involves changing the people, sometimes it involves realigning the people, sometimes it involves the fact that what the communications people are doing is not related to the business of the organization, that’s a little bit scary. One of the things that I noticed in working with Chet is that Chet was very good at getting people to talk about what was on their mind. And he had a very effective way of doing this with the CEO. He would always ask them to say—well, tell me a little bit about your business, how do you make your money? And he had always very carefully researched the company, he never went in anywhere without having done all of his homework. And he would have a reason for doing this and he might say, but now wasn’t there a problem with the plant that you have at Niagara Falls? —Didn’t I read once that you had a problem there? And he would get them talking about this and then he would say—now how did the PR people handle that? He would ask in that way to get them to talk more because what he wanted to do was to have them feel like first of all, this was somebody who listens and pays attention and is interested in me and what I need and what I want. And he always tried to put it into the best, most positive construct that he could and maybe the second business call I ever went on with Chet was to Firestone Tire & Rubber and Firestone had a new CEO and the CEO had come out of the automobile industry because Firestone’s base of clients were the big three in Detroit and then the U.S. government, for selling their tires. They didn’t deal with the public very much. And this was the kind of assignment Chet liked. The new CEO, a man named John Nevin, decided he wanted to get into the aftercare market with cars and that meant he wanted to buy a chain of existing auto service centers that had been owned at that time by the JCPenny Company, JCPenny wanted to get rid of them. So there were 1,700 of these service centers around, whereas the Firestones were all dealer franchises, the existing Firestone stores. And the Firestone stores just depended on Firestone promotion to drive business to them. So now suddenly he owns a chain of what amounts to retail outlets and Firestone had not been a retail company, and he’s very unhappy with the way things are going. So as he describes to us his problems, it turns out he’s a former journalist and one of his problems was, he says, nobody in this place can write. They send me stuff up here that if in Philco, when I was running Philco for Ford, he said, if somebody had sent something like that to my desk, I would have written a note across it that said ‘you’re fired’ and sent it back to them. And he said, I don’t think anybody down there can write, I also don’t think they can proof, and he said I need help here. So the first thing I’d like you to do is figure out, am I right or wrong? Can these people write and I just don’t know it or what? I don’t think they know what to expect out of me, and of course that was true. The people who were there had been in place a long time and they were terrified of the new CEO and they didn’t get any direct feedback from him. They didn’t know why he just wouldn’t use the stuff they sent him. They weren’t communicating with each other. We spent time talking with them, and then Chet came back up and he said to Mr. Nevin before we left, “Well, I think we can help you, I’ve spent some time talking to the people in your public relations shop and I think we can help you. It may result in some dislocation of resources and some changes, “If that’s alright with you, I’d like to send you a proposal.” Mr. Nevin said that’d be fine and Chet said, but let me ask you one thing before I go because I always like to find something positive. Is there anything that the public relations people do that you like, that you approve of; I’d like to know what that is. Mr. Nevins thinks about this for a minute and he finally says, you know if I’m going to be making a speech or if I’m going to have a press conference or anything, we always have a glass of water up there on the podium for me, and it doesn’t have any ice in it. And he said that’s just the way I like it. And he said that’s good. So as we were leaving Chet said, “We’re going to have a real problem with this one.” He said, I don’t know that he really knows what it is he wants out of the public relation department, he sees them as a bunch of writers and he doesn’t like the way they write and the thing he does like is that they meet his personal need to have a glass of water. Here’s a guy who doesn’t really—his expectations are much too small for what he should be getting, and he doesn’t know how to use them. And of course he was right. As we got into the case it became clear that what had happened here as we would all see quickly today is that this company had reinvented itself when it bought these 1,700 auto service centers and tried to morph them into the already existing brand. It was basically an original equipment manufacturer that suddenly had a consumer-based business but nobody had explained any of that to the communications people, nor did they know they were supposed to be doing anything any differently. Mostly they worried about three or four magazines, they sponsored the Firestone 500 and they carried car activities, golf tournaments and so on, and that’s what had been expected of them in the past. So, Mr. Nevin didn’t know how to explain his changed expectations, they didn’t know how to read the tealeaves, and it was really a case of my watching Chet sort of do his alchemy in this, which was to basically in time, propose that a special position be created for the person who had been running corporate public relations, that they recruit someone who had the background and the skills to be able to deal with the retail side of the business and they would have therefore rebuilt the staff in the organization. Well, I learned a lot just from working with him on that case, and I can say that as I continued to work with him throughout, really the 80’s, I continued to learn. But most of all I just learned again and again and again how important were the principles that he operated on, and the way he saw things functioning and focusing. So I’ve enjoyed a good experience and a good career in this and it’s given me a chance really to make a difference in some very big companies and some large organizations, by simply learning to listen, being very good at identifying problems, trusting my intuition sometimes, and always remembering, I think the most important rule of Chester Burger is that—nobody is going to pay you a lot of money to tell them what they’re doing wrong. They already know they’re doing something wrong and mostly they have bits and pieces of what it is. They know it’s not working and if you feel like your mission is to get all self-righteous and start lecturing them or telling them how wrong all of this is or how bad all of this is, you’re going to turn them off. And he said, “My goal always is to make a change; my goal is to have something be better after I’ve been involved there and I know a part of that is psychology. It’s not by making people feel inadequate or off the track as much as it is by getting to the meat of it, which is—what can we do about this? And what can we do to improve this? And making concrete suggestions.” Often in Chet’s reports and things, the recommendations would be the beginning of the report, and then what consultants called the verbatim—the excerpts, some interviews, and the findings that we got—would be almost be like an appendix at the back, because he didn’t want to begin a review of a project by digging into everything that was wrong. So, that became my guiding light as well. I would always look to say, what are we doing here that’s good but now what can be done better, what can we do to improve it?
INTERVIEWER: One of the questions that I had was, who had the most significant influence in your life and I think obviously Chester Burger was a tremendous influence in your life, in your whole attitude toward work and your relationships with people. So mentoring was very, very important. Have you followed suit in that at all? Have you felt that you’ve been a good mentor to others?
ARNOLD: I do, I think that’s a large part of running a good consulting business. You have to have a mentor relationship with the people that you work with because it’s part of creating the culture inside of the shop, and sometimes this means that you can’t keep someone. In one case, I had a person that was, if anything, overeducated, someone with a PhD in English Lit and also with an MBA from the Kellogg School. Very, very bright person, but impulsive and driven to be able to explain to the client what they’re doing is wrong and why it’s wrong. When you begin a project, the first thing you have to do is you have to learn. I call it a process of discovery, and this is one of the things I try to get people in mentoring to understand from 35,000 feet all companies look alike. It’s not until you’ve run deep inside the company for a while, and until you can say how this company is different from its competitive set or its peer groups or its industry. Until you can say specifically how it’s different, you’re not ready to give anybody any advice. You have to know the company that well. You have to understand the authenticity of what the company is, so that you then can provide advice and recommendations basically using their own language, and using their own examples, and showing the benefits that come from that. So it’s that bit about starting off with, I like to just call it modesty. I think a good consultant is modest up front. It’s like no, I don’t know everything about your company yet, and sometimes in the selling, in the campaign that you do to get a client, this is very difficult because you always meet, particularly in CEOs, the people who want…they want, snap-snap-snap-snap. So you get the guy who takes you to lunch at the Harvard Club and wants to tell you very quickly, now here’s what I think my problem is, now what should we do about it? And you have to say, just like a good doctor, I’ve learned that sometimes the apparent symptoms don’t really bespeak whatever the underlying illness may be, and I’m not going to really jump to a conclusion like that. It wouldn’t be fair, it wouldn’t be honest, it wouldn’t be right. And sometimes you go as far as to say, it sounds to me as though you made up your mind that somebody should be canned, and maybe you’re just looking for me to come along and paper over that decision. I don’t want to get involved in something like that, it’s not professionally honest…you know, an honest thing to do. But for an organization, having a process is the way you do your business—which is what Chet had at his place. He had a very clearly laid out way that he wanted to get a client, how he wanted to serve them, and what he hoped, then, would be a good reference from that. And I find those same things are important in the people that you work with in your own business, and you have to mentor people into that. Not everybody fits. Some people don’t and you just have to say, this is probably not the kind of business you should be in. As consultants, we often don’t even disclose who our clients are, they don’t want us to, for whatever reason, and so it’s not the thing you do because you’re going to see your name in the newspaper necessarily or you’re going to be associated with a high profile client the way that a public relations agency may be. That was a tough thing for me to get around, because I made the mistake of hiring in some cases—two or three people with high profile agency experience, who came into the business but were just not good as consultants. To be a good consultant you also have to be kind of a teacher. You have to be persuasive, you have to get people to be willing to try what your recommendations are, and they have to believe in them. They have to believe that they’re credible. One of the important lessons that I got from Chet about this, going back to the same Mr. Nevins at Firestone, while we were making a report for Mr. Nevins and I’d written most of the report, inside the report I had put in a couple of citations from management experts of Peter Drucker or someone, and Chet let it stay in and we went through and everything was fine and as we were flying back to New York, Chet said to me, you know he said I know you’re just beginning now with consulting but he saidcan I offer you a little advice, from now on just remember this, when you’re working with me, you’re the expert. You don’t need Peter Drucker or anybody else. I don’t want Mr. Nevins to think that he should have hired Peter Drucker.” He said, I want you to be it, this is you, and you’ve made the study. You’re making the recommendations; you don’t need to borrow from somebody else, their credibility, use your own credibility. And I probably will never forget that until my dying day because it stuck, it hit me right between the eyes and I’ve tried to pass that message on to everybody who has worked with me and to people who just ask my advice is that in the consulting business, you are the product. Your credibility is on the line, and you have to defend your recommendations, and you have to defend your findings and you don’t want to do it in a defensive way, you want to be so thoroughly prepared and so confident that you figured out what it is that you want to recommend. When we’re involved with a client, we’re really working at the policy making level of that organization. People are sitting there saying we have a public relations problem, can you help us define it and can you tell us what the appropriate response to this is, and then how do we need to get organized to do that? How much money do we need to have to put behind this? What kind of a timetable—is this a five-year deal? A two-year deal? What is it about that that’s important and you have to have a team of people with you who are specialists at employee communications or investor relations or public affairs or marketing communications—any of those things—who are experienced. They don’t have to go in and start reciting off all the things they’ve done because they can speak to management in a way that sends them a message that says, I know exactly what you’re talking about and I’ve dealt with this before and I can help you deal with it. And just as Chet did—I was very fortunate—passed on and shared with me these things, I’ve always thought about it as kind of like the chief of the tribe passes it on to the younger members of the tribe, the things you need to know—respect for the earth and the sun and the moon and the stars, all of those things, Chet was like that. But he had just the perfect touch. He would never criticize you or belittle you, you knew Chet was about to give you some wisdom when he would say, ‘can I just make a suggestion.’ And you know, you knew to pay attention. That said okay, listen up.
INTERVIEWER: I’m sure we can both hear him in our brain saying these things.
ARNOLD: He obviously made a huge impression on me, I mean I worked with him every day for so many years and it was always a joy. For one thing, because the sorts of things that Chet got involved with were always the most interesting things going on, and that made you happy to be in that office…to do that. If I could just give you one small aside about this—Chet, when he started this consulting business—nobody knew what a management consultant and communications was. And from his television background, he had developed relationships at AT&T and one person in particular who had sort of picked Chet’s brain for a number of years, but never paid him anything was from AT&T and wanted to know about this new thing, television. What’s it going to mean, how’s it going to play out? And when Chet was on his own and doing this, he went to see this guy, and said, “I’m a management consultant in communications and I’m here to help you.” So he says, nobody knows for sure what it is you do, what do you do? Chet said well, if you’re having a problem in communications—maybe it’s internal or maybe it’s with some audience or something—I can help you analyze the problem and put together a plan. The guy says, oh…I don’t know about that but he says look—and he pushed across the table some folders and he said, these are the bios of the officers of AT&T, I don’t like the way they’re written, do you think you could help me rewrite them? Chet said, I very humbly picked up the folders and said, “I’ll certainly give it a try’ and he left and he said I was right, they were terrible. And he said I rewrote them, he liked it and he said that was my first assignment at AT&T for which I wasn’t paid anything and out of that grew other things that he said, I thought to myself, I guess the management consulting and communications does whatever it takes that the client wants, to get a relationship going because you have to make yourself useful to them first. Ultimately, you can become spiritually rewarding to them, but first of all you have to be utilitarian. They have to see some immediate thing that you, could help with. And that’s always been important to me. Chet became, also, very much involved with dealing with the principles of public relations firms. Chet had been really good at getting new business, his first job after he left CBS was working for Ruder Finn and he just got a new business and he would have a quota for the year and he would bring it in—I think you have that in your video with him. And so, after he started his own business, the principles of public relations firms would often call him and say Chet, we’re having a problem in developing this…he would go and consult with them. And more, I think is just a kind of a courtesy than anything else—he’d send them a small bill and go somewhere and have pizza and send them a bill for $75 or something, not much of anything. But as a result of that, interestingly enough, Chet got to know people who wanted to acquire public relations firms, and people who wanted to sell their firm and he became something of a dealmaker.
So, one of the most venerable public relations firms was during this period of time, which is the late 60s and early 70s, was called the Carl Byoir Company. Carl Byoir was a former newspaperman and a really good businessman, who frankly never knew very much about public relations, but he knew what a public relations business should be like. At one point, the company Foote, Cone & Belding Advertising wanted to buy a public relations firm and they had worked with Chet to try to see about starting their own public relations capability, and decided that they didn’t want to do that. They also tried to hire Chet to come in and do it, he didn’t want to do that either, so they asked him to acquire for them a public relations company. So he managed to make a deal for the Carl Byoir Company and Foote, Cone & Belding took over the Carl Byoir Company. It didn’t go so well. They were unhappy with it, so they said to Chet, what should we do and he said well, the good people at Carl Byoir unfortunately have left because they don’t want to work for an advertising agency. I’m sorry to tell you this, you remember I warned you of this in the beginning, that might be a problem and that public relations was the people, and if they walk out the door then what do you have that you’ve paid for? And they said what should we do and he said well perhaps I could find somebody to run it for you, who doesn’t mind working for a public relations company, and he did. And the person that he found was running another public relations firm in Boston so they ended up buying that public relations firm to get this person to come in and run the Byoir Company. A couple of years go by, Foote, Cone & Belding says, we’ve decided we don’t want to be in the public relations business anymore, we want you to sell Carl Byoir for us, we want to get rid of them. So, Chet’s talking to me about this and he said, this is just kind of brilliant in a way isn’t it? And I said what is? And he says, well you know Hill & Knowlton—J. Walter Thomspon who owned Hill & Knowlton—has now been taken over by this fellow, Martin Sorrell from England, who was taking over all of the big ad agencies and he’s getting their public relations arms. He said, there’s a new chaperone at Hill & Knowlton right now, and Hill & Knowlton slipped in the rankings last year down to second place. And he said, I’ll bet you if I called this fella and say to him, ‘I bet I can get Carl Byoir for you,’ that he’ll go for it. And with me sitting there he called up this person whose name as they say shall remain nameless, and said, “I understand that Carl Byoir might be for sale” and he said, “So I thought of you first and I haven’t mentioned this to anybody else yet.” Over the speakerphone, this guy says, ‘Give me 24hrs, don’t talk to anybody else about it, don’t say a word about it, and 45 minutes later he called back and he said, “You think there’s any wiggle room on a price?” And Chet said, “I haven’t even asked him a price yet” and he said, “Don’t talk to anybody else about it, we want it. We want to make this deal.” So, Chet makes the deal to sell Carl Byoir again, this time to Hill & Knowlton. In the meantime, two friends of Chet, who had a public relations firm in Washington, had been working for Hill & Knowlton, like affiliates, and they weren’t getting any business out of it and Chet had arranged that relationship and so he got them a divorce. He told Hill & Knowlton just before they bought Byoir, he said, “These guys want to get out of the deal, they’re not happy with it,” and they said fine. So what Chet had done, he’d taken them over to Carl Byoir and said, these guys can work in your Washington office, now they’ll be good for you. So here all had happened in the space of three days is that now Chet says to me, “Jim, I think I have an assignment for you.” He said, “It’s going to be a bit of a nasty one. You’re going to have to get on a plane; you’re going to have to go down to Washington, and you’re going to have to tell Mr. So & So and So & So, who just now started working for Carl Byoir and quit Hill & Knowlton, that Hill & Knowlton just bought Carl Byoir…that they now work for Carl Byoir again. Well, that was the kind of life being around Chet was. Everyday was just full of things at that kind of level, the excitement in it. Because he was trusted by so many people to come through and so many people wanted his advice. They didn’t all take his advice, sometimes to their regret, but they wanted his advice because he was truly seen as a wise man—a guy who gave good advice. But a very exciting person to be around in the office, because the phone was always ringing, the people were always coming in and it was never the same routine…dull stuff. It was always something very special. (50:20)
INTERVIEWER: Wonderful stories.
ARNOLD: Well, we haven’t talked much about Page if you want me to say…
INTERVIEWER: Yes, if you could talk a little bit about…
ARNOLD: Well, Chet was one of the original trustees of Page, because of his AT&T relationship and when Page first started it was essentially an inside AT&T thing, which was very big. During those days, the AT&T Corporate public relations staff was over 1,700 people, just at that time. Arthur Page was largely at that time, an internal figure to people in AT&T. He wasn’t that well known, and in fact, in 1970 when they—it was a forced ranking by PRSA of 119 so-called famous people in public relations, and at that time Page had barely been dead for 8 or 9 years, and he finished #9 on the list. Everybody ahead of him though was the head of an agency. He was the first corporate person but, just wasn’t known in the field particularly at all, so AT&T started off thinking this will just be kind of like retirees and current AT&T employees, and it’ll just be to kind of keep his legacy alive. Chet was one of the people I think who helped turn their thinking away from this direction. He was at that time the only non-AT&T employee who was a trustee, although as he points out, he was one of two people never to have worked for AT&T, who was in the telephone pioneers which was the AT&T Retirees Association. He was elected as an honorary pioneer. And he argued that if you really want to make this something, that you’ve got to broaden it out eventually, but Chet was a trustee for only two years, and then he very generously said to me, “I think I’m going to be wrapping up my affairs and I think this is a great opportunity for you, and I think at this point they will accept you onto the board,” even though—I think there was one other person at that time who was not in AT&T, but they were heading in that direction. It was a very different organization. It was really sort of making it up as it went. A lot of what it did, was almost of the luncheon club variety of people get together, have a good time, share war stories and encourage one another and catch up on grandchildren and things of that sort. It was not very mission-driven at the time, but over the next 4-5 years that I was involved, I came on the board in 1986, it really began to develop a mission. I guess the easiest way to say it was that if you’re thinking about dogs and you like dogs, the mission came to be—how do you improve the ‘breed’ of person who is working in corporate communications. And mentoring became a large part of that, but there was also a sense of, we need to get as big a tent as we can get here, so we need people from different industries so that we can begin to pool our knowledge and our intelligence and our connections. Find ways to set standards and enforce the standards. There was a period of time in which there was some concern about kind of a deification of Page business like, why are we making Arthur Page out to be almost a God-like figure in doing this organization? And in fact, there was a contemporary of Page—his name was Paul Garrett, who was at General Motors and was also extremely influential. He actually had a more high profile boss in Alfred P. Sloan—to make him have a lot of impact. And both Page and Garrett were very active. They both were on the board at the Metropolitan and they took turns chairing the publicity committee and on most of the other social service things in town. So they were friends, and they had a lot of influence on each other. I think the big difference ultimately was that Page more than anybody else had—let me just say clearly, the two of them were responsible for beginning to institutionalize public relations inside a corporation as opposed to what say, Ivy Lee or Eddie Bernays or Earl Newsome or Carl Byoir would do, which was to keep public relations a separate business using clients from the inside. So creating a role for public relations, and then trying to integrate it into the organization was terrifically important. The thing about Page, and the way he did it that I think distinguished him more than the others; he was much pithier at describing why he would do things and the way that he would do it. He also had a really good focus I think; on what’s important and a lot of people attribute this to the fact that AT&T was a monopoly. It helped to set the principle and that was that the public interest had to be uppermost in what you did in business, and thus his often quoted phrase about public permission and public approval is significant, but, he believed that, and he used the word character—Page did—long before anyone else did. It’s now a buzz word. I saw in yesterday’s Times, that the current CEO of Coca-Cola, Muhtar Kent, says that he believes now that customers are as interested in the content of our character as a company as they are in the content of the product that we make. I think that’s true. I think the word character—maybe it combines reputation and brand and a whole other assemblation of attributes or qualities, but to me the world character, which Page liked and used—and he used to say over and over again, we have to keep the character of AT&T open and available and transparent so that it shines through in everything we do. Whether it’s a switchboard operator or the lineman or anybody else, they all have to participate in doing this. He’s often attributed as having said it’s 10% saying and 90% doing. I think his idea of institutionalized public relations evolved beyond that because he said that fairly early in his career. You can see, in reading through the speeches, how his thinking evolved and became more sophisticated, but it was always anchored in this one thing which was, Page in his life—you will see his involvement with the government was always sincere and genuine. He always believed that ultimately the people’s will would be done by any company, whether it was in the private sector or not. That if you lost the support of the public, then you ultimately would fail and your enterprise would fail, that it had to be there. Well, he’s the first I think of the American business leaders who really understood that public opinion had been mobilized and organized with the emergence particularly of the giant publishing companies, newspaper companies and the radio companies and he could anticipate what was going to happen with television, which happened really in his own lifetime. But he understood how public opinion had become a significant force, and he also understood that it was the ultimate arbiter. It was the decider because if a business got too far out of alignment with what people thought and valued, they have a way of reining you in. But he wanted AT&T, in a way, to keep itself open all the time, so that people could see it because he said, “As the secret of being a monopoly is, you can’t have secrets. People have to see what you’re doing because they had to always be reassured, a) that you’re not using your monopoly just to enrich yourself or that you’re not being slothful just because you have a monopoly or you’re not being inefficient because you have a monopoly.” Because as he said over and over again, the one thing we manage to do is to get people to accept the fact that AT&T could be called a natural monopoly. We haven’t overcome their suspicions of a monopoly though, because that’s still inherent. The American state of mind is to be suspicious of anybody who doesn’t have competition. Well, all of those things, fermented in a very yeasty-like way in the early days of the Page Society, because people could connect with—those are very contemporary ways of thinking about a company and its use of public relations.
Page was also very, very insistent that the purpose of public relations—or as it was called, information, in those days—was not only to make sure that the management’s point of view was known to the public but that the public’s point of view was known to the management. That’s very vital because I think, particularly in the last 20 years or so, that more and more the management of organizations—all organizations—regard public relations as being a microphone to broadcast what they think. What they want to say. Their story. Their point of view. And less and less as a source of intelligence about what the public thinks and the outside environment. And I see this as being very critical for the success of any good public relations operation and its critical to the success of a public relations leader, who wants to be a counselor, because somebody has to be the one, when you’re getting it wrong, somebody has to be the one to go to the management and say, “But the public isn’t seeing this you know, that’s not what they think, we’re not getting across to them.” And that may mean then that we have to change a policy, we have to change a procedure, we have to change a product, we have to change a service. We have to do something here because ultimately in the collision between what the public expects of us and their lack of satisfaction with what we’re doing now, they’re going to win ultimately. And so it’s up to us that as good stewards—managers of the company—to try to anticipate where this is going, I think some of Page’s most interesting pieces had to do with anticipating where public opinion was heading, and the changes that were coming. You just don’t hear many people think about that very much today. One person did and I think the person who’s most informed by Arthur Page was Peter Drucker. Almost everything Drucker writes, first of all in the concept of the corporation, which he did, based on his work at General Motors actually. And then secondly, in the practice of management, his 1954 book just highlights over and over again the views that Page had, as well as the views that Garrett had about what public relations should do. Over and over again, Drucker emphasized this. I had the rare privilege of getting to know Peter Drucker, and having visited him on more than one occasion. Having lunch with Drucker, I said to him, “Why do you think it is that public relations today doesn’t have the same sort of automatic credibility or acceptance with the senior management team that say, it would in the time of a Paul Garrett?” And Paul Garrett actually had Drucker make the first study of General Motors, which became the concept of the corporation. Say of a Paul Garrett at General Motors or an Arthur Page at AT&T and he said—he got a little impish and he said, “Well, because of my fellow countryman Eddie Bernays. He said you know, Eddie Bernays taught everyone that public relations was about gimmicks, and about coming up with some kind of a big idea, like a celebration or a promotion or an anniversary, that would attract the attention of the media. And he said, the problem with that is, if you’re running a public relations firm, that’s the way you can make a living but if you’re running a company, that’s not what public relations has to be to the company. It can’t be that. And he went on to say, which I thought was just remarkable he said, “What’s happened here is because of Bernays. Everybody thinks public relations is getting the word out and getting their story out. Telling your story, pushing stuff out, pushing messages out, broadcasting messages.” And he said, “Back in the original concept of public relations inside a company”—almost quoting Page verbatim, without attribution I might add—he said, “Public relations credibility comes from being able to advise management directly of what things will work and what things won’t work, based on the public’s opinions and attitudes.” And he said, “You don’t hear much of that anymore.” He said, “So I’m going to take it then that the caliber of people doing public relations inside of corporations today is much less than it used to be, at a time when there was an Arthur Page or a Paul Garrett. And I’m going to assume that they don’t personally have the credibility or the stature with the management of their companies to be able to make this a part of their portfolio, such that they’re going to be sitting there when people are saying, ‘What should we do or what should we not do?’ They’re going to be involved…it’s the ‘how do we say this’ or ‘how do we explain this’ stage. Not in the ‘what should we do’ stage.” I was struck by that, by his willingness to say that. But Page’s business about the public interest was very critical to Drucker. If you look at the end of his book, Practice of Management, on the last page of the book, he wraps it all up and he quotes an English pamphleteer, a mandible from the 19th century—who was a political economist. And that’s different from an economist economist. But he wrote a satire called The Parable of the Bees and in The Parable of the Bees he had a philosophy which he expressed, which was the philosophy of a lot of political economists at the time, which was that private vices yield public virtues. So, it’s okay for people to do bad things because in the long run they cancel each other out and the public benefits from that. Drucker ends his book by saying, in the democratic form of capitalism that we know today and is practiced in the United States of America; nothing could be further from the truth. Because people have learned now that you have to conduct private business in the public interest. It’s almost a Page statement. He was very influenced by Page and by what Page wrote and by what Page said, and I think in that sense it’s been remarkable to look both at what Mr. Garrett did and what Mr. Page did and how ultimately, they influenced Peter Drucker so heavily in his concepts and his writings. And he’s intimately familiar with both of them. In fact after Alfred Sloan left General Motors, and Garrett was no longer working there, Drucker would have lunch at The University Club once a week, and sort of commiserate about what was going on in the world of high finance in New York City. Absolutely fascinating stuff, and I think that the Page Society has continued to expand and to grow to accomplish this mission. I think it’s gone beyond just thinking of how to improve the breed; it’s not trying to run real programs that will make consciously the effort to do that. I can’t tell you how successful that’s going to be as a strategy because when I look back over the history of corporate public relations in particular, where I find that there have been real flowerings around—it was grown and there were highly visible people—they were really a people of top-notch quality. And the question gets to be, can you mass produce people like that? It’s like the age old argument about leaders you know, can you really make leaders? You can expose people to leadership skills and leadership strategies, but does that transform them into leaders? That’s a real question, and just to go back to Chet just for a moment, Chet confessed to me one time late at night on a plane that—I ask him, what’s the most frequently asked question that you get from people, not necessarily clients but people you know, for advice and stuff and he said, “Oh without question, it’s from people who are in positions in their organization, and they want to be taken more seriously.” And he said, “I guess the easy way to say it is, ‘How do I get more clout with the management?’” And he said, “The disappointing thing is that I can explain to them how I think they should do that, and they will nod and sometimes they’ll take notes and he said, ‘But deep in my heart I know that most of them are never going to have the kind of clout that they think they should have or that they want to have because they simply don’t have the aptitude, the personal skills to seek up and to get into their business.” His favorite line about public relations people in management roles—Chet’s—was that most of them think of themselves as public relations professionals’ first, and not as business people. Whereas corporate management, and he really didn’t like the yuppie idea that you would hear people say, I’m just a portable skills package, I can take myself and go anywhere and do public relations, which would bother Chet immensely because he would say, that’s what’s wrong. You see they don’t really get themselves rooted. A man like Arthur Page, he became central to the business of AT&T. He became central to their rationale for being a monopoly. He became central to the strategy of universal service throughout the Bell System. To the cross subsidy between the long distance lines and the local business—all of these things were Page’s way of trying to show over and over and over again how AT&T had to put the public interest first, ahead of anything else. And Chet would say to many of the people doing public relations, they think exactly that. They’re thinking about, what’s the next job I can get now where I can do public relations? They’re not thinking about, how do I really integrate what I do into the fabric of this business? Make it vital, make it vitiating to the business itself? And that used to be very frustrating to him, because he felt like in a way it was kind of insulting that somebody would come to him and say as if there’s some bag of tricks that you’ve learned that you could just go plant these seeds to go grow into a beanstalk and it’ll take you straight up to the top to be successful. That stuck with me, and I think that’s still a big challenge for Page, trying to define, what’s the outcome? What’s the end result of being involved in Page programs in terms of the impact on corporate management, because from the very beginning—from day one, when I sat in a board meeting, there was no question—whether it wa