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This Is Everybody's Fault But Mine

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01/18/2010

In 1992, Jay Leno became the host of NBC’s “Tonight Show,” and Brett Favre played his first game as starting quarterback for the Green Bay Packers. Eighteen years later, Favre leads the Minnesota Vikings – Green Bay’s traditional rival – in a playoff run while Leno is poised to regain the hosting job he surrendered to Conan O’Brien less than a year ago. The ongoing drama surrounding both men emphasizes the difference between bureaucratic and entrepreneurial management in organizations.NBC and the Packers both planned the replacement of their star employees years in advance. Ted Thompson, the Packers general manager, drafted quarterback Aaron Rodgers in 2005 as Favre’s eventual successor, while NBC chief Jeff Zucker signed O’Brien to a new contract in 2004 that guaranteed him the “Tonight Show” by 2009. Long-term planning is common in any firm, but when dealing with high-profile public positions, there’s a tendency to emphasize the individual’s desires over organizational objectives. That’s what made Thompson and Zucker’s moves stand out.

Publicly, Leno and Favre cleared a path for their successors. Leno spoke on his “Tonight Show” about the importance of keeping O’Brien at NBC and the need to avoid a repeat of Leno’s own problematic transition from Johnny Carson. Favre never publicly supported Rodgers, but in 2008, after many years of wavering on the subject, Favre finally announced his retirement.

Both men then changed their minds. Leno decided he still wanted to tell jokes on television every night, and Favre wanted to continue throwing a football. NBC and Green Bay had already installed their successors, but no matter. The question now was how would each organization’s management respond?

Green Bay stuck to its guns. Rodgers was their starter going into the 2008 season. When Favre realized he couldn’t simply have his old job back, he demanded his unconditional release (he was still under contract even after retiring). Green Bay said no, primarily because they did not want Favre to sign with Minnesota and compete against the Packers in their division. Instead, Green Bay traded Favre to the New York Jets on the condition that New York didn’t turn around and re-trade Favre to Minnesota. That didn’t stop Favre. A year later, he lied about his retirement a second time to secure his unconditional release from New York, whereupon Favre signed with the Vikings.

In contrast to Favre, Leno was perfectly free to sign with another network after his contract expired in 2009. He was under no ethical duty to retire. But once word got out that he might go to ABC or Fox, NBC management panicked. Zucker and his lieutenants offered Leno a new contract that would revive his one-hour program – sans the “Tonight Show” name now contractually obligated to O’Brien – to air during the prime-time hour of 10 p.m. NBC spun the new “Jay Leno Show” as a revolutionary idea that would cut the network’s programming costs – talk shows are cheaper then scripted dramas – while keeping both of its popular hosts in the NBC family.

NBC’s refusal to “move on” proved disastrous. Leno’s 10 p.m. show tanked in the ratings and destroyed the lead-in for the affiliated stations’ local news – their major revenue source. Leno’s program also diluted the “Tonight Show” brand, as Leno and O’Brien were now directly competing for guests and viewer attention.

Zucker and NBC management responded to theirs and Leno’s failure by…blaming Conan O’Brien. Instead of simply canceling Leno’s program, NBC decided to move it to 11:35 – the “Tonight Show” time-slot for 57 years* – bumping O’Brien’s “Tonight Show” past midnight. Somehow this move would reclaim NBC’s ratings lead at 11:35, which O’Brien “lost” to David Letterman’s “Late Show” on CBS, while simultaneously improving O’Brien’s program.

O’Brien rejected this idea last Tuesday; as of this writing, NBC and O’Brien have reportedly completed a severance agreement that restores Leno to the “Tonight Show” full-time while allowing O’Brien to move to another network.

The conventional wisdom – and I admit to reciting it myself – is that NBC made a mistake when it promised O’Brien the “Tonight Show” five years in advance. But consider NBC’s own late-night history. In the early 1990s, Johnny Carson was working on a year-to-year basis; he could basically retire anytime he wanted. Behind the scenes, NBC quietly signed Leno – then Carson’s regular “guest host” – to a holding deal guaranteeing him the “Tonight Show” whenever Carson chose to retire. Unlike the 2004 O’Brien deal, however, this succession pact was signed privately and was not made public until after Carson announced his own retirement in 1991.

What transpired next, of course, was the late-night war between Leno and David Letterman, who felt he’d been robbed of the chance to succeed Carson himself. Letterman, then as now, was the more polished broadcaster and arguably the better creative choice. But Leno was the better business choice. Letterman had notoriously poor relationships with NBC management; Leno was the good corporate soldier who made a point of building relationships with the NBC affiliates – the network’s customers.

NBC erred not in picking Leno over Letterman, but in refusing to simply allow Letterman to walk away. The mistake was in trying to backtrack on a rational, long-term business decision simply to avoid some temporary bad press. Ultimately, Letterman left for CBS and temporarily enjoyed a ratings lead over Leno; over time the audience returned to Leno and the “Tonight Show” brand.

Yet not only did the current group of NBC executives fail to learn from their predecessors’ mistakes in the early 1990s; they managed to make far worse mistakes in dealing with the Leno-O’Brien situation. First, they publicly announced the succession plan; second, they openly attacked their customers by forcing them to air the Leno-at-ten program; and third, they refused to take responsibility for their actions by attempting to shift blame onto O’Brien. This was a total business failure.

Now let’s go back to the Brett Favre situation. Packers management faced public and press criticism initially for refusing to let Favre return on his own terms. But Ted Thompson and his coaching staff stood by their long-term investment in Aaron Rodgers. Even today, some people will say this was a failure; after all, Favre has the Vikings in the NFC Championship game, while Rodgers led the Packers to a first-round playoff defeat. Certainly a Vikings Super Bowl victory would vindicate Favre and discredit Thompson, right?

Well, no. It would vindicate Favre’s ego for sure. But it wouldn’t undermine the Packers’ business decision-making process. If anything, it is the Vikings who have demonstrated why the Packers made a smart move. Vikings head coach Brad Childress “recruited” Favre out of his second faux-retirement because he faced a win-or-be-fired scenario this season. During his Minnesota tenure, Childress failed to develop a long-term franchise quarterback despite his background as an offensive strategist. Favre was a quick-fix. And it worked: Midway through this season, Childress received a contract extension through 2013. He still doesn’t have a viable quarterback if and when Favre retires and stays retired.

For his part, Vikings owner Zygi Wilf also welcomed Favre, because winning in the short term aids and abets his quest to extort several hundred million dollars from Minnesota taxpayers for a new stadium. A Super Bowl win this year would help reduce political opposition to such a nonsensical project. Again, the question of how the team will operate post-Favre is secondary.

The Packers, in contrast, have a productive starting quarterback who could stay in that role – and contend for a championship – over the next decade. In a year or two, when Favre is finally retired and the press corps no longer feels compelled to exalt him, the logic of Thompson’s planning should be more readily apparent.

NBC executives have yet to learn this lesson. They insist a panicky restoration of Leno will solve their problems. They’re right to a point. It won’t solve the network’s business problems, but it solves the political problems of Jeff Zucker and his cohorts. Much like Zygi Wilf and Brad Childress, Zucker is trying to preserve his own standing regardless of the cost to his organization’s long-term success. It is a classic case of bureaucratic management.

After all, Leno is going to retire again at some point. And there’s a decent chance Leno’s ratings won’t return to their pre-2009 levels, especially given the ongoing bad press and the increased late-night competition (which may include a new O’Brien show at some point). Just as NBC had no backup plan for the failure of Leno-at-ten, it has no such plan for any other contingency. Indeed, beyond protecting Jeff Zucker and his executives from blame, NBC management appears to have no business plan at all.

Bureaucratic management is all about risk-aversion and blame-shifting. Case in point: NBC Sports and Olympics chairman Dick Ebersol publicly blasted Conan O’Brien last week as an “astounding failure” who was responsible for the current situation. Ebersol claims O’Brien would have better ratings now if he’d just taken Ebersol’s advice on how to improve the “Tonight Show.” Ebersol never specified what that magic advice was, nor why O’Brien would take notes from an executive whose own division is expected to lose $200 million covering next month’s Vancouver Olympics.

(It’s also curious that Ebersol wouldn’t lobby to keep O’Brien as “Tonight Show” host and try to improve the show going forward, rather then paying O’Brien upwards of $40 million to get him off the air. Then again, when you’ve already blown $200 million in shareholder funds, what’s another $40 million?)

In contrast, entrepreneurial management involves taking risks and responsibility. That’s what Ted Thompson did in Green Bay. Of course it was risky dumping a 16-year Hall of Fame-bound quarterback for an untested player. But Green Bay didn’t act arbitrarily or capriciously; it acted according to a long-term plan designed to keep the franchise competitive, not just at one position but throughout the entire 53-man roster. If it doesn’t work, then Ted Thompson and his staff will have no one to blame but themselves; they won’t have the luxury of hiding within the General Electric bureaucracy and blaming a freakishly tall guy with red hair. They can’t even blame Brett Favre.

*By which I refer to the slot immediately following late local news. Older readers will no doubt remember the 1960s-era Johnny Carson “Tonight Show” beginning at 11:15; over the years this moved progressively towards 11:35 as the affiliates claimed more time for their newscasts.

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