08 May 2019

Lessons from the Ashes

How Warwick Fairfax lost his family’s 150-year-old media empire—and found his purpose in the process


Dan Morrell: After leaving England for Australia in late 1830s, John Fairfax began building a media empire. At its height, John Fairfax Limited held the Australian equivalent of the New York Times, Washington Post, and Wall Street Journal, and grew to include everything from magazines to radio and TV stations.

Warwick Fairfax (MBA 1987), the founder's great-great grandson, grew up with the expectation that he would someday run the company and carry on the family tradition. He felt duty-bound and built his life around that destination, attending Oxford, working on Wall Street, and then getting his MBA.

But in 1987, as Warwick was finishing up at HBS, his father passed away, and it threw things into flux. At that point, the family owned about 50 percent of the company and the rest was publicly held. Fueled by his own critical opinions about the company’s management and wary of a corporate takeover, 26-year-old Warwick launched a successful takeover bid that was worth about $1.5 billion in US dollars.

Just three years after Warwick’s takeover, the 150-year-old company declared bankruptcy. The dynasty was over. In this episode of Skydeck, Warwick and I talk about how he lost his family’s company, how he overcame that loss, and how he is working to help others get through these same sorts of deep, personal challenges—and come out stronger on the other side.


Dan: Tell me about the company's situation when you arrive at HBS in 1985. Where did the company stand? And what challenges was it facing?

Warwick: Back in the '80s, newspaper companies were still doing pretty well. It was before the internet, so the bulk of newspaper revenues come from classifieds, some from display, a little bit from subscriptions. So it was doing well, but there’d been friction within the family, as there often is in family businesses, over the last few decades. Kind of towards the end of my time at HBS, my dad died in January '87. And the stock price started rocketing up, which meant the market felt the company was in play, that somehow with my dad dying, others might take it over. And the other thing from my perspective was I felt the company wasn't really being as well run as it could be. I think it could have been more profitable. So here am I, like 26 at the time of my last year at Harvard Business School, with all these ideas that the company could be taken over and it’s not being well run and a lot of youthful naivete and enthusiasm. So in those first few months of '87 after my dad died, I'd study for my cases that night, go to class. But then in the evening, I'd be talking to advisors and investment bankers about potentially doing my own takeover. So it was a little bit of a weird existence, those last few months at HBS. By the time I graduated in May, June, we already had the outlines of a takeover plan. And amazingly, were able to get financing. We launched in late August '87 at $2.25 billion Australian dollar takeover, which in US dollars probably somewhere north of $1.5 billion. So a lot of money, one of the biggest takeovers in this Australian corporate history. I was organizing all of that and leading up to the takeover I was studying at HBS.

Dan: So walk me through the takeover, take me from '87 to essentially 1990. That process and how that plays out.

Warwick: One of the assumptions I made was I wanted to change management and increase profitability and that the family would somehow stay in, which was an incredibly naive and dumb assumption. So they didn't, so that meant from day one of the takeover, we had a lot more debt than we anticipated. Then there was the October '87 stock market crash, which really hurt our asset sale program in Australia. So by the end of '87, we had in Australian dollars, about $1.5 billion in debt. So we did increase operating profits. I brought in a new chief executive that increased operating profits by 80%, but it didn't matter because the interest was so big that it a bottom-line level, no matter what he did, it was never enough. By the time we got to late 1990 Australia had gotten the big recession, newspaper revenues, which was the heart of the company is very much tied to the economy. And so with the amount of debt we had, we had no margin. So we had to file for bankruptcy in late 1990. My hope was to preserve the company and family control. And what I ended up doing was leading to the exact opposite of it and ending family control.

Dan: Warwick, how did you know it was over? Do you remember that moment when you knew you had to declare bankruptcy?

Warwick: It was at the point where from a legal perspective, there really wasn't any option. So I can intellectually understood it, but yeah, it was just horrific thought that what have I done? Wanted to do the takeover, I mean yes, we increased operating profits. So I suppose my hypothesis that it wasn't being as managed as optimally as possible, this proved correct. But so what? We lost control and what does that do for all of the journalists and thousands of people that work there and all of the family history. So it was a very devastating moment.

Dan: Warwick, talk about the period just after that. Was it a period of reflection that you had? Was it a period of wilderness? What did that look like for you in the years just after?

Warwick: Yeah, I mean, that's a very appropriate phrase, wilderness. It was. My wife's American, so we moved to the US early ’91. It was devastating. My whole life was spent being groomed to run this family media company. And now that was over. So what do you do now? I mean try getting a job with a resume saying failed media mogul, it's like impossible. I felt like I’d let down my father, I’d let down my family. I'd made some stupid mistakes.

Probably one of the worst things other than letting down my family is the company's founded by a person of faith. Faith is very important to me. So I felt like I let down John Fairfax and in some strange way I felt like I even let God down. Like I thought he must have wanted me to keep the company in line with the founder or at least in terms of how you treat people, integrity and all. And so it was just a very, very difficult time trying to find my way back. But what is my purpose in life now? I mean, it took years really to be able to move forward and it was not easy at all.

Dan: When did you start developing the framework of crucible leadership?

Warwick: The turning point for me was the pastor at my church asked me to give a few-minute talk somehow related to a sermon he was giving. And so yeah, I can talk about my story and what I've learned and maybe some faith lessons, if you will. What was amazing to me is that I live in Maryland near Washington, DC, and nobody knows much about Australia. Nobody's heard of Fairfax Media. But yet somehow what I had to say really resonated and for weeks and months after people would say, well thank you that your story really helped me. And there's something about talking about adversity, about failure—and this is a pretty spectacular failure on an enormous scale.

What I'd learned about significance and purpose. So at that point I thought if I can start writing my story, which I've done and hope to get it published. And then from there Crucible Leadership came out of that as “How do you bounce back from adversity”—whether you lose a business, get fired, a health challenge. “How do you find purpose in life?” So that's really where it all began.

Dan: I wonder, you have these four pillars refine, design, vision, and reality. How would you apply those four pillars to your own experience?

Warwick: Yeah, certainly in terms of refine it was the take over and the aftermath. It taught me a lot about who I was and who I wasn't. So what was needed is really more of a Rupert Murdoch, take-charge leader. And that's not me. I'm a reflective adviser. I'm a thoughtful person. I'm not somebody that enjoys managing in that scale. So I was just not designed for that. So that was really the first huge lesson about that whole refining moment. And so then that really shifts into design. Once you know how you're wired, the question is, well, how do you live a life of significance? Which to me means fulfilling some higher purpose, helping your fellow men and women, making a difference in the world.

And that ties to what are the things you're passionate about. For some of us, it may be maybe you suffered abuse or something and you want to help other people who were survivors of that. In my case it's really wanting to help people that have suffered business loss or loss in general and finding purpose. That's really the steps is first understanding how you're wired, which often comes through a crucible experience or refining moment. Then figuring out what's your vision, what's the vision of something you feel like can help people based on how you're wired and potentially what you went through. And then how do you make it reality.

Dan: And the central goal of all of this crucible leadership work is as you've written a life of significance. Can you define that for me?

Warwick: Yeah. I think all human beings inherently want their life to count. There are very few people that think, great, I was a successful CEO and I'm worth hundred of millions and hooray. I mean, that's great. Nothing wrong with success. The end in itself, it's not very fulfilling, at least I don't think for most people. So a life of significance, it's just that—it means helping other people in some sense, making a difference in the world as you define it. It's a very personal thing.

Dan: What does it mean for you personally?

Warwick: Well, for me I started off with crucible leadership really in my own orbit, thinking about people who have bounced back from a business failure or being fired or what have you. But it's really broadened out to helping anybody that wants to make a difference in the world. Who’s gone through a refining moment and wants to make a decision saying I can either wallow in my misery. It may be your own fault or other peoples’. But people who have said, okay, I'm not going to let what I'd been to define me. I'm going to use this to make the world a better place. So I want to help those people. I want to give them a roadmap. I want to give them hope. That's really kind of my goal is to help, in a sense, people like me, don't have to be failed media moguls, but anybody that wants to make a difference in the world that's been through some kind of refining crucible experience.

Dan: Warwick, in almost everything I've read about you, you've said that you have an aversion to the limelight. That's the way you're wired. So how hard is this kind of openness for you?

Warwick: That's an interesting question. You're right, because when I was in my newspaper days in the takeover I never gave interviews, which may not have been such the smartest thing in hindsight. But I'm not somebody that likes talking about myself. I'm not somebody who's going to say, ‘Oh, look at me. I'm a Harvard MBA.’ I did my undergraduate at Oxford. Do I ever wear Oxford or Harvard shirts? Never, because I think boasting is just awful. I'm just not into that. But, you know, I think it's a process. I'm not trying to be vulnerable just to be vulnerable. It's if I can help people, then it's worth it. So that's my sole motivation is really to help others.

And my faith definitely helps, because from my faith perspective, God loves us for who we are and not for what we do. And so if I'm really believing that my security is not based on, oh, look at me, look how successful I am or what have you, but it's a process. I remember years ago in the '90s there were reunions that came up at Harvard Business School and I wouldn't go, I was like too embarrassed, almost ashamed to turn my head up and see, wow, look what you did. Now nobody's going to react that way. But we think they might. But eventually I thought you know what, I'm going to go. And amazingly, it wasn't an issue but you think that. I'm probably not the only one that suffered adversity amongst a fellow HBS alumni.

Sometimes you have to forgive yourself, like in my case, how could a Harvard Business School graduate be so stupid, was I not paying attention in class? Well, I was, I did fine, but there were emotions—wanting to not disappoint my father and all these emotions clouded my judgment. So we're human. Part of it is forgive yourself and if you've gone through something where it was somebody else's fault, forgive them. Not because they deserve it necessarily, but you deserve it. Forgiveness is, I think, really key to be able to move on from a crucible experience.

Dan: How long did it take you to forgive yourself?

Warwick: Wow. Well, yeah. I am somebody who I jokingly say, if there's a problem in the world, I naturally assume it's my fault. I'm wired for blame and guilt, I'm afraid.

So I'm a tough case, but years, I mean, most of the '90s. Yeah, they were wilderness years. It was tough. It's like, how could I do it? And I've largely moved on from that. It's like, yeah, I'm very reflective, extremely reflective. So I've analyzed it to death. I've done all these what-if scenarios. The problem with what-if scenarios is you never get to play out what would have happened. You're just guessing, you don't know. It takes a while—well, it can take a while—it did with me.

Skydeck is produced by the External Relations department at Harvard Business School and edited by Craig McDonald. It is available at iTunes or wherever you get your favorite podcasts. For more information or to find archived episodes, visit alumni.hbs.edu/skydeck.

Featured Alumni

Featured Alumni

Class of MBA 1987, Section F

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