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AOL Veteran Hopes to Lead Company Back to the Future

Ted Leonsis, who was pushed aside after helping to create the ailing Internet giant, returns as a key strategist behind its turnaround plan.

January 13, 2003|Edmund Sanders | Times Staff Writer

DULLES, Va. — Long before America Online's problems were apparent to most, veteran AOL executive Ted Leonsis knew something was terribly wrong at the company he helped create.

By the fall of 2001, Leonsis -- a former AOL president whose role had been marginalized over the years -- was convinced that the media giant was on the wrong track, too focused on cutting lucrative deals with business partners and not doing enough to expand into broadband and serve customers. AOL needed to admit it had lost its way and dramatically change course, Leonsis concluded in an impassioned 10-page memo that he fired off to AOL Time Warner Inc. Chairman Steve Case and co-Chief Operating Officer Robert Pittman, encouraging both men to bridge their differences and work together.

"The organization's culture and core objectives need to be reset," Leonsis wrote in November 2001.

It would be several months before AOL Time Warner leaders realized Leonsis was right and confronted the problem head-on. Pittman is gone and Case has agreed to resign in May. Last month, America Online announced a turnaround plan that in large part mirrors Leonsis' advice.

Leonsis' memo has propelled him back to center stage at the Internet unit, an unexpected comeback for the 46-year-old vice chairman, who had faded into the background upon Pittman's arrival in 1996.

Now Leonsis is back in charge of the interactive services division, including product development, one of his favorite areas. Newly installed America Online Chief Executive Jonathan Miller tapped Leonsis as one of his key strategists to implement the turnaround plan. And Leonsis has emerged as a critical corporate ambassador, smoothing the ties between new AOL leaders and longtime managers.

"He's been remarkably prescient," Miller said. "Ted is one of those people who really understands where things are headed. A big part of what I've set out to do is harness some of his ideas."

Leonsis says he harbors no ill feelings from being nudged out of day-to-day management in the 1990s and is thrilled to be back.

"I don't have ego about it, but I do feel self-satisfaction," Leonsis said in a recent interview. "I was an architect of the old strategy and now I feel like I've been one of the architects of the new strategy. I won't say it's like riding a bicycle, but getting back to basics has been pretty easy."

Leonsis said his time behind the scenes gave him a fresh perspective on the corporate rat race and a greater sense of independence.

After some midlife soul-searching, Leonsis in 1999 bought stakes in two struggling sports franchises -- the Washington Capitals hockey team and the Washington Wizards basketball team. His aggressive efforts to improve the teams -- he brought in basketball legend Michael Jordan as a partner in the Wizards and lured Czech hockey star Jaromir Jagr to the Capitals -- have turned Leonsis into a local celebrity, a role he clearly relishes.

So no matter what happens at America Online's Dulles headquarters, Leonsis knows that at the end of the day he can retreat to his luxury box seat at MCI Center and experience the kind of rush no boardroom can provide.

"Tomorrow night I can go to my arena, where there will be 20,000 people," Leonsis said with a grin. "After we score a goal, the camera will go on me and I can stand up, raise my arms and 20,000 people will stand up and cheer.... I guess we all get our egos assuaged differently."

He says he no longer cares about job titles, organizational charts or reporting schemes.

"I'm an ideal employee," he said. "I don't need to be here. I don't need the money. I don't need the ego. I'm here for the sincerest of reasons. There's something very liberating about that."

Leonsis made an immediate impression on his new boss. On Miller's first day, Leonsis took him out for dinner and peppered him with briefing memos and outlines on various issues, Miller recalls. Leonsis sent a stream of managers to Miller's office to give the new CEO quick AOL history lessons to bring him up to speed.

"He really wanted the new guy to have the benefit of his perspective," Miller recalled.

Their quick bonding helped Miller gain the confidence of other AOL managers, who had endured a year of management shake-ups and remained intensely loyal to Leonsis.

"Ted has come through the fire at AOL. He's the keeper of the old flame," said Danny Krifcher, senior vice president of advanced services at AOL. "To see him having a great bond with the new CEO says to people that the flame is in good hands."

At large staff meetings, Leonsis is known for spreading his energy and optimism to the troops.

At one recent strategy session, Leonsis turned the meeting into a revival-like rally, calling upon individual managers to stand up, raise their hands and vow to do a better job. "Are you going to stamp out spam!" Leonsis asked one manager. "Will you make us the best in programming to teens!" he shouted at another.

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