Transforming Obstacles into Opportunities

Lessons from Katharine Graham, the housewife-turned-executive who redefined 20th century journalism

Following her husband’s tragic suicide in the summer of 1963, Katharine Graham was asked to take the helm of the fledgling Washington Post, a local DC metro paper that had been managed by her family for the past three decades.

It is hard to imagine a CEO more set up for failure than Graham.

A full-time housewife for the past twenty years, she had no executive or management experience to speak of. The Post competed in a crowded market where profits were hard to come by, even under the experienced management of Graham’s predecessors.

As a woman, most of the men at the paper openly doubted her ability to lead. In many ways, this mirrored Graham’s own self-doubt. In her memoir, Personal History, she describes a complete reliance on her husband prior to his death, writing, “I literally believed that he had created me, that I was totally dependent on him, and I didn’t see the downside at all.”

Yet, in spite of all these challenges — the lack of experience, the sexist culture of the industry, the internal self doubt — Graham not only kept the struggling paper afloat, but lead the Washington Post Company to market dominance. Over her nearly 30 year tenure, she established a near-peerless journalistic legacy, vaulting the paper into the national scene through its coverage of the Pentagon Papers and the Watergate scandal.

Furthermore, she established herself as a remarkably effective corporate executive. Across the 22 years between the company’s IPO in 1971 to when she stepped down in 1993, the Washington Post Company produced a staggering 22.3% year over year return to shareholders. A dollar invested in Graham’s IPO would have grown into $89 by the time she retired, compared to $5 had it been invested in the S&P 500.

Which begs the question — how?

How was it that Graham, facing so many disadvantages, was able to lead the Post to more growth than than local competitors like the Washington Star, or national competitors like the New York Times, both of whom had greater brand recognition and more experienced leadership?

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Nearly 2000 years ago, Roman Emperor Marcus Aurelius wrote in his Meditations:

“Our actions may be impeded . . . but there can be no impeding our intentions or dispositions. Because we can accommodate and adapt. The mind adapts and converts to its own purposes the obstacle to our acting. The impediment to action advances action. What stands in the way becomes the way.”

This reflects a fundamental tenet of Stoicism, a popular philosophy amongst educated Romans of the time, that external obstacles are not bad in and of themselves, and can in many cases be transformed into advantages.

As Ryan Holiday, one of today’s most well-known advocates of Stoic philosophy puts it, “the obstacle is the way.”

It’s Gandhi channeling the passivity of the early 20th century to overthrow the British through non-violent resistance.

It’s Barack Obama in 2008, transforming the scandalous revelation of inflammatory racial remarks by his pastor and longtime mentor into a teaching moment for the nation, delivering a spiriting discourses on race and the importance of unity that helped charge his nascent campaign with the energy needed to propel him to the White House.

And perhaps most trenchantly, it’s Katharine Graham, transforming the overwhelming number of obstacles and disadvantages she faced into fuel to propel the Washington Post Organization to unimagined heights.

In her memoir, Personal History, she commented as much, writing, “There is no doubt in my mind that the struggle to survive was good for us. In business, you have to know what it is to be poor and stretched and fighting for your life against great odds.”

Her success at the helm of the Post is proof of the power of turning obstacles into advantages in the corporate world, and provides a roadmap for how we can do so ourselves.

Adopting beginner’s mind to transform inexperience into opportunity

Arguably, the biggest obstacle Graham faced throughout her career was her lack of experience. It was not uncommon for the heads of peer newspapers to have decades of experience drawing across all the disparate aspects of the newspaper business, from finance, to publishing, to ad sales sales.

Yet over time, she was able to transform this inexperience, and the corresponding insecurities that came with it, into what became her biggest strengths as a leader: open-mindedness, an insatiable desire to learn and improve, and the ability to think from first principles.

Unlike her competitors, who were intellectually wedded to traditional means of operating a newspaper, Graham’s inexperience enabled her to see things with a “beginner’s mind,” allowing her to evaluate decisions from a fresh perspective unburdened by decades of experience. And a retrospective analysis of the Post’s performance shows that in many cases, it was Graham’s most unconventional decisions on who to hire or how to operate the paper that played the biggest role in company’s incredible growth.

Consider, for example, the people that Graham hired or took on as advisors. One of her earliest and most impactful — hiring the notoriously brash Ben Bradlee, a rising star at Newsweek (owned by the Post), as managing editor (and eschewing eschewing more traditional, experienced external candidates). This decision paid dividends throughout the following decade, as Bradlee helped steer the paper to national prominence through its courageous reporting of the Pentagon Papers leak and the Watergate scandal.

Graham’s unique assessment of people extended to those she took counsel from. When a young Warren Buffett purchased over 10% of her company, many on the board feared a hostile takeover. Spurring the board’s guidance, Graham proactively solicited advice from this new investor, and eventually extended him a seat on the company’s board. This fateful decision allowed her to tap into Buffett’s legendary business acumen over the following two decades, providing her with with access to invaluable executive mentorship and coaching that her untraditional background had not afforded her.

Furthermore, beginner’s mind set Graham on a journey of lifelong learning. In Personal History, she writes,

“I was always interested in what constituted good management, both within and outside our industry. In the same earnest way that I attacked many things, I began to do my homework in management. I must have driven everyone around me crazy by studying everything so intensely, but I was compelled to know more.”

Without preconceived notions on how her paper ought be run, she embarked upon a national tour to observe the operations of different newspapers, as well as then-successful companies outside the media industry like Xerox and NCR.

As a result of this commitment to learning and growth, Graham quickly picked up the nuts and bolts of effective management at the Post. Yet even as the paper (and broader Washington Post holding company) continued to grow under her leadership, she never lost her sense of beginner’s mind, and always approached decision making from a set of first principles rather than accepting following established industry best practices.

In fact, across her career, where competitor papers zigged, Graham zagged.

She was notoriously tightfisted with corporate funds in an era of rampant acquisition. Instead of pursuing growth at all costs, she set a simple benchmark — any company they acquired must be projected to earn a minimum of 11% cash over a ten year period. Very few deals passed muster.

And perhaps due to this high standard, the Post made successful forays outside the traditional media industry, making highly lucrative acquisitions of companies such as Kaplan, a test-prep education company.

Perhaps the most controversial decision Graham made, with Buffet’s guidance, was to engage in an aggressive series of stock buybacks during the 1980s. This was a highly unusual practice at the time. Yet, after assessing the value of The Post, Graham moved forward with a conviction that the market was undervaluing the company, buying back over 40% of the company (against the initial recommendation of the rest of her board). Doing so in the long run, however, ended up adding hundreds of millions of dollars of shareholder value as the market corrected and the stock price of the Post skyrocketed.

From the people she hired to the decisions she made, Graham was able to use what made her most vulnerable, her inexperience, as a way to see the industry from a different lens, enabling her to operate based on first principles and propel the company to new heights.

Becoming powerful by standing up to power

Graham was an ardent believer in the fact that journalist quality and profit went hand and hand.

It was that very belief that helps explain the paper’s tenacious reporting of the Watergate scandal in the early 1970s. In retrospect this seems like a brave and noble decision; certainly our country is better for it. The Post ended up better for it too, as the reporting on the scandal earned it a Pulitzer and permanently cemented the paper’s reputation as a top-tier journalistic outlet.

Yet at the time, to many in the media industry, taking on the Nixon administration seemed foolhardy, even suicidal.

It took two years from the moment the Post started reporting on Watergate until Nixon was forced by the Supreme Court to release the White House tape recordings which ultimately proved his complicity in the scandal. And over those two years, the Nixon administration (and its Republican allies) did just about everything it could to strike back at the paper, to destroy its will to continue its reporting.

The paper had already had a precedent of denying access to the paper and its reporters. Nixon once famously remarked to his press secretary Ron Ziegler that “no reporter from the Washington Post is ever to be in the White House,” and that if this order was not followed, that he would be fired.

But after the Watergate reporting started, Nixon’s administration and re-election campaign committee escalated their opposition to the Post by attempting to undermine the paper’s credibility and reputation.

Clark MacGregor, Nixon’s campaign chairman, said that “the hallmark of the Post’s campaign is hypocrisy”, and occused the paper of “using innuendo, third-person hearsay, unsubstantiated charges, anonymous sources and huge scare headlines” in connecting the administration to the Watergate break-ins.

As Graham shares in Personal History, readers started to write in directly to Graham, accusing the Post of “ulterior motives, bad journalism, lack of patriotism, and all kinds of breaches of faith in our effort to get the news to the people.”

Perhaps even more damaging that the attacks on the paper’s reputation were the attacks on the broadcast stations which Graham’s holding company owned. Over a four week period in the winter of 1972, three separate challenges were issued to the broadcasting license renewals of the Post’s two Florida television stations. Two of these challenges were led by organizations with ties to Nixon. And as it so happened, these were the only challenges issued to any of the 30 broadcasting licenses up for renewal in the state of Florida that year.

According to Graham, within two weeks of these challenges being issued, the Post’s stock price decreased by 35%. That year, they ended up decreasing the value of the company by more than half, as the stock price plunged from a high of $38 to a low of $16.

Throughout these two years of attacks, Graham herself began to doubt whether or not the paper had made the right decision in continuing to report on the emerging scandal, especially as other newspapers refused to follow suit in their own reporting. As she shares in Personal History:

“Because an exclusive story usually remained so for only about twenty-four hours before everyone jumped on it, I sometimes privately thought: If this is such a hell of a story, then where is everybody else?”

Yet, she trusted the people she put in place, standing behind her editors and reporters at every step of the way.

Once the release of the White House tape recordings had vindicated the Post’s reporting, Graham had found that the years of pressure put on the paper from the Nixon administration had in fact transformed the paper the better.

“Watergate tested our whole organization: our talents, our skills, our ability to organize and mobilize resources to handle a long-term major investigation while still covering the daily news,” wrote Graham. “More important in terms of its effect, Watergate catapulted the Post to true national and international prominence.”

Nixon was an adversary that few had the courage to take on. But in doing so, the Post separated itself from those less willing to suffer the administration’s wrath and cemented itself as among the nation’s elite newspapers.

Transforming internal discord into operational excellence

With the threats of the Nixon administration behind them, Graham and her leadership team had little time to rest easy. Only one year later, the Post’s executive team and the labor unions which comprised the majority of their workforce faced a standstill in negotiations. They faced a looming threat of having the majority of their employees go on strike, which would require the paper to maintain operations with a skeleton crew of executives and union-exempt staff.

Due to the massive leverage held by the unions, the Post had historically kowtowed to union demands, no matter how unreasonable. For example, their existing contract with the Pressmen’s Union afforded the right to pay for the reproduction of pre-prepared proofs that came from advertisers — duplicative and wasteful work which required the Post to double the number of printers, and take on extra employees.

Graham knew that continued acquiescence to labor demands would limit the paper’s ability to grow and to continue its investment in in world class journalism. Because of that, she decided to let the union contract expire in order to buy more time to renegotiate a more mutually equitable agreement with labor.

In a supposed show of good faith, the Pressman’s Union told Graham they would continue to work during negotiations. Instead, on the night the contract expired, they snuck into the Post office in the middle of the night, set the printers on fire, and brutally beat the pressman foreman who tried to stop them.

While the Post was unable to get out a paper the next day, they were able to ship a paper the day after, and the day after that, on and on for 4 straight months — even as the striking pressmen took on jobs with the Post’s main competitor, The Washington Star, in order to help feed the strike fund.

They did so through a series of heroic measures, from flying prints out to third party printing facilities via helicopter while they repaired their own printers, to having company executives take on night shifts to run their own presses once they had been repaired. Over time, the paper was forced to discover new ways to print the paper in order to continue its daily circulation, identifying a series of marginal improvements that allowed them to reduce the number of pressmen required to operate a press by nearly half.

In the face of continued negotiation in bad-faith and threats of violence from the pressmen toward Post employees, Graham and the Post eventually “busted” the Pressmen’s Union, permanently replacing them with non-union workers.

The Post’s handling of the strike provides a master class in how to transform adversity into advantage. Most papers would have been crippled by the initial damaging of the presses, and intimidated by the violent tone with which the pressmen had launched their strike. Instead, the Post used this low blow as a means to take the moral high-ground in the conflict, helping to maintain public opinion and minimize loss of circulation. Perhaps more importantly, as Graham described in Personal History, the damage the pressmen inflicted was one of the key factors that enabled her team to persuade the Post’s reporters and editors to cross the picket line.

Graham’s stand against the unions and her refusal to capitulate in the face of unethical strike tactics and attacks from local competitors ultimately helped reset labor relations following the strike. Moving forward, the standard had been set — the Post would be among the highest paying papers for blue collar jobs like the pressmens’, but they would stand up for themselves against unreasonable demands or unethical bargaining tactics in any future negotiations.

Applying lessons from Graham’s success

Graham’s success over her tenure at the Post is testament to the power of turning obstacles into advantages. Throughout her career, her actions provided a roadmap for how each of us can do the same.

There are two key lessons to learn from Graham when facing obstacles in our own lives.

First, when facing an obstacle or disadvantage, consider how you can channel the emotions it brings up in you toward overcoming it. Graham’s insecurity regarding her inexperience, for example, was the primary catalyst which drove her life-long pursuit of learning. Obstacles have a way of making us angry, or frustrated, or anxious. While in many cases, these emotions can be counterproductive, they can be effectively channeled into fuel to motivate us to stretch beyond what might seem rationally possible, as illustrated by the response of the Post’s tireless executives in the face of attacks from Nixon, and later, the Pressmen’s Union.

Second, treat obstacles as a catalyst to growth, as a means of forcing you to become better. Just how muscles only grow when subjected to stress and tension, so too it is with your company, your team, and for yourself. If it were not for the Pressmen Union strike, for example, the Post may never have discovered how to run their presses more efficiently, a discovery which had a significant impact on the long-term profitability of the company. Even internally imposed constraints, such as the company’s rigorous qualification criteria for acquisitions, forced the paper to diversify beyond its core competencies in a way that paved the way for much of its growth in the mid eighties and early nineties.

What both of these lessons show is that, broadly speaking, obstacles can be used as an advantage, and in that sense, they are actually a blessing.

So next time you come up against such an obstacle in your work or life, remember the lessons of Katharine Graham and the Washington Post, and see that obstacle for the opportunity it really is.

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