A Program for Growth

Hartmut Ostrowski

Chairman and CEO, Bertelsmann AG

 

"Take the lead. Go for growth. Create value” - these were the strategic mottos set by Hartmut Ostrowski upon taking office in January 2008, to reinforce the Group’s position as one of the world’s leading media and services companies. Just the kind of self-confident pronouncements you’d expect from a man who brings true passion to his entrepreneurship.

Ostrowski and his fellow Board members have since taken important steps to improve Bertelsmann’s growth profile and master the challenges of an increasingly digitized, fragmented media world. Shrinking businesses like the music joint venture Sony BMG and the North American club operations were sold, while new, promising businesses were founded and investments channeled into growth markets. The turbulence on the money markets and the declining global economy at the end of 2008 have added new challenges that, while they haven’t changed anything about the strategic concentration on growth, have shifted the focuses of this strategy.

In the present situation, Ostrowski’s priority lies first and foremost on safeguarding the core businesses and the more than 100,000 jobs in the Group. A comprehensive cost program has been initiated, and any major investments have been put on hold for now. Ostrowski refuses to be discouraged by the global economic and financial crisis: “I firmly believe that Bertelsmann will not simply manage to survive the crisis somehow, but will in fact emerge from it stronger than before. Now is the time for true entrepreneurial spirit.”

The statement perfectly reflects the go-getter attitude of the 50-year-old native of Westphalia, who has spent nearly his entire professional life at Bertelsmann and has travelled to practically every corner of the world in the process. He is glad to state the reasons for his confidence: Ostrowski sees Bertelsmann’s decentralized structure as a particular advantage, as it allows the Group to mobilize a maximum of entrepreneurial initiative. “We have highly motivated, entrepreneurially minded executives and employees who respond to a given situation swiftly and flexibly. Often, they’ve responded before they’re even approached by the CEO,” he reports. Besides, Bertelsmann has a broader business and geographical setup than any other major media company, which means optimum risk distribution. And finally, Bertelsmann has a stable, predictable ownership structure, “with shareholders who are aware of their responsibility and are prepared to put their own interests on hold for this. This allows Bertelsmann to plan for the long term; “we’re not driven by a stock market.” His eye is firmly on his growth target – organic growth of four percent and capital yield of over eight percent – even if upheavals in the economy and the stock-market have slowed things down temporarily. “The important thing is that we’re moving in the right direction. It’s secondary whether we reach our goal a year earlier or later,” Ostrowski asserts, secure in the knowledge that the shareholders fully agree with him.

Ostrowski plans to rely primarily on Bertelsmann’s strengths: With a corporate culture that places no limits on entrepreneurial freedom and a top-notch team around the world, he feels that the company is well-equipped for the future. “I can imagine no better team for achieving our goals.”

His strategy centers on systematically channeling investments into growth areas and expanding existing businesses along the value chain. Ostrowski knows that this makes growth possible even in mature markets. Digitization and use of the Internet are to generate new business models and sales channels across all divisions and businesses. “We have first-class content, be they bestsellers, award-winning TV movies, TV programs or established magazine brands. We will bring this content to our customers on all conceivable channels and via a number of collaborations.”

The Services Spezialist

Ostrowski is also relying on the expansion of Arvato’s service businesses to drive growth: the services specialist and longtime CEO of the Arvato division is an expert in tapping promising markets all over the world. Arvato, which experienced strong growth under Ostrowski and currently has over 60,000 employees and does business in 34 countries with its 270 subsidiaries, which makes it one of the world’s biggest media and communications services providers. “There’s still plenty of potential in the services business,” Ostrowski believes. In fact, in tough economic times, the Arvato division is one of Bertelsmann’s pillars of strength: for many business customers, outsourcing becomes a priority, and they are most likely to place their trust in a proven large-scale provider and specialist.

Hartmut Ostrowski emphatically refutes any concerns that he might pursue the expansion of the services business at the expense of the content-driven businesses, thereby calling into question the Group’s identity as a full-range media provider: “Content is still king!” – he emphasizes, and adds, “…and the customer is the emperor!” The task is to continue developing both lines of business concurrently. Ostrowski firmly believes that both media services and communication services will continue to grow.

Entrepreneur by Passion

Being an entrepreneur and managing successful businesses is Ostrowski’s passion. Even as a small boy, he enjoyed perusing the trade magazines his father subscribed to for his plumbing business. He knew early on that he wanted to become a manager and hold a responsible position in a large company. At the time, though, he wouldn’t have dared dream that he would one day head Europe’s biggest media group.

The people who work with Ostrowski describe him as down-to-earth. A native of Bielefeld, he loves straightforwardness and plain speaking, as opposed to long-winded beating around the bush. He abhors dishonesty, irresponsibility and actions motivated purely by politics.

Ostrowski, who loves music and opera, often turns to nature and sports for relaxation. Running is an easy way to combine all three. When it comes to team sports, his heart beats for football, or what Americans refer to as soccer – he plays football and is also an avowed fan.

Whenever his appointment calendar permits it, he watches Arminia Bielefeld’s games live at the stadium. Not to mention his efforts for his local football club, TuS Dornberg, where he spent happy days on the pitch as a striker in his teens. Ostrowski doesn’t see his position as Chairman & CEO of an international media and services corporation as contradictory to his commitment to a local soccer league. Anyone who constantly travels the world knows how important it is to come home to a reassuringly tranquil environment. Ostrowski further underscores this with his ongoing involvement with his alma mater, University of Bielefeld, where he sits on the board of the Westfälisch-Lippische Universitätsgesellschaft (University Society of the Westphalia-Lippe Region).

After studying business administration at the University of Bielefeld, Ostrowski felt the urge to get out of his familiar surroundings. However, instead he ended up at Bertelsmann in the neighboring city of Gütersloh. “Wanted: entrepreneurial talent” was the heading for an ad looking for motivated young people. The 24-year-old started as executive assistant in what was then Bertelsmann Distribution, learned the business from the ground up in the “Vereinigte Verlags-Auslieferung”.

A year later, Ostrowski was head of the credit management division, “learning to be a boss,” as he recounts with a smile. He was in charge of 47 women and three men, “which was a real challenge for me as a young guy,” he says. As the head of a central department, he began to market financial services outside the group as well as within Bertelsmann. In early 1986, at age 27, he became an authorized signatory and was ready for a change again – ready, in particular, to get out of East Westphalia.

His new employer was a subsidiary of Security Pacific, at the time the fourth-largest bank in the United States. His task was to build a factoring company, first in Frankfurt, then in Munich, with the aim of conquering the European market. “During this time, I really came to appreciate Bertelsmann’s system of allowing its management great room to maneuver. In my new job, I had very little freedom to make decisions.”

His dream had always been to be an entrepreneur within a large enterprise. So he was happy to accept Bertelsmann’s offer to return to Bertelsmann Distribution as head of a business unit in April 1990. In July 1992, he was appointed managing director, and in July 1995, he became CEO of the newly formed Bertelsmann Services Group. He was appointed to the Arvato Executive Board in 1996. In September 2002, he was named CEO of the Arvato division and given a seat on the Bertelsmann AG Executive Board.

"Just do it!“

“Just do it” is a phrase with which Hartmut Ostrowski readily identifies, and which is ever more important in a world of increasingly complex technology and contexts. He is also fond of quoting former U.S. President Bill Clinton, who wrote: “We can’t possibly do everything, but we have to do what we can.” And Bertelsmann, the Chairman & CEO is convinced, can do a lot.

Success requires hard work and the luck that comes with it. This combination also gave Ostrowski the achievement that is most important for him personally: the creation of several thousand jobs in the past ten years. Right in line with the spirit of Bertelsmann’s corporate culture, he sees it as his social duty to defend his colleagues’ jobs.

Asked what he would like to do if he weren’t Chairman & CEO of Bertelsmann, Hartmut Ostrowski answers without a moment’s hesitation: “I would move to my favorite island, Majorca, with my wife, our two kids, and the dog, and provide consulting and support to young entrepreneurs from there!”

(Last updated: December 2008)