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Leadership Style at AOL

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Netra Shetty
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Leadership Style at AOL - May 7th, 2011

AOL Inc. (NYSE: AOL, stylized as "Aol.", and previously known as America Online) is an American global Internet services and media company.[3][4] AOL is headquartered at 770 Broadway in New York.[5][6] Founded in 1983 as Control Video Corporation, it has franchised its services to companies in several nations around the world or set up international versions of its services.[7]
AOL is best known for its online software suite, also called AOL, that allowed customers to access the world's largest "walled garden" online community and eventually reach out to the Internet as a whole. At its prime, AOL's membership was over 30 million members worldwide,[8] most of whom accessed the AOL service through the AOL software suite.
On May 28, 2009, Time Warner announced that it would spin off AOL into a separate public company. The spinoff occurred on December 9, 2009,[9] ending the eight year relationship between the two companies.[10

The AOL co-founder shares leadership lessons learned from his storied career, which stretches from building an Internet powerhouse to the infamous Time Warner acquisition, and now, Revolution, his newest venture. Find out what these experiences have taugh
America loves a comeback story. Steve Case spent 20 years building America Online into an Internet powerhouse. In January, 2001, at the pinnacle of the company's influence and market value, Case led the now-infamous AOL acquisition of Time Warner. He spent two years as chairman of the combined company, giving up that position in May, 2003.

But it's now 2006, and Steve Case is back. Never one to be satisfied with the status quo, in April, 2005, Case launched Revolution LLC (www.revolution.com), a private holding company that he's funding personally with $500 million of his estimated $825 million in wealth. The company will invest in health care, wellness and resorts -- three sectors for which he sees significant sustained growth. Today, his company has about 2,500 employees across its three operating groups, Revolution Living, Revolution Resorts and Revolution Health, and several hundred millions of dollars in revenues.

More About Revolution
There's a wide variety of individual companies across Revolution, including (among many others): Exclusive Resorts, the largest luxury residence club in the U.S.; and Miraval Resort, Travel & Leisure's No. 1 ranked destination spa.
Also in the group -- companies that form the initial foundation for Revolution Health, such as:

MyDNA Media, electronic publisher of consumer health news, disease content and genomic science information
1-800-Schedule, which helps consumers find doctors and schedule appointments
Simo Software, a company that allows consumers to manage their health-care spending, records, and finances securely and privately
Extend Benefits, which provides individual benefits solutions to corporate clients
InterFit Health, a large provider of consumer health screenings and immunizations
Steve recently shared with me the progress of Revolution and the lessons he learned from the AOL and Time Warner experience. An innovator of the first order with conviction about how to positively impact on the world, Steve's leadership style is based on thinking big, change-the-world thoughts. He plays to his strengths as a visionary, an evangelist for the consumer, and a deal maker; understands how technology can serve people, and focuses on building a world-class team of colleagues, advisers, and managers to run the business operations.

Following are excerpts from our discussion.

Steve, tell readers about your new company, Revolution.

Revolution is building businesses that change the world. We're focusing on major challenges that could be addressed through philanthropy, politics or the public sector.

But for me, given my interests and skill-set, I think I can have the greatest impact through an entrepreneurial prism, building on the AOL experience. At AOL, we were very mission-driven. We really were motivated as much by getting people online and ushering in a more interactive age as we were about building a business and making money.

That same philosophy applies particularly in areas like home health care, which is a broken system that demands a-swing-for-the-fences kind of approach to empower consumers, leverage technology, and effect big change.

Do you have a role model organization for what Revolution is hoping to become?

Our bias is a Built to Last mentality. The assumption is that we're going to be in these companies 10 or 20 years from now. It's similar to the Warren Buffett approach of buying businesses and holding them over the long run.

But there is a twist. Similar to what Richard Branson has done with the Virgin brand -- airlines, mobile communications, financial services, retail, etc. -- we believe that there's a lot of value to the branded approach. We will build up the Revolution brand over time and apply it to a variety of consumer businesses.

So I view our approach as something of a hybrid between what Warren Buffett and Richard Branson have done, ultimately making Revolution unique.

It must be gratifying to finally be able to live in the present and be forward-looking rather than defending the AOL-Time Warner merger.

Yes, for sure. But it's broader than that. When I think about AOL, I really think of it as being a 20-year journey. Even though the second 10 years were when the fame and fortune set in, it was the first 10 years, the pioneering phase, that I enjoyed more and thought I was better at.

So recognizing that and focusing on business opportunities that have significant swing-for-the-fences transformational potential like health and that play to my strengths is a lot of fun.

What are other lessons you've learned from the journey that you've been on?

One of them is that I think I'm better at the earlier stage ventures, I'm better playing offense than defense. When companies get large, they tend to focus as much on protecting what they have as building, and I'm much more a builder than a manager.

Another lesson has to do with corporate and organizational structure. We've tried to establish an umbrella with a core set of values and strategic directions and an environment where entrepreneurship can flourish. We now have autonomous companies and management teams, but they're united by certain key attributes, such as being consumer businesses that empower people by giving them more choice, control, and convenience, while being disruptive kinds of businesses.

We've been working on setting up a structure to preserve the entrepreneurial zeal. Notably in most cases we're acquiring control of companies, but not 100 percent. Even though this is more complicated, we think it makes sense, based on the lessons I learned at AOL.

When we bought companies like Netscape or ICQ, despite the best of intentions, a few years later they were not as valuable as they could have been. They ended up being divisions of divisions of divisions and the innovators chose to move on.

In retrospect we would have been better off having bought 70 percent of ICQ [which formed the basis for what has become AIM instant messaging]; the 70 percent ultimately would have been worth a lot more than the 100 percent we bought.

You have assembled a team of luminaries, such as Colin Powell, Carly Fiorina, and Frank Raines. What do you see in their involvement?

Like you, I believe that success ultimately comes down to talent. We've tried to create a dynamic where the brightest people want to be affiliated with Revolution, at levels ranging from part-time board members to full time executives.

In the case of health, we knew it was a big opportunity -- it's the largest industry in the U.S., and it's broken and in need of a fresh approach. But we don't know a lot about health, so getting smart people together with experience and perspective in health care, technology, and the public sector was critical to make sure we're asking the right questions.

We also wanted to make sure we were able to launch this new venture with a degree of credibility. Our goal was to start building an "increasing returns dynamic," where people want to be part of it because they are excited about the opportunity and because of who else is involved.

Many people over the years have tried to wrestle the health-care beast to the ground. Why are you going to succeed when others have failed?

First, it's not a new phenomenon for me; there's a sense of deja-vu. We heard the same skepticism in 1985 when we started AOL. Many had tried and failed in interactive services, videotext, or interactive television. Companies like Knight-Ridder and AT&T had done some testing and concluded that consumers really didn't want interactivity.

But we went ahead and launched a company believing that people actually did. Many thought we were crazy. It took us a decade to get going. In fact, it took us nine years to reach one million subscribers and, nine years later, we had 20 million subscribers and were a company worth over $100 billion.

What was the secret to the growth?

We recognized that people were looking for services to make the Internet easier to use, more useful, fun and affordable, and we took steps to make this happen. We also needed to turn PCs into communications devices.

In the 1980s, modems were viewed as peripheral devices, but we recognized that communications needed to be integral. So we led an effort among IBM, Tandy, Apple and others to start building modems into PCs. That's when interactive services really took off.

The lesson there is to identify the breakthroughs that will accelerate the growth of the markets we're targeting, like building modems into PCs.

Three Leadership Lessons from Steve Case
Learn from but don't dwell on past mistakes -- have the courage to think great thoughts.

Be self-aware and objective about what you do well; surround yourself with people who complement your strengths and balance your weaknesses.

To create significant entrepreneurial and professional opportunities, understand and align yourself with major demographic, technological, and consumer preference trends, and take a long-term view.

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