Delta president: ‘You’ve got to be fearless’

INSPIRING PERSPECTIVES

Each Sunday, the AJC brings you insights from metro Atlanta’s leaders and entrepreneurs. Henry Unger’s “5 Questions for the Boss” reveals the lessons learned by CEOs of the area’s major companies and organizations. The column alternates with Matt Kempner’s “Secrets of Success,” which shares the vision and realities of entrepreneurs who started their dreams from scratch.

Find previous columns from Unger and Kempner at our premium website for subscribers at www.myajc.com/business.

At least twice, Ed Bastian stood up for what he believed in against more powerful executives. While some may shy away from that path, fearing it would be political suicide, Bastian's career got a boost — both times.

As a young auditor for a large accounting firm not long after college, Bastian uncovered financial fraud that experienced partners in his firm had missed.

Then, some 25 years later, he quit Delta Air Lines over strategic differences — only to be asked to return six months later when his thinking had gained more traction among top leaders.

Bastian, now 57 and president of Delta, discusses his unconventional route to the No. 2 job at the Atlanta-based carrier, including why he spoke out and how he did it without burning bridges.

Q: What was your childhood like?

A: I grew up in upstate New York as the oldest of nine kids. My dad was a dentist who practiced his craft in a room inside our house. My mom was a hygienist who worked for him in the house.

It was always fast-paced with nine kids running around. My father insisted on quiet, so there was an incentive to be out of the house. You learn to be independent.

My parents set high expectations, which had something to do with my internal drive.

Q: Where did that lead you?

A: I was always good in math in school. I found myself taking accounting classes in college. They turned out to be a great entry vehicle into the business world.

Accounting is the language of business. If you have a good understanding of how the numbers come together, it allows you to look across a wider business span. You can grow substantially in your career.

Q: After you graduated from St. Bonaventure University, you became an auditor at a large accounting firm, Price Waterhouse. What happened to propel your career?

A: In my second year auditing a big ad agency, I tripped upon a set of analyses I couldn't quite understand.

The underlying liability of one of the businesses of the ad agency couldn’t match the reality of how the business was performing. The more I dug into it, the more troubled and puzzled I became.

People from my firm before me had been passing on this in previous audits, not really understanding what was going on. I was just determined to try to figure it out. It took a lot of time for the information to bubble up. It was a very manual and cumbersome process.

I wound up stumbling into a massive fraud — tens of millions of dollars in 1980.

I was deposed for many days by the Securities and Exchange Commission. Various partners of my firm lost their jobs.

It taught me that you’ve got to trust your instincts. You’ve got to be fearless with things that are important.

Q: Then what happened?

A: It put me on a good career path. During the investigation, I got to know the guys running the firm.

I made partner at 32, which was an early age at a big accounting firm. But it also showed me that I wanted to do more. I was doing a good job of telling other people what they ought to do. Now, I wanted to make decisions and be responsible for them.

Q: So you went to Pepsi for six years, spending most of your time working on the international finances of its Frito-Lay snack business. What did you learn?

A: I look at Pepsi as my post-graduate work because there was a fabulous management team.

I learned what it was to be in a real marketing organization. They took sugar water and salty snacks and they turned them into a multibillion-dollar global enterprise. How do you do that? How do you get your product distinguished from Coke, when in substance there are not as many differences as people like to believe there are?

There’s the power of marketing, the power of the brand and the power of distribution. For example, there’s a whole psychology to displaying retail products on the store shelves. On innovation, I learned that first to market and speed to market wins.

Bonus questions

Q: Did you learn anything else at Pepsi?

A: The importance of making quick, timely decisions. That way, you're not putting a whole lot of pressure on any one decision.

If you defer making a decision until it grows into a big issue, then you have a much greater risk. But if you make a lot of decisions quickly, your batting average improves.

Also, you have to make fact-based decisions, not emotionally based ones.

Q: You left Pepsi in 1998 to become corporate controller for Delta. But you quit at the end of 2004 as Delta’s financial problems were getting worse. Why?

A: I didn't agree with a lot of decisions that were being taken. I couldn't in good conscience stay working for a company that wasn't making the tough, long-term decisions it needed to, including filing for bankruptcy. They needed to do it a lot sooner than they did.

I didn’t believe the business model was going to work — massive employee (salary and benefit) concessions and job cuts.

They didn’t have a plan to win in the marketplace. We were never going to win by cutting costs while carving up the hearts of the people — the most important asset you have.

We were playing defense, trying to copy low-cost domestic carriers instead of playing offense with our international opportunities. If you’re gong to ask people to sacrifice, you need to be responsible and put those dollars back into good commercial activities so you can resurrect yourself.

I was vocal internally and left.

Q: You became chief financial officer for Acuity Brands, an Atlanta-based lighting manufacturer. You got a 50 percent pay raise in a more stable situation. Why did you leave to return to Delta after six months to become its chief financial officer?

A: My wife asked me the same question. Jerry Grinstein (Delta's then CEO) called and asked me to come back. My heart wanted to come back.

We talked about a new strategy for Delta and hiring new talent. Jerry also committed to restructure, including bankruptcy if it was needed. I knew that we would have the opportunity to succeed.

Q: You didn’t alienate Grinstein or other top leaders when you quit?

A: I quit on my own terms. People understood that I was not comfortable with the decisions that were being made at that time and respected my point of view.

I love this company and I love Jerry. He probably is the most important mentor I’ve had in my business career. I felt terrible about leaving, but I did not think I was doing the right thing for my family and myself by staying.

After I talked with Jerry, I took a pay cut to go back to a company that was going to file for bankruptcy. The company was burning. But I thought we could fix Delta.

I’m not afraid to take risks. If I could have afforded it, I would have done the job for free.

Q: Delta was eventually fixed. It involved bankruptcy, merging with Northwest Airlines, expanding internationally and making several other strategic moves. What was the key?

A: It's been a 10-year turnaround. The bankruptcy gave us a second chance.

We played to our strengths and developed a long-term strategy. Airlines are a lot about real estate — where you fly to.

Also, we had to develop a very active communications strategy. We had a lot of change going on. You have to bring people along. People can deal with change. But what they can’t deal with is the anxiety of not knowing what is going on — the lack of communication.