Mountain climbing aid to peak performance at top

By Selwyn Parker

The view from the top of the mountain can be enlightening for a manager. Especially if it's Mt Cook.

For John Faraci, the outdoors-loving chief executive of Carter Holt Harvey, there are many lessons to be learned in the thin air, ones that can be applied on terra firma.

Faraci, then 47, tackled the treacherous 3753m peak with an American friend in February 1997, not long after he arrived in New Zealand to take over the forestry company.

Neither had attempted Mt Cook before and they climbed at night. "The snow and ice is more stable then," explains Faraci, a sinewy man with gimlet eyes.

They got to the top safely, surveyed the "vast arena of giants" that is Mt Cook National Park, and got back down with Faraci's robust management philosophy once again renewed. No doubt he filed away another lesson or two that should help him steer through hard times a company with sales of more than $3 billion a year.

It wasn't the highest ascent he has made. He got to within 1100m of Alaska's 61944m Mt McKinley, North America's tallest mountain, and along the way he has knocked off some serious peaks - 4392m Mt Rainier in west central Washington, 4197m Grand Teton and 4207m Gannett Peak, both in Wyoming.

Faraci is prepared to go a long way for a special peak - for example, Mt Denison in The Valley of the Thousand Smokes, Alaska.

Like most climbers, he's a hard man. Asked if he has ever had any serious mishaps, Faraci says: "Not really, some frostbite, a broken ankle in a glacier fall, a cracked sternum."

Given this level of stoicism, you would hardly expect Faraci to tolerate too much weakness within the organisation. Under him and Carter Holt Harvey's previous boss, former Vietnam paratrooper captain, David Oskin, the company has been jolted into top gear.

These days, it's not enough at Carter Holt Harvey to say: "Well, I tried."

"Tried" doesn't cut it. Getting to the top is what counts for the mountaineering executive. "We're not saying we'd like to improve our financial performance," Faraci remarks in the annual report under a thin-lipped portrait of himself.

"We're saying we can and we will." And just to emphasise the point, more of the remuneration of the top people will be paid out by results this year.

If Faraci is hard on the troops, he's harder on himself. He used to run a marathon a year almost on principle, just to test his will and body, although he didn't have much time for training.

His other passion is flying - "I'd love to pilot a MiG", he says.
But it's from mountaineering that he draws the enduring lessons of management.
For example, the importance of teamwork.

"You must have 100 per cent confidence in yourself and the people around you," he explains at Carter Holt Harvey's head office in Manukau. "You have to contribute but you must realise you can't do it all yourself."

Modest to the point of being self-effacing, Faraci skates over the actual achievement of climbing. But an ascent of Mt Cook is obviously a feat in anybody's language, and especially by two newcomers to the mountain's sometimes fatal eccentricities.

Incidentally, International Paper appears not to worry about their $3 billion man scampering up formidable peaks. "I'm expected to take care of myself," Faraci explains.

Three years into the top job at Carter Holt Harvey, he has brought a mountaineer's attributes to one of the most challenging management jobs in big business in a decade.

It's pretty much the same process that Lion Nathan went through in the 1980s and which Fletcher Challenge is going through now - namely, reconfiguring the entire business to combat tariff-free international competition, not to mention the small matter of imploding Asian markets.

"We lost 90 per cent of our sales to Asia and 50 per cent of our prices, all in six months," Faraci says.

At the same time, international competitors jumped through holes in the tariff walls to undercut Carter Holt Harvey and other New Zealand companies. The result was that prices crashed to between 10 and 40 per cent below those of the mid-1990s. "And those prices aren't coming back, not ever," Faraci warns.

At times like these, mountaineering qualities such as perseverance come in handy.

For example, Carter Holt Harvey will stick with Asia, despite its basket case status. Korea usually takes 15 per cent of Carter Holt Harvey's total log sales but in 1998 that market collapsed.

As Faraci says, "Asia's our future. It's a very important market for New Zealand and for Carter Holt Harvey. We never gave up on our customers there." Thus the company expensively keeps a big staff there, many of them fluent in Asian languages, against the day when Korea and other customer nations start buying again.

Climbers are usually good judges of danger too. If they're not, they are probably dead. "Things aren't scripted in climbing. You don't know what's around the corner," Faraci adds. "It teaches you a lot about risk management. Here, I'm paid to take risks but I also have to manage them."

He has acknowledged the dangers and turned back from the summit a few times when weather closed in, but only to regroup and, as he puts it, "rededicate yourself to the goal." Yes, you take risks but not dumb ones.

And the way Faraci sees it, reducing costs takes a lot of the risk out of commercial life. Put another way, if a company can survive and even prosper in hard times, it should be able to withstand whatever is thrown at it.

When the Asian crisis hit, Carter Holt Harvey was fortunately in a process of renewal called Project Genesis which, among other things, had launched a ruthless attack on costs. Project Genesis drove down the cost of forest harvesting and of working capital. Hundreds of efficiencies across the business saved $50 million a year. Businesses deemed surplus were sold off.

Result? Operating cashflows improved by $16 million in 1998 despite lower earnings before interest and tax. It's supposed to get better this year.

Carter Holt Harvey's chief executive certainly leads by example.

Anybody who gets up at 3 am most mornings ("it gives me time to think") can't be accused of riding to glory on the shoulders of others.

Shy and dry, he believes in an understated, you-take-the-glory style of leadership.

"Leadership isn't a personality business," he says. "One personality doesn't define leadership. To me, leadership is about getting people to do what they didn't think was possible. I have to create leaders and institutionalise the process of change. You can be a leader at any level, whether you're a forklift driver or running the company." That's another thing about mountaineers. Up there, you're judged not by rank or reputation, but by competence.

* Contributing writer Selwyn Parker has written a history of Carter Holt Harvey. He is available at wordz@xtra.co.nz