Page 228 - Leadership Lessons of the White House Fellows

LEADERS ARE TRANSFORMATIONAL CHANGE AGENTS

encouraged Simon Doonan, Barneys’ renowned creative director, to stay
with the company too, and he promoted from within to fill other leading
merchandising slots. He created generous incentive programs for loyal
shoppers and saw to it that employees were trained to provide better
customer service. Barneys’ culture was retained, optimism was restored,
and communication between the team members was enhanced. Next, Shull
turned his attention to the store’s grave fiscal challenges.
When Shull arrived at Barneys (having being named president and
COO and then CEO the next year), the Pressmans and the partner
company Isetan were embroiled in a major financial squabble. The Press-
mans personally owed Isetan over $600 million, and there was a dispute
about the ownership of several Barneys stores in the United States. The
parties were at an impasse in trying to find a way to untangle the twisted
mess so that everyone could come out a winner. Shull had a plan for reach-
ing a compromise that would save Barneys, but he needed to persuade the
Pressmans to give up the lion’s share of their equity stake to make it
happen. The decision-making process in Shull’s contract was that if he
could convince just one member of the Pressman family to go along with
his idea, that decision would prevail. He did exactly that. The next step
was to talk the Japanese company into signing on to the deal.
“The family had been unsuccessful in trying to figure out how to work
with Isetan. What we did early on was fly to Japan and reach out to Isetan
and treat them with respect. The family hadn’t done some of those things,”
Shull said. “We proposed a debt restructuring transaction to Isetan which
we thought was fair, although it was about fifty cents on the dollar of what
they had invested. We gave them real estate in New York, Chicago, and Los
Angeles as part of a transaction which was valued at about $280 million at
that time, plus $25 million in cash, and the Pressmans gave up all but
1.5 percent of their equity stake.” Isetan accepted the offer, and Barneys
was saved. When Shull left the company just two years after taking the
helm, Barneys posted an operating profit of over $18 million.
Shull’s artful negotiation skills, which he fine-tuned as a White House
Fellow working on the Vietnam Veterans Memorial, made it possible for
Barneys not only to recover but to prosper. In the mid-2000s, Shull was
responsible for salvaging another long-standing company, Wise Foods, using
many of the same principles he applied at Barneys. He says the basics of
negotiation are simple. “What I learned in Washington is it’s very important

213