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VOL. 128 | NO. 194 | Friday, October 4, 2013

Business Lessons

International Paper CEO Talks Leadership Skills

By Bill Dries

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John Faraci answered without hesitation when asked this week about his biggest mistake as a corporate leader.

International Paper Co. CEO John Faraci discussed leadership skills during an event in the New Memphis Institute’s luncheon series, held earlier this week in front of an audience of 400.

(Daily News/Andrew J. Breig)

It was the $100 million plant he green-lighted for construction by International Paper Co., the Memphis-based company of which he is now CEO.

“It’s not like it ran slow or didn’t make quality products. It just didn’t work,” Faraci recalled. “I had to go in and tell the CEO at the time.”

Faraci spoke Tuesday, Oct. 1, to a group of 400 at the latest event in the New Memphis Institute’s luncheon series at the Holiday Inn University of Memphis.

“I learned so many lessons out of that. One of the lessons I learned is it’s OK to fail. It’s OK to make mistakes. It was a huge mistake,” he added, also cautioning that to learn from mistakes, it is not necessary to make one of that size.

“It really brought home to me that in life, careers, anything ... nobody goes undefeated,” he said. “The key is what you learn from those mistakes you made. I heard people say winning builds confidence. Not winning builds capability.”

Next month will mark Faraci’s 10th year as leader of the global company. But he started with the paper and paper-products company in 1974 as a financial analyst.

In his decade at the helm of International Paper, Faraci has led the sale of the company’s timberland and its acquisition of IP’s one-time rivals Weyerhauser and Temple-Inland. The two mergers bookended the company’s three- to four-year reconfiguration, which was only recently completed.

Separate from that have been the market forces that prompted decisions such as the recent one to close a paper mill in Courtland, Ala., laying off more than 1,000 workers through the first quarter of 2014.

International Paper will have jobs for 300 to 400 of those displaced workers, according to Faraci, who still described the decision as “gut-wrenching.”

But because of a drop in demand for the paper products that begin at the mill, Faraci said, a plant had to be closed to reduce capacity.

“We are straight up with people,” he said of the way IP dealt with the situation. “And we don’t close it the next day.”

Asked about mentoring programs, Faraci said he is a believer in mentoring that is more organic and usually something other than a formal program in which a mentor is chosen for someone.

“Mentoring is most effective when it happens on its own,” he said. “The most effective mentoring is unstructured.”

Talking about leadership traits, habits and development, Faraci said he learned long ago that the idea isn’t to treat people like you would want to be treated. He recalled a leadership training group in which he took part long ago.

“I popped up and said, ‘My leadership style is to treat everyone the way I want to be treated,’” Faraci recalled. “Everybody at the table looked at me like I had four eyes. To be a good leader, you need to treat people the way they want to be treated.”

That means recognizing employees’ different motivations.

He also said diversity is about more than gender or race or religion.

“It’s much more than racial diversity, male-female diversity, religious diversity. It really encompasses all of those things,” Faraci said. “If you think about building a global company with people from all over the world, what you are talking about is differences. How do you create an organization, a work environment, that embraces those differences regardless of what they are. … I’ve come to realize diversity is much more than maybe the way we thought about it 25 or 30 years ago, especially when you go around the world. People in Europe think about it differently than people here in the United States.”

International Paper encountered those differing views on diversity when it decided to hold separate meetings for senior male managers and senior female managers. And in some cases, the managers – male and female – responded favorably to being able to talk about problems and challenges in that setting.

“But the people in Brazil said, ‘Never do that again,’” Faraci recalled. “They wanted to have whatever meeting they were going to have together.”

Diversity is about more than communication for global companies such as International Paper. Like another Memphis-based company, FedEx Corp., IP has moved into numerous joint ventures and acquisitions of companies in foreign markets into which the company is expanding, and the expansions rely on the established networks those companies have already built.

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