One of the most impressive elements of Gary Loveman’s rise to leadership at Harrah’s, outlined in Stanford Graduate School of Business case OB-45, is the legacy of Phil Satre.
Phil and his wife live here in Reno, in a gorgeous house designed by an architect I know, Mercedes de la Garza. I used to work with Phil’s daughter. I have friends who are friends of Phil’s wife, Jennifer. I see Phil at events around town. So this case has an element of “Wow, I sort of know these people!”
To me, this case is a testament to Phil’s leadership, which set Loveman’s story in motion. At the time Loveman joined Harrah’s in 1998, Satre had already been with Harrah’s 18 years. He grew the company from a casino giant in Reno only to a casino giant across the U.S.
Satre’s strategic insight was brilliant, such as his recognition that competing on the basis of fancy buildings means you’re always going to need significant capital upgrades. Satre also recognized the need to expand nationwide beyond Reno, Las Vegas and Atlantic City to minimize the economic vagaries of a limited number of markets.
Phil knew that his marketing program was producing less than it could, and needed to change. At the same time, he recognized that the company was sitting on a rich data mine of information. These two insights led to a fateful conversation with Sergio Zyman*, the decision to create a dual COO/marketing position and the eventaul hiring of Loveman to fill that role.
Throughout the case, it’s clear that Loveman’s early success was directly attributable to Satre. The staff trusted Satre, and therefore trusted his choice of Loveman, a decidedly unconventional choice. In fact, Satre was apparently so revered that he hired Loveman without even consulting the board first. Because Satre had built a functional organizational culture, the leadership team seemed to understand that if Satre felt the company needed Loveman, well, the company must really need him.
Satre describes the role of CEO in an organization the size of Harrah’s as “identifying quality growth opportunities.” Loveman has more than proved he can stand on his own merits, completing significant acquisitions in the time since, including that of Caesars, and growing the company to $9 billion in revenue and 85,000 employees.
But it’s the Phil Satre story that set it in motion.
* In 1999, just after he left Coke, Sergio Zyman wrote a book called The End of Marketing as We Know It. I bought it then, but never read it. It’s been sitting on my bookshelf ever since. With the explosion of the internet as a marketing tool circa 2000, his book seemed like it might be dated, so I ignored it. After reading this impressive tale of Zyman’s prescience, I’m going to pick it up again. And one insight from his 1999 book is certainly correct: Zyman “believes that the old-style marketing of Madison Avenue is dead, that it no longer has the ‘ability to move the masses.’ that in today’s ‘consumer democracy’ there are simply too many choices.” Well, he’s been proven right on that count.