Act II

Ann Fudge's two-year break from work changed her life. Will those lessons help her fix Young & Rubicam?

In February, 2001, Ann Fudge did something that has become achingly common among high-powered career women. She quit. After a quarter-century as a rising star in Corporate America and just one year after she had been promoted to run a $5 billion division of Kraft Foods Inc. (KFT ), Fudge walked away. She didn't do it for her two sons, who were already grown and embarked on careers of their own. She didn't do it to accept another turnaround challenge, building on her reputation for reviving brands from Minute Rice to Maxwell House. Like a number of her peers, she simply wanted to define herself by more than her professional status, considerable as it was, and financial rewards, sizable as they were. "It was definitely not dissatisfaction," says Fudge, now 52. "It was more about life."

For Fudge, that meant cycling around Sardinia and going to movies on Sunday nights. It meant finally enjoying her Westport (Conn.) home, where she had done little more than grab a few hours sleep amid the grind of corporate life -- "things like going out on the deck and writing in my journal." It meant rising to do yoga instead of racing to work, reading books about moving the soul instead of moving products, and sitting down to dinner with her husband, Rich, instead of grabbing a slice of pizza at the office. And, perhaps most refreshing for a woman cast as a role model for much of her career, it meant anonymity. "I loved it. You drop off the map, and nobody cares about you anymore."

Well, not quite. About two years into her sojourn, Fudge got a call from Martin Sorrell, chief executive of Britain's advertising conglomerate, WPP Group PLC (WPPGY ). He wasn't interested in seeking her reflections on retirement. If anything, he says, "I thought, what a waste." If everybody followed Fudge's lead, he argues, "look at the damage to the economy to have all these talented 50-year-olds out." No, Sorrell called to tempt Fudge back in with an offer to run Young & Rubicam Inc., the distressed advertising and communications giant that he had bought for $4.7 billion in 2000. He thought that Fudge, with her marketing expertise and renowned people skills, could rescue a company that two CEOs in three years couldn't. And he certainly wasn't oblivious to the buzz that hiring a prominent black woman would create. Besides, the notoriously hands-on boss contends, "women are better managers than men."

What an offer, though: Fudge would take over a company with about 40% of the revenues of the unit she ran at Kraft, a company that a former Y&R client calls "distracted and uninspired" in an industry worried about becoming irrelevant. All at a time when Fudge was dreaming of starting her own children's media venture. But here was a chance to make a difference in a hurry. As CEO, she could alter the way that business was done -- turning the company from an insular idea factory stymied by its own turf battles to a truly client-focused and efficient operation. Her ideal: a collaborative family in which independent businesses work together to diagnose and solve customers' problems. This was a company where she could put her marketing savvy and management ideas into practice, a company that needed her, a company of her own. And so in May, 2003, she became chairman and chief executive of what is now called Young & Rubicam Brands, as well as Y&R, its flagship ad agency.

In this way, Fudge stands out among top-tier executive women who choose to leave the corporate world because of its unrelenting demands: Most who walk away seem not to return, unless it's to found and run their own businesses. In a culture that exalts loyalty to the job, if not the company, and disparages, however quietly, those who try to limit its hold on their lives, leaving is often seen as a sign of weakness, a sometimes unforgivable lack of ambition. Most Americans are even reluctant to take all of their annual vacation; Fudge herself measured her maternity leaves in weeks, not months. While PepsiCo Inc. (PEP ). CEO Steven S. Reinemund, who has watched several high-level female colleagues quit for personal reasons, says he has thought about taking a long break "a number of times" over his career, he hasn't. Few have. It shouldn't be a stigma, but it is.

No wonder that what really intrigues Fudge's female peers isn't that she left but that she went back. Or, just as important, that she could go back. Few high-level women dropouts have the opportunity to rejoin the corporate elite with their credibility intact. And even for Fudge, that is anything but certain: At Young & Rubicam, she has been welcomed with as much skepticism as enthusiasm. Fudge was an unconventional choice as chief executive, and she is taking an unconventional approach -- importing a management rigor and an inclusive style rarely associated with advertising. Fudge's leadership could result in dramatic improvements or end in very public failure.

Awkward Match

Fudge traded her enlightened early retirement and entrepreneurial plans for a daunting challenge. She has thrust her newly centered self smack in the middle of a company that has endured neglect, executive greed, and a messy merger. Some big clients have left in frustration: Burger King Corp. pulled Y&R as its lead ad agency on its estimated $350 million account less than a year after awarding it; executives there declined to say why. According to AdWeek, which tracks the industry, billings at Y&R'S New York headquarters have shrunk from $3.4 billion at the end of 1998 to about $1 billion today -- a downward trend that company insiders acknowledge but say is exaggerated by several spinoffs. The various divisions of the group, from direct marketer Wunderman to brand consultancy Landor, rarely work together. Some employees are bitter. And now many are peeved to have a consumer-products executive who espouses management principles like "Lean Six Sigma" at the helm of an ad agency, where a modicum of chaos is thought to be necessary for creativity. To them, it's an awkward match.

The new CEO acknowledges that it'll take time to create goodwill among a group of people who have been so disillusioned for the past few years. A slew of senior executives, including CEO Peter A. Georgescu, cashed out after the 75-year-old company went public in May, 1998 -- the largest initial public offering in advertising history and one that ate up two years of attention within the company. In 2000, Sorrell acquired the group after a stormy five-month takeover that had all the hallmarks of a high school romance -- tantrums, tears, intrigue, and shifting infatuations. Insiders say a second CEO took the money and left; his successor barely showed his face outside the office.

While it's too soon to judge the success of Ann Fudge's second act, an intriguing drama is starting to unfold. Some colleagues speak glowingly of her vision, intelligence, and warmth, saying she has brought a healthy disdain for outdated practices to the offices of Young & Rubicam worldwide. Others dismiss her as a celebrity CEO who lacks a feel for the industry and a rousing competitive instinct. Not only is she an outsider, she is someone who opted out.

A surprising number doubt -- quietly for now, anyway -- that a woman who openly hugs fellow execs and values her life beyond the workplace can raise Y&R to new creative and financial heights. As one senior executive puts it: "I just don't know if someone who can spend months on a bicycle has the 24/7 drive we need." Even outsiders wonder about the fire in her belly. "Does Y&R need a General Patton or a well-rounded, solid business leader?" ponders veteran consultant Richard Roth, whose firm helps clients find the right ad agency. "Ann certainly represents the latter." Fudge laughs off the innuendo. "I really love doing things differently from the norm," she says.

The notion that she is somehow not up to the job because she took time off rankles her peers. "What's two years in a career that trumps most careers that are twice as long?" says Mary Lou Quinlan, a consultant and former ad exec who was handling marketing for Folgers coffee when Fudge was working wonders at Maxwell House. "The thought that you can't take two years off and come back to work intensely is ridiculous," adds Ellen R. Marram, a partner in private-equity firm North Castle Partners LLC, who took a year off after stepping down as CEO of Tropicana Beverage Group when it was sold to PepsiCo. Especially since Fudge regularly puts in 15-hour days and has already crisscrossed the world to visit Y&R offices, reorganized top staff to make them directly responsible for all their clients' needs, moved to cut costs, and is pushing to garner more business in areas like technology, health care, and direct-to-consumer marketing.

But it is Fudge's vision for how Y&R should operate that really puts her at odds with some of her new colleagues. She brings a client's perspective to the job in a way that is fundamentally different from the usual ad agency ethos. In Fudge's world, creativity is only worthwhile if the client appreciates it. That's practically heresy to some. As an experienced marketing executive, she knows all too well the limits of the traditional 30-second commercial. When clients approach her agency for help selling a product, she believes the response should be to find the best possible combination of services, drawing on all the far-flung units in the empire. To underscore this, she launched the Young & Rubicam Brands name for the group's family of companies. That's a difficult mind shift for a confederation of businesses used to working independently and even competing against one another. Meanwhile, many insiders complain that despite the change in nomenclature, Fudge has failed to give Y&R the dynamic, fresh identity it needs to draw customers and talent back into the fold. Instead, from her open cubicle at Madison Avenue, she has focused on meeting with customers and encouraging her employees to unite in giving them better service. Her goal: more revenue from existing clients, rather than the buzz of new business. Y&R Vice-Chairman Stephanie Kugelman calls the griping "old world ad-speak," arguing that marshaling resources for clients trumps fresh slogans. "This is what you have to do these days," says Kugelman. "The whole business has changed."

Fudge may not have won the hearts and minds of all her staffers, but at least some clients are in sync with the kinds of changes she's trying to make. "Too many people add a lot of cost and not a lot of value," says M. Carl Johnson III, chief strategy officer at client Campbell Soup Co. (CPB ). "They have to stop doing stuff that's stupid." Fudge's first big success was Microsoft Corp.'s (MSFT ) recent decision to give roughly $250 million of its customer-relationship management business to Y&R. "If it wasn't for her leadership, we wouldn't have been able to close the deal," says John B. Kahan, Microsoft's general manager of corporate customer-relationship management. "Most agencies come to the table with: 'Here's what I did for other customers.' She says: 'What does it take to delight your customer?"'

Bruising Egos

But even that deal has sparked internal grumbling. The bulk of the business will be done by Wunderman, the direct-marketing unit that arguably has a more potent brand name at the moment than Y&R. Few of the company's divisions want to be grouped under a single brand, and they certainly don't want to work more closely with what they regard as the high-handed and dysfunctional Y&R ad agency. As one unit exec puts it: "Who wants to dull down a pitch by bringing someone you wouldn't choose to the table?" Fudge says she "absolutely totally respects the individual entities," arguing that more collaboration does not necessarily mean the end of their independence. "The concern is more at the senior level," she sighs. "The middle guys get it."

Fudge's message of discipline is also bruising egos. Many openly snicker at her attempts to introduce Six Sigma, the rigid and almost religious quality-control program long associated with General Electric Co. (GE ) (where Fudge sits on the board). They call it Sick Sigma. She calls the initiative FIT -- for focus, innovation, and teamwork -- and says it's tailored to simplifying processes in the ad industry. She now has staffers trained as Six Sigma "green belts," who tackle everything from sourcing supplies to honing the process for developing creative strategies. Despite resistance, several converts are already excited about the results, with Y&R account manager Kathryn Burke arguing: "This really needed to be done." Fudge saw how the program boosted productivity at Kraft, and she believes it'll actually free up time for more creativity at Young & Rubicam. As she says: "Do we really need six meetings to get an idea?"

One of Fudge's most critical -- and allegedly most strained -- relationships is with Michael Patti, the brilliant, often bellicose worldwide creative director of Y&R ad agency and head of its New York office. Terms like "client-centric" don't seem to figure in his vocabulary. While some insiders say the duo barely talk, both deny a rift. "We read each other's minds!" says Fudge. But Patti, who was hired in a multimillion-dollar deal mere weeks before Fudge joined with a lucrative multiyear contract of her own, clearly has a different view of what will it take to turn around Y&R. His dream definition of the agency: "Young and Restless. Hungry." He calls his boss a "touchy-feely...gatherer" of ideas who has brought a "calming effect" to the office. In his view, Fudge helps to nurture clients, while he pushes the "wow!" creative work. "She can hold their hands as we go there, and I can go out and get it done, hopefully," says Patti, adding that "it's a pleasant change to be partnering with a woman." This from a man who spent the past 18 years in what he calls the "testosterone culture" of BBDO Worldwide ad agency.

Such observations underline two obvious characteristics that set Fudge apart: She is female, and she is black. That may account for the preponderance of adjectives like "lovely," "nurturing," and "nice" that get thrown at her. It may also explain why Fudge says she is used to being underestimated. On a recent business trip, someone mixed up Fudge and a junior associate, who is white. "I almost think it's funny," says Fudge, noting that she has experienced racism every day of her life. When her sons were teenagers, she used to tell them not to put their hands in their pockets, in case people thought they were carrying guns. "It's not different for any person who grows up black in this country. You understand who you are. You deal with it." The bigger issue, she says, is "the challenge of being questioned all the time."

'Always So Adult'

Growing up with a brother 11 years her junior in a middle-class neighborhood of Washington, Fudge says the racism she felt was outweighed by a close-knit community and strong role models. Her mother worked as a manager at the National Security Agency; her father had a job with the U.S. Postal Service. After 12 years of Catholic school education, she headed off to Simmons College in Boston, where she earned a degree in management in 1973. More important to Fudge, she left Simmons at age 22 with a husband -- she married Harvard Graduate School of Education student Rich Fudge in her sophomore year -- and a child, Rich Jr. A friend and former classmate, Lynne White, recalls that Fudge was "always so adult, so ahead of the rest of us." As black women in a predominantly white women's college, they were active in student politics and civil rights. All the while, Fudge seemed to balance her studies, motherhood, marriage, and extracurricular activities as if "it wasn't a juggle or a struggle for her."

Fudge says it was tough but claims she simply didn't consider doing it differently. She worked two years in human resources at GE and had a second son, Kevin, by the time she arrived at Harvard, where she received her MBA in 1977. After graduating, she avoided applying to companies such as McKinsey & Co. because the long hours and travel would be hard on her family. Her situation was so unusual in those days that her first boss at General Mills Inc. (GIS ) asked how she could do her job as a marketing assistant with two children at home and a husband who worked full-time in the training department of 3M Corp. She swallowed her fury and outdid her colleagues. After work, she would pick up her sons from day care and, once they were in bed, settle down to review pages of data. Her boss later gave her a book, Games Mother Never Taught You: Corporate Gamesmanship for Women, as an apology.

Although she seemed to have found a delicate balance as a working mother, Fudge had also begun planning for an early exit from the workforce during her 23-year ascent at General Mills and General Foods, which later became part of Kraft. In her late thirties, she asked a financial adviser about retiring at 50 -- not because she was unhappy at work but because events such as her sister-in-law's diagnosis of multiple sclerosis made her realize that there was more she wanted to do than climb the corporate ladder.

Former colleagues say that sense of personal priorities was always evident, despite her obvious drive and intuitive marketing savvy. At Kraft, where she rejuvenated such brands as Kool-Aid, Log Cabin syrup, and Stove Top Stuffing, she never inflated the importance of the work. Jeri Finard, senior vice-president and general manager of Kraft's coffee division, sums it up as the "perspective that we're not in the business of saving lives, we're in the business of selling coffee." And sell coffee she did: Fudge obsessed over product quality while keeping costs under control -- and significantly increased profits at Maxwell House during her eight-year stint managing the brand.

Still, many were shocked when Fudge resigned barely a year after she became head of Kraft's Beverages, Desserts & Post Division, which made up about 15% of the company's total revenues. Retired GE Chief Executive Jack Welch, who brought Fudge onto his board, gave her one piece of advice when she was considering her departure: "Don't leave without another job to go to." Welch, who has never taken more than a few weeks off at a time, jokes: "It's the only piece of advice I ever gave her, and she didn't take it." Fudge explains that she didn't feel right talking to investors ahead of the company's IPO if she wasn't planning to stick around. And she wasn't. Her mother had recently died and two friends also had passed away within a few months of each other. She was ready to explore life outside the corporate world.

A Deep Breath

While Fudge remained active on several boards after leaving Kraft, she devoted most of her time to work that was closer to her heart. She completed The Artist's Way at Work -- a best-selling book of exercises aimed at unleashing creativity and innovation on the job that she still follows. Cathleen P. Black, president of Hearst Magazines and a friend, says "she took a deep breath for a couple of months" before delving into her other passions. She traveled to Morocco, Thailand, and Bali, played with her three grandchildren, and even helped organize Kevin's wedding. "It was stepping back and asking: 'What are you really here for? What do you really want to accomplish?"' Fudge explains.

Going into advertising wasn't exactly at the top of her list. But when Sorrell called, she couldn't resist the offer to run a company where she could apply her new ideas and one that was in an industry she was already familiar with. The children's media venture could wait. Her sons were enthusiastic but warned: "Don't lose what you gained over the past two years." To this day, they call frequently to check on her stress level. So far, she laughs, they tell her "you haven't lost it yet."

Quite the opposite. Fudge seems distinctly uninterested in the clandestine infighting and overt sniping that has characterized Y&R in recent years. In fact, pals like Ann Moore, chairman and CEO of Time Inc., observe that she seems "amazingly energized" by the new challenge. And what a challenge it is. At a recent town hall meeting in Chicago's Hard Rock Hotel, the CEO gave her signature upbeat talk to a somewhat stony-faced group of staffers from several of the group's brands. Few asked questions and, despite the spread of wine, beer, and nibbles, many returned to their offices mere minutes after she delivered her speech. That followed a lunch meeting with key executives such as Kary McIlwain, the president and CEO of Y&R's Chicago office, who told Fudge that "here in the prairie, people are still looking for the momentum of change." Although nodding and taking notes, Fudge said: "If you're looking for a big nuclear bomb revolution, it's not going to happen."

What Fudge has done is to try to reassure staff that she is paying attention to them. Before she came in, Jed Beitler, chairman and CEO of Sudler & Hennessey, a Young & Rubicam unit that specializes in health-care communications, recalls long periods of feeling, well, ignored: "There were predecessors to Ann who couldn't even pronounce the name of our company." Fudge, in contrast, knows the names and faces of people in offices around the world. William Eccleshare, who heads up Y&R/Wunderman in Europe, the Middle East, and Africa, believes she brings much-needed enthusiasm and a "huge intuitive understanding of the business." Beitler says he's "relieved and pleased" to see a leader who is meeting his people and clients for a change. "There are a lot more of these Kumbaya get-togethers where we actually talk to each other," he says, adding that "there are a helluva lot of people who are prepared to fall on their sword for Ann."

Then there are those who would stick it in her back. After calling her an incredibly nice person, such critics launch into a volley of concerns over her priorities. They question whether she is creating an environment that fosters creativity and attracts the best talent. They want to see some new lieutenants at the helm -- and more new clients. One executive says he's in "show-me mode" while another complains that "we're just supposed to get more efficient and cozy with clients." And, once again, there is that sabbatical: "A few years is a long time to be away."

Does Fudge see some resistance ahead? Sure. Does she care what people are whispering behind her back? Not really. "At this juncture in my life, it's so much not about me," says Fudge. Sorrell figures it could take at least three years to revitalize the group and, given her outsider status, "with Ann, it might take longer than that." He shrugs off the grumbling as an inevitable consequence "whenever people try to change things" and says he simply wants to see results. Of course, Fudge is well-acquainted with the imperatives of the corporate world. But she wants be remembered as someone who "made a difference in how people view themselves individually and how they view themselves collectively." Guess Sorrell knew that when he hired her. zz

By Diane Brady

With Brian Grow in Chicago and bureau reports

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