A Rallying Cry from Bertelsmann's New CEO

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Though he has acquired a public image as something of a local yokel because he spent most of his life around Gütersloh, Ostrowski may in fact prove to be a bigger risk-taker and dealmaker than his résumé suggests.

Ostrowski, currently chief of Bertelsmann's Arvato services division, played an important role in converting the unit from a printer and distributor into an outsourcing company (BusinessWeek.com, 10/31/05) that repairs mobile phones and even manages city services for a British municipality. His track record at Arvato suggests he won't be afraid to push Bertelsmann outside its traditional businesses.

Ostrowski also won't be afraid to sell traditional businesses that aren't making money, as he made clear in his speech to managers. "You're not going to turn a lamb into a lion," he said. "We have to evaluate our business areas and—if necessary—take tough decisions." There is speculation one of the sacrificial lambs might be the U.S. book and music clubs, which Ostrowski could sell to raise money for faster-growth businesses.

Seeking More Superstars

Finding those faster-growth businesses will be the hard part. In his speech, Ostrowski mentioned education, services, and the Internet. Of those three the Net will be the trickiest to master. The next business to face a shift to digital distribution will be RTL Group, Europe's largest TV broadcaster and the company behind the widely exported American Idol casting shows (known as Pop Idol in Britain and Germany Seeks a Superstar in Bertelsmann's home country). RTL has become by far Bertelsmann's biggest moneymaker, delivering $745 million in the first half, or 71% of operating profit.

But critics say RTL is still too dependent on traditional ad-supported broadcasting and must do more to avoid being overwhelmed by the same online tsunami that has devastated the music business. At RTL and throughout the company, Ostrowski will push for faster decision-making and will more energetically tweak Bertelsmann's portfolio of businesses using a $10 billion war chest (BusinessWeek.com, 3/21/07) to make acquisitions when necessary.

To put his stamp on the company, Ostrowski may also have to impose more centralized control. Mandates from the top never go down easily at Bertelsmann, where the units often think of themselves practically as independent companies. Sounding a bit like Captain Kirk rallying his crew on the bridge of the Enterprise, Ostrowski appealed to his managers in Berlin to support him. Bertelsmann must "explore paths that no one has ever gone down before," Ostrowski said.

Ewing is BusinessWeek's European regional editor .