Page 135 - MS Year in Review 2020

He reflected back on the lessons from Westfield’s ill-fated acquisition of Channel

Ten in Australia as a result of the attempted diversification into media business and
the near bankruptcy that it caused. Lowy said that this experience was a great
lesson in managing failure.

At that dinner, he pointed out that not all business decisions result in success;

some are inevitable failures. Lowy discussed what he had learned in dealing with
the problems of Channel Ten and identified the steps Westfield had taken to
address these problems.

Flamholtz was impressed by Lowy’s candor, humility, and his leadership during the

crisis. He later asked permission to write a case about this crisis.

This article provides background on the origins of Westfield in 1960 and then

describes how company leaders engaged in an ill-fated diversification in the early
1980s that led to an existential crisis for the company. Finally, it examines how

Frank Lowy, then Executive Chairman of The Westfield Group, led Westfield thru a
“minefield” to save his company and identifies what leaders can learn about
managing a crisis caused by diversification.

Westfield’s Background and Events Leading to a Crisis

John Saunders and Frank Lowy were Eastern European Jews who survived the
Holocaust and emigrated to Australia in the early 1950’s. Their first partnership was

a delicatessen in Blacktown, a suburb of Sydney, where they served a mixed
population of railway commuters and workers who were European

immigrants. Soon, they opened an espresso bar in a nearby shop, which became a
great success with local Italian immigrant workers.

Within a few years, they began their initial venture in land development by
purchasing and subdividing local farms around Blacktown to meet the housing
needs of the expanding population. In what would be a characteristic of their

approach to business, the partners personally involved themselves in the details of
developing and selling their lots.

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