(FORTUNE Magazine) – The first thing Kate Betts did when she took over Harper's Bazaar was to start gutting the staff. The second thing she did was scrap the magazine's 133-year-old logo. And that's just six months into the job.

"They wanted change," shrugs Betts, referring to the brass at Hearst Magazines who named her editor-in-chief last summer. That's why they hired her. And that's what Betts is determined to deliver.

Bazaar has been around since 1867. It's one of the best-known names in the fashion world, but in recent years it has stumbled badly. Supercilious photo essays with titles like "Electra" and tedious articles such as "Ode to the White Shirt" made Bazaar hard to plow through. "It's gotten stodgy," says Martin Walker, a magazine consultant. That's the kiss of death for fashion magazines, whose advertisers woo the young and spendthrift. Bazaar's average reader is 38, while at Vogue, Bazaar's big competitor and Betts' former employer, the average reader is 33. As a result, business has stagnated. For the first 11 months of 1999 ad pages grew by less than 1%. By comparison, Vogue saw business jump 14%. Elle increased its ads by 8%. Meanwhile, in circulation, Bazaar--with 750,000 readers--trails Vogue, which has 1.1 million readers, In Style (owned by FORTUNE's publisher, Time Inc.), which has 1.36 million, and Elle, which has 913,000. And there are threats looming outside the crowded women's magazine field: New Internet media sites like Fashion Planet, oxygen.com, and iVillage are all vying for the same readers.

So Betts' job is clear: Deliver Bazaar a badly needed kick in the pants. "Here's a magazine that's 133 years old with a logo that's barely been tweaked in that much time," sniffs Betts, sitting in her new Manhattan office, stark white with a wall of windows looking out to the Hudson River. "It needed a new identity." Clad in knee-high stiletto boots and a slim black skirt, her blond hair expertly unkempt, Betts fully looks the part of a New York fashion editor--hip, elegant, and ultracool. But what she's facing is, in fact, not so different from what Durk Jager at Procter & Gamble or Daniel Carp at Kodak is up against in stodgy old corporate America: How do you drag a 100-year-old business into the 21st century? How do you recharge a once great brand that's gotten old and stale? And, above all, how do you capture that all-important next generation of consumers?

"It's a very difficult path to navigate," says Warren Bennis, famed management professor at the University of Southern California. "The challenge is setting a course for change but also adhering to tradition." What makes Betts' job even more difficult is that her predecessor, Liz Tilberis, was a legend in the industry. As Bazaar's editor for seven years, she was admired for her sense of elegance and sophistication, and she was honored for her courageous five-year battle against ovarian cancer. Tilberis died last April while working on the July issue--an issue her staff then transformed into a tribute to her. "This one, we hope, is fit for an angel," they wrote in the editor's note.

How do you follow a legend? "It's one of the toughest challenges a leader faces," says Jim O'Toole, author of Leadership A to Z. "It's the Rebecca syndrome: The shadow of the first wife looms over the second," says Bennis. And the results can be disastrous: Just look at Doug Ivester at Coca-Cola. For her part, Betts acknowledges that taking over from Tilberis has been daunting. "You can't overestimate the impact the death of someone like Liz has--the way people grieve," she says. Betts knows that every alteration that she makes could be perceived as a slight to her predecessor's memory. But Betts' boss, Cathleen Black, president of Hearst Magazines, says that for the magazine to thrive, it has to change. "Kate has the vision for how to take the magazine, with all its great history, into the future," says Black. What's more, at 35, Betts is plugged in to what younger readers want. "She knows what's relevant," Black says.

So how's she doing? For starters, no one can accuse Betts of lacking the will to act on her vision. Last summer, when Hearst offered her the job, Betts was nine months pregnant--already on maternity leave from her job as fashion news director at Vogue. She accepted the offer and three days later gave birth. Almost immediately, while still recuperating at home, Betts got to work. "In a weird way it was good that I was offsite for a while, because I could figure out where I wanted to go with the magazine," says Betts. She concluded that Bazaar needed a complete overhaul: a new staff, a new logo, a new typeface--a new everything. She planned to make the magazine more accessible--profile clothes that women really wear, feature humorous gossipy articles, and offer easy-to-follow fashion tips. To that end, over the past six months Betts has replaced more than half of Bazaar's staff. In their place she has pulled together what she calls her "dream team" of writers, editors, and art directors she had worked with in prior jobs at Vogue and W. Some industry insiders criticize her for the abrupt staff moves. "It was really shocking; people were still mourning," protests one fashion-world veteran. But Betts insists that to drag the magazine out of irrelevancy she had to take drastic measures. "I needed to get the whole team past the preconceived notions about what Bazaar was before and get them into a new frame of reference." She explains: "The frame of mind of breaking the rules."

So far, breaking the rules has paid off. This month Betts unveiled the first issue of the revamped Bazaar. Gone are the haughty chronicles of high fashion. The new issue features a crime story on cashmere smuggling, tips on casual dress for work, and an essay from Sex and the City writer Candace Bushnell. Thanks to the publicity generated by Betts' overhaul, Bazaar has gotten a much needed boost in ad sales. This year's February issue has 70% more ad revenues than last year's. Hearst says the March issue will be up more than 10%. But magazines almost always get a boost in ad sales at launch. "There's a lot of buzz, and advertisers want to be associated with it," says consultant Walker. The real test for the new Bazaar is whether readers--younger readers--will buy it and keep buying it. If Betts can make that happen, she'll become a legend in her own right.