LEARN CORPORATE GPR FROM THE CEOs ‘covrmexra BETHUNE, former mechanics the ultimate fait man. Whon his aitine coulda't meet payroll he knew wht to do, ‘comma’ tleost pric EHUD PREFER shorted a company that had elf out ofthe computer market. Peifer overhauled Compaq’ fundamental approach to making and seling computers, {S'S OZ MASON Jed UPS into the information age anid ferce competition, introducing radial new technologies into a staid and conservative company. A NOREYWHL'S MIENAEL BONSIEHORE cana old his ‘employees that they ll might lose contol oftheir under chieving company if they did't change their ways HMB ROBERT EATON acd Ror Lute straightened out the automo company aftr Lee lane's » tumultuous reign, changing the way cars and trucks. are planned and manufactured. cay 0: LON MSE bit rom the round up the work leading oper terial equipment and ten {50 ed to ethine his’ ‘management team. ‘mass ROBERT L9UIS-BREYTUS stored ie once-moribund sneaker company to remarkable comeback, and it's now nipping at Nike's heals fi il tenio.sen svar ANIL on HOVEIN09 sommeddno,) porqnoay, pea st NLUYW How Seven Straight-Shooting CEOs Turned Around Troubled Companies MARTIN PURISCOMEBACK How Seven Straight-Shooting CEOs Turned Around Troubled Companies . MARTIN PURISah 99 by Mar Ps an Por in ‘vi ere ner teil Po ern ‘iyishsomvenns aoe Sa Simro nt ann Ht ee, lsmeloncroya candy ane eee nay coges Cntgg nnn na Sonaroseinig vet expan ronde—Coe wn 2. chi sect ce Geane ‘To Haver Evans, who sald yes ‘To Jonaruay Ka, for hs inhuman patlence. ‘To Pen Bowe, an with an unsally sharp and an unusually wry sens of humor. ‘Teboth the bad and good cients we've worked ‘with over the years~the former have made us appreciate the lter,CONTENTS 1. A RIDDLE WRAPPED IN A MYSTERY INSIDE AN ENIGMA 3 2. Gordon Bethune: rie Mechanic 21 3, Relchard Pei xing Moore's Law 47 4, Robert Eaton and Robert Lutz: 1he copilot: 81 5. Oz Nelson: Tie Roolutionary fom Kokomo 121 6. Michael Bonsignores toting sh Neat 143 1, Leon Hirsch: sting Go 177 8. Robert Louis-Dreyfuss Dow’ Worry Be apry 205 8. CONCLUSION: The Realty Principle 229 Indes 2391/4 RwoLe wrarrED IN A MYSTERY INSIDE AN ENIGMA ‘his sa book about how leaders Jead. It snot a book af ‘heory, since Lam nota theoretican and have no ambition of becoming a management guru. Rather these pages Will place you in the company of some word-dass business lear, etch of whom has led his company frm the brink of failre to mew level of achievement, Learning how they think and work was my way of enlarging my own under- Sanding ofthe natuse of leadership, and my hope, que ‘mpl, that their example may help you further along that sme road ‘Thies a personal book, one that arose i part fem my ned to make sense ofa specific example ofthe power4 / commance Inftuence leadership can exert. in this ease, 1 asthe one beng led, and perhaps the est pace to start out journey ough the subject swith this sory. Late in 1991, 1 met Bkhsrd Pelle or the fr time. He had jut been named chet executive offic of ompag Computer Corp. and our ‘advertsing fim had just been awanded the Compag ac- count It was large and highly visible assignment, but out compestors were haely rending thee thes with envy ver our good fortune, The company, feral, had recently announced ite fist lose after nine year of spectacular ‘growth and profits nthe shar-infesed waters a the per~ sonal computer indusey, where a moments weakness is ‘often the Immediate prehide to becoming somebody's Inch, the smart money was betting that Compag would soon become another plee of roadil tering the high tech highway Plier, when we met in his Houston ofes,Joked ke 4 ceniral casting GEO: gray-haited, handsome, conserva- tively dresed, immaculately groomed, Bot nothing else ‘was standard issue. In meetings, he spoke Hite and 1 the point. There was no bullying or bonhomle. He often ap ‘eared ost in thought, but Would iavatablycorret that Impression by asking suecin perinent questions about ‘the matter onthe able. Quiet, butinfexby, he remained focused on thoroughly exploring whatever problem was at hhand, creating a logis! suategy to address It and a tUmetble for execution ‘Whale m Bekhard's company, I had no feeling of being overwhelmed by sheer energy charsm or intellectual ds- ply. Yet, hen returned 1 New York from Texas, with drew all the ase in my pension account, which were Ante Wiaped Mate § nay subscandl, and place them in Gompag shares. had never done anything remotely Ike it before (and haven't since) Nor was this an ostentatious demonstration of ly aly toanew account—indeed unlikely chat other than my wife, anyone knew what done. Rather, sifer had, without my immediately egsering the fc, convinced me ‘hat Compaq would thrive. And it di, executing one of the ‘most rapid and sucesso Wrnarounds in reoent corporate history lier etfect on me was ofmpel action, in his case to place my Hnansal future inthe hands of @ man I barely knew It as a action tha, mulipied many thousands of times, on the part of oer invesors, colleagues, supplies, consumers, bankers and industry observers, beeame the human substance of Compaq renassance, This ripple ef fect Thave come to believe over the years, i the visible trace ofthe invisible force we cllleadership. Relatively few leaders are called upon to wina waror sve a company ut whatever their sphere of endeavor, all have tis curious f+ feat of enabling those around them fst, to believe in the future, second, to want to help shape It and, tl to eet criched by the endeavor. As Max Deprce the longtime (CEO ofthe Herman Mlle office foriture corporation put ein his bre, poedclly musing book Lesh Is a Ar “the ist respoasblty af a leader isto define realty. The last to say thank you." ‘But what i lesderhip island not just ts elects? Ccenainy, I Isa thing whose absence we often lament, ‘whether inthe White House, te school house or the cot: porate site. And though, to paraphrase former Supreme ‘Court Justice Poter Stewart on pomography, te alwaysknow ic when we se it leaerslp has proven al but n= possible to analyze ar define, much les teach. People of every stipe have ted, from Wharton PhDs 10 football, coaches, but without any scentifcally veriflable resus. ‘The recently published Knowledje hang Busnes nel edi, or example, reste is definition of leadership 10 the “Abii, through personality or organizational muse twinfluence others toward a goal.” Unforcunately, that all the encyelopedi’ editors and advisors flr able to assert. AS they weit, “Beyond that definition, is haed to say much about leadership that will not be disputed. That is because ‘countless theorists have come up with systems to describe ‘types of leadership and characteristics of god leaders. But no theory of leadership ha held upto testing overtime." 1s an are, evidently, where would-be authorities ‘should fea to tead, But the fac remains that Ihave been, ‘oly in functional terms leader myself ever since 1973, ‘hen Ralph Ammirat and {funded the advertising fim ‘Amnmiratl Pur, which grew into Amit Puss Lint, of APL as ls known to industry insiders. n the quarter een- tury since then we've grown intoa company of some eg thousand employees, spread out over ity-eight counties, ‘with annual Ming of over $7 illon. Running this fm hha been the great joy and headache of my profesional Le, fae portion of which has been devoted to teying to Figure out the nature of leadership, Afterall othe extent ‘that Tean provide this intangble quay to my coeagues, ‘and tothe extent that they can ofr ito thet people. the ‘mare flexble, ceaive, ellecive and prosperous we are ely tobe, “Argunby, the requirement for leadership, and the sort ‘ld Woaped te yt /7 of vision described by Max Depret, has never ben more ctcal than now, when rapid politica, cultural and tech- ological change has et most of ws feeing more than a ‘He unmoored. Cersinly n the business word, a higher premium ft placod on leadership than at any tine since 1 began my carer thisty'some years ago. Change threatens the stability and predictability of makes. Whether you are BM, GM, Nintendo, ora Korean debt the earths con- stanly shifting under your fet and may, nfo, open up at ‘ny moment The data bear out thi apocalyptie metaphor. orexample ofthe Fortune 500 companies of 1970, ony thi sl exist today. ust since 1996, when 1 hepan work on this book, sev zal ofthe companies T have Been studying have changed romatcaly, United States Surgeal Corp. for example, red tobe aequlred by Tyco Intemational, for roughly $4 bila instock and assumed debt Chryses,of couse xe- ate global healines when i agreed ro merge with Ger- ‘many’s Daimer-enz tdi Compaq alter i announced is purchase of Digital Equipment Corp. for $96 billion. A> as, meanwhile, Became the world's number two sporting ‘equipment and apparel company after buying Salomon S.A for $1.4 billion, Change ofthis order can be demoralizing. Authors John ‘Mickethwait and Adtian Wooltige, in their valuable book he Wiad Dacor Making Smt of he Management Gury ct the research of poychologlst Allan Katcher, who asked (wenty “senior American executives” what about ‘themselves they most wanted to hide from thelr suborai- nates. “n nineteen out of twenty eases" Mickethwalt and ‘Woolddge waite, with barely disguised amusement, “the8 /conenacx snover was the same, These trembling Chihusbuse groomed throughout thelr earees to become top dogs ‘eared that their subordinates would lean how inadequate they fl in thel jo" Presumably these same feelings of helplessness led to the results ofa 1995 Bain & Company survey, which con- cluded thatthe average Amesian company used roughly thirteen diferent management techniques. I's a wonder ‘hey aren’ al sllering rom multiple personality disorder A quick look atthe busines best-cilr Hse wil gve you & sense of the bromides Being dispensed to executives, Lead ership, we lear, i an “an” oF a “scence IC “war? of “sour is being the “ead dog” ora supportive “olower.” sxecutives need t0 flow withthe Te, Hip adversity into sccess through jujitsu, or imagine chat their employees ‘compris a basketball squad ora Green Beret unit. Would- be leaders are told to emulate Winston Chichi, Abram ‘Uncoln, Atla the Hun, Jesus, Captain Jean-Luc Picard ao-t, Maceiaveli and Special Forces commandos. A large ad pce inthe Now York Tine ook Review bya major publisher reads, “Meet Your New Business Consultant: ‘George Washington, Thomas Jelleron, James Madison. ‘Build strong alliances. Be a rk-aker. Travel with the troops. America’s founding fathers offer the bes Ways 10 ‘ola great mation. of your busines” ‘And this ming-bendlng itany doesn't even touch upon ‘the generally more sober prescriptions of the leading bus ‘ess magazines and academic journals (have you checked recently whether you area tanseconal or wansforma- tonal executive by natare?) ‘Tacory, of couse, never maps preely onto rely but ii Wrapped in ayy / 9 in the real of business leadership often seems to have ein omamon with everyday experience, or even com ‘on seni. In practic, any advice can be uselsnply be ‘cause it makes people fel Deter, which in turn Wberates& ‘etal amount of paychie energy 1 accomplish the ask at hand. Butmy own experience hasbeen thatthe bes advice comes from the example of those who have themselves held postions of responsi. Certainly, the greatest ep "ve had in teaming how 10 “lead” my oven. company has come from content exposure fo the Best an worst men and woren slaty situated 10 mysel. This sor of reverse peer review has crested small universe of postive and negative models, which gave me a context within hich to sate my own attempts to improve my perfor mance while charting Ammirau Puris Litas course throug the, als, tumultuous changes the advertising in- doy is undergoing, “The alm ofthis book i to offer readers something ap proximating my own experience. I'san invitation spend time wil le prominent and gifted business leaer: Fek= hard Peller of Compaq Coraputt, Robert Louis-Dreyus and Chrisian Tourtes of Adidae AG, Leon Hisch of US. Surgical, Oz Neto of UPS, Robert Eaton and Bob Lutz of Chrysler Corp, Michae| Bonsignore of Honeymll, and Gordon Bethune of Continental Allies. They ae ¢ het ferogencous lot, united at fst lance only by acevernent ‘and their have (or foolhardy willingness to expose dhe- ‘eves to dhe scratiny of an outside observer. Otherwise, their backgrounds are as disparate as can be imagined, One {sa gourmand andthe scion ofa great Ruropean trading dy nasty, another wa high-schoo! dopout whose ambitions19 /comeanca, ‘extended only as far as becoming a car mechanic. One, “erat one ofthe most wadition-encrusted companies in ‘the workd—a place that half-century ago looked the same 851 looks today—became a grayannel revolutionary 10 bring his lm into the communicatons age. Yet anotier is 4 flrcely independent entrepreneue who has siuggled to Team the at of management and bring stability ois conn- any, 1 determined aly on that 1 wanted to concentrate on (CFOs who had guided theie companies through major {omarounds and transformations. This was important 10 ime, because iin such ess that leadership i nos ur senly required and may exhibit self in high rele. When nothing set but leadership and vison, you can see more early the work that it does, ‘To halt corporation’ downward inertia momentum and then torevers its course daunting tsk Ren Rosen, the dean of venture captalists and caltman of Compad’s Dost of directors, as sald he Delleves mimarosnds are more dificult to cary out than satus. Shoals of good People leave and must be replaced, morale must be main: tained or rebuilt nthe wake of ayos and doetl forecasts ‘nthe business pres. The market itself aeeds to be cou ined that the company has eome back rom the dead tha back payments wil be made up and promised shipments “elvered ‘Among the seven corporations festured i this book, ‘only Compag and UPS are associated wih my advertising agency, both as longstanding dents. There i a clea sk iat my status asa cical observer willbe compromised i the reader's mind by including these two companies, but Andi Wrapped i tery / 1 ve come to know them so well over the years that fet the inside knowiedge 1 old bing to describing her eans- formations outweighed any potential drawbacks. nthe cd, they received no seca avo Tr would be nice to seport tha approached thls subject with a completly ope mind, which always helps an au thor sound Olympian and tnfllble. Unfortunately, that ‘was not the cat. Infact, I came tt with a pronounced bias belie tat succes executives have atleast one thing in common. ‘They pursue the erat ‘That the hidden uifying dead I hoped to find con- pectng the behavior and personales of those profiled Fre. And to my parts eye, {ound i. That st to say that my protagonists are necessary philosophically In lined (perhaps one ofthe ale is), o that, ike the Greek Dhllsophier Diogenes, they wander the wold, lantern in Ian, searching for proof and certitude. Rather, I mean to -soggest that they display a doggeness even a kindof eom- pulsion, to ig beneath appearances and neaver the true fate of affairs in the area of the enterprise ‘Tis may sem lke an odd eit to use as the foundation for a book about business leadership, but itis bound up swith the ratefied atmosphere within which most CEOs, and ost senior executives in general, ens. CEOS ae cllec- tively absolute rulers, though is considered poleally n= ‘correct 0 say son an age of shareholder rights and boards that appear to have awakened, ater Tong shumbes, to dele legal and ethical governance responses. At lange, rltinsional organizations, the representatives of entire nations pay cour, eager fr the investment capital prestige12 communes and expertise thatthe cle exeestve can shower ot ther, {CBOs also hire and fire ot will realizing the nani and professional dreuns of some, while denying or even de sroying others. ‘The fact isthat CEOs are held sponsible forthe success ‘or fale of thee companies and that their plans are rarely second-guessed or overturned (short of ng) by their di- ‘rectors. I's for his that they ae pald enormous and mch- ‘atczed suns of money if they sueced, there is virtully nothing they cannot do, whether i pending bilons on new programs, changing strategic diteton, bankaupting ‘ovis through lyotsor granting them new le through ‘capt investnent, ‘Unfortunatly, with this power ond exits, in varying grees, ata company with ten employees as well as one ‘wth ten thousand) comes a court and courts, mulling Jayers of selsinterst in which CEOs ate swaded, some times without theirknowedge and often aginst thes il My fist tte for this book was The Pag ef War, the resonant metaphor from von Clauses asic tex, The Ato Wr, for the confusion of armed conic. I seemed an apt de~ scription forte experience of the CHO, Who i presented ctu of reality—from which he is shieled-—that is most aways false People may wish to ater hm, o spare him unpleasantness, o hie a faite of their own. Their Imenons are not always not even predominantly, male- ‘lent or disingenuous. I’ more that power, which prover- bay corrupts solder, does 50 arly becouse it detonts his petre of the world by lending the words and acs of ‘those wih come neat. ‘The CEO's eld of action, the markets over which he ae Wapedia yey / 2 ‘vars against his competitors, is often befogged, quite poss: bly othe point of strtng hls vew and impeding ste section t0 the changes that ate constantly alterng the terrain In fact, the most precious and fiat thing for a (CBO to obtain isa clea view of hs or her word. How well fs my company perlonning compared to Its competitors? How good are we? How good do our customers think we fare? How is company morale outside the execute suite? ‘What does the pis think of ws? Ae they right? Why do Snvesing profesionls regard us as they do? Are they right? Who are the best people on my sa? Who are the ‘worst? Are good ideas reaching. me or are they being sercened out? these are the kinds of questions, eal to the future of any company, to which good CBOs must «easels strgle to get honest answers. In tie when survival, not to mention gow, dependent upon fastre- sponses to rapidly evolving maket conditions, o oa selng farenough abead of events to move nto new markets ex trey, the only way for eades to perform aby is throvgh the astute, disciplined and fst eading ofthe best informa nmi experienc, finding the tat is perhaps the most !impostnt thing a CEO can do oF, conversely, one of the ‘most disastrous things he doesn’ do. Moreover sa chat= acer se, Do you want tobe toi the tuth or not? One thing f certain: If once you send out the signal that the pleasantly feb preferred tothe nplesuely tue, chats all you have to do—the impression lasts forever. know {his tom personalexpetence ‘Back inthe 19608, when { wos a young copywriter, an account executive began behaving latlonaly promising 214 comenace, lent allkind of creative work and then never mendoning hls promises 1 anybody atthe agency Naturally, he cent sew angrierand angieras the Ist of unmet promises re, hile those of us who worked onthe account couldn’ Hg- recut what was wrong, since we felt our work was tong and effeave, ‘Wen fnally earned what was going on, Went tomy boss, the man who ran the agency, and tld him that not ‘only di we have wouble with large account, but that one othis employees seemed tbe having serious psychological