Aetna: the turnaround king: by focusing on employees and customers, Ronald A. Williams has designed a culture at Aetna where workers thrive and shareholders have been rewarded by a five-year stock increase of 600%.

RONALD A. WILLIAMS IS NOT A CEO driven by power, influence, or celebrity. He makes few gestures when he speaks. His suits are not tailored; his shoes are soft-soled. He grants the press limited access and refuses to give details about his family life or offer any personal insight into what makes him tick: It's not eccentricity. He's an ultraprivate man focused on making Aetna bigger and better.

When Williams joined the nation's largest health insurance provider in 2001, the company was on life support. The Hartford, Connecticut, company had strained relationships with physicians and hospitals and suffered significant losses. Over the last five years, Williams has reconstructed Aetna with surgical precision. He restructured corporate divisions and created an environment that fosters

Aetna posted revenues of $22.5 billion in 2005, up 25% from $18 billion in 2004. Moreover, Williams' focus on customer satisfaction through a combination of technological upgrades and back-to-basics values has boosted Aetna's share price by roughly 600% (see chart).

His performance earned him the nickname "The Turnaround King," and he is largely viewed as one of the most brilliant corporate strategists in the healthcare industry! In fact, the 57-year-old was recognized as one of BLACK ENTERPRISE'S "75 Most Powerful African Americans in Corporate America" last year. "He's a better operational leader than anybody I've ever seen," says Jeff Weiss, founder and director of CCI healthcare executive summits. "His memory, command of the details, and understanding the complexity, is amazing."

These characteristics have earned Williams unwavering loyalty from Aetna employees. "People will walk through wails for him," offers Weiss. "The amount of work he gets out of people is ungodly. He gets tens of thousands of people to put out 120%, and Ron does it by the quality of his thinking and the integrity of his actions."

As a result of his efforts, Williams rose quickly: he was named president in 2002; CEO was added to his title in February 2006; and in May the company announced that Williams would replace John "Jack" Rowe as chairman when Rowe retires at the end of this year. Because of his spectacular corporate turnaround and exemplary leadership qualities, BE has named Ronald A. Williams our 2006 Corporate Executive of the Year.

QUALITIES OF A CORPORATE STAR

Williams' star qualities were apparent at his previous employer, WellPoint Inc., the health-benefits giant. Williams joined the company in 1987 and worked in several positions. Within eight years, he was president of the company's California business and helped pull in $3.1 billion in revenues in 1995. A year later, he was named president of Blue Cross of California, a WellPoint subsidiary. "[WellPoint] went from near bankruptcy to just about being the best managed company in healthcare three or four years in a row," says Weiss. "And Ron was running most of it."

Despite his efforts, Williams would never have been named president of the company, according to industry insiders. He began to contemplate his next move. Aetna wanted Williams aboard, but he was being heavily recruited by a venture capital firm. A friend convinced him that his talents would be wasted as a venture capitalist, especially since he was one of the few people in the nation with the skills to retool a lagging but complex organization like Aetna.

Williams admits he was drawn to the challenge. And Aetna found the prospect of signing the exec even more appealing. "There's Ron Williams and then there's everybody else," a headhunter told then chairman and CEO Rowe.

"We needed a very senior operation executive who understood health insurance at the molecular level," he explains, "somebody who could take apart the engine and put the 200 pieces on the garage floor, put it back together, turn the key, and it would start."

Rowe, a renowned gerontologist who joined Aetna in 2000, was a physician who had previously run Mount Sinai NYU Health in New York. He had never managed a for-profit business.

SHARED VISION, DIFFERENT STYLES

Williams and Rowe did share the same vision for what an HMO could become: an organization that would influence the quality of healthcare. The two, however, had wildly different management styles and personalities.

In outlining their differences, the talkative, playful Rowe explains: "If we are going to visit a customer, all I need is a one-page summary of our relationship and the current major issues. Hand it to me in the back seat of the car on the way from the airport to see the customer. Ron wants a report that's this thick about everything, the customer's company and the industry, etc."

The chemistry worked. When Williams joined the firm in 2001 as the new chief of health operations, there were concerns about a hostile takeover, and the company suffered net losses of $279.6 million. "This was a company that looked like at one point it might even go bankrupt," explains Joe France, a healthcare analyst at Banc of America Securities. "It was really the low ebb of the company's 125-year history."

Part of Williams' turnaround strategy focused on targeting different customer segments and developing new products within various lines of business. He strengthened the dental company that had been losing market share for years. He also invested millions in the pharmacy business, opting to manage it internally rather than partner with a pharmaceutical company. Williams also stopped outsourcing behavioral health services--which includes wellness and mind/body treatments--and brought the unit back in house.

Mark T. Bertolini, executive vice president of Aetna regional businesses, helped Williams execute the bold strategy to resuscitate Aetna. "What we know is that customers who had more than three products with us had a much higher retention rate than customers who only had one product with us," says Bertolini.

A technology buff, Williams has applied new systems to advance strategic initiatives, such as centralizing patient data using a patented set of computer algorithms. For example, the system can identify incompatible prescriptions for a patient who may be seeing several different doctors. And Aetna was one of the first to offer a combined preferred provider plan, Aetna HealthFund, which gives members the option of seeing out-of-network doctors.

LEADING BY EXAMPLE

Williams, who holds a degree in psychology from Roosevelt University and a master's from MIT Sloan School of Management, grew up on the South Side of Chicago. His mother, now deceased, was a part-time manicurist. His father worked as a parking lot attendant, bus driver, and transit union trustee. Both parents instilled in him strong values that remain part of his personal and professional code.

The other factor contributing to Williams' success has been his willingness to make adjustments. "You have to be prepared to redefine your aspirations, your goals, [and] capabilities," he says. "Some people are not willing to do that. You also have to be geographically flexible. I've lived lots of places and I think that if I were interested in being in one place forever, that I probably wouldn't have had the opportunities that I have had. I've been willing to go where the opportunities are."

Once he's in a new organization, Williams is fully engaged. In fact, when he accepted the position at Aetna, he showed up for work the day after he left WellPoint. "If I didn't show urgency in what I did," he says, "why should anyone else?"

One of his most difficult decisions at Aetna was cutting more than 10,000 jobs. "The result was that we became a healthier organization," he says. Elease E. Wright, senior vice president of human resources at Aetna, says Williams' understanding of people greatly improved the corporate culture. "Before Jack and Ron, it was more [hierarchical], so a lot of direction came from the top," she says. "When that happens, people are following directions, so accountability is not clear as you go down through the organization."

Adds Bertolini, "It was a very poisonous environment. [It] had gone from internal sniping, politics, and self-promotion to one of a real team environment focused on getting things done."

Walking through Aetna, one finds Williams' guiding principles displayed on its walls: "Deliver bad news early and personally," "Own your plan and, quickly, proactively, act on variances," "Attack the issue, not the person," and "Assume positive intent." They're not just mantras. They represent key elements of the company's operational model. Most employees know them by heart. Williams lives by them.

To give employees a better understanding of the competitive landscape and how Aetna earns and spends money, Williams introduced a business literacy program. He also conducts a series of quarterly managers meetings, regular site visits, and town hall meetings. "We spent a lot of time educating employees about the condition of the business, what our plans were, and their roles in helping us be successful," he says. "It's really to create an environment in which people know its OK to ask the difficult, tough questions."

Williams does quite a bit of listening as well. "We were in a quarterly business review," says Bertolini. "There was a person who obviously didn't understand all of the information. Everybody at the table knew that this person was clueless. And instead of going 'You don't know what you're talking about,' which tends to be my style, [Williams] started asking questions and making suggestions and got the person through it. At the end of it, he said, 'Now, what do you think you need to do next?' He got them there by asking them questions and letting them answer. So now they own it. He did it very unthreatening and was tireless about it."

Richard Cavanagh, president and CEO of the Conference Board, an organization of chief executives of which Williams is a member, has seen him use the same technique in board meetings. "He asks questions in order to constructively move things along rather than to show how smart he is."

CHALLENGES OF BEING CHAIRMAN

As Williams moves into the chairman's seat, some believe letting go of the reins will be difficult. He is undoubtedly a micromanager, involved in every minute detail of running the company. "At heart, he's an engineer and mechanic and now he's a pilot," quips Bertolini. "He shouldn't be screwing around with the engine."

Rowe believes that "the Ron years are going to be marked by, I believe, true industry leadership" and a continued emphasis on customer service.

Williams, however, is not inclined to predict his own behavior. Since healthcare responsibilities will continue to shift to consumers, it will be Aetna's duty to help them become aware of all their options. "The only thing you can count on is change," says Williams of his transition. "What we do today won't be successful tomorrow. There will be new requirements to reinvent ourselves. I think about it in the context of positioning the institution to be here another 150 years and also to create the next generation of executives who will be here to confront challenges I can't even imagine."

RONALD A. WILLIAMS

AGE: 57

TITLE: Chief Executive Officer and President, Aetna Inc. NEXT APPOINTMENT: Chairman

EDUCATION: B.A., Roosevelt University in Chicago; M.S., Sloan School of Management, Massachusetts Institute of Technology 

FAMILY: Married 26 years to wife, Cynthia. They have one son, Christopher, who is a sophomore in college.

BOARD AFFILIATIONS: Board of Directors, Lucent Technologies Inc.; Board of Trustees, The Conference Board; Dean's Advisory Council and the Corporate Visiting Committee at the Massachusetts Institute of Technology; member of MIT's Alfred P. Sloan Management Society; Board of Trustees, The Connecticut Science Center

INTERESTS: Tech gadgets, reading, jazz, watching old films

WHAT HE HAS LEARNED: "Engagement and enthusiasm of the employees is absolutely essential to business success, and customers are at the center of what you do. We win or lose by our willingness to listen to what they tell us. Lots of companies listen but don't do anything. If you listen and take action, then it could be extremely effective."

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