Going With the (Demand) Flow.

If the hallmark qualification of a motivated leader is a bottomless appetite for challenge, Fred Poses was born to the role. Poses, who at 57 recently ascended to the chief executive title for the first time in his career, left behind a company with a legendary prowess in the methodology of quality and productivity to start over at American Standard, an organization that is, by comparison, a Six Sigma fixer-upper.

Were it not for his high-spirited drive, Poses might have coasted to retirement as president and COO of AlliedSignal (since merged into Honeywell International); in fact, he easily could have quit working altogether, thanks to the financial performance of that company under Larry Bossidy. And with 30 years under his belt--the first and only company he worked for since finishing a tour of duty with the Peace Corps at the close of the 1960s--no one would have blamed him for wrapping up his career in those familiar surroundings. Admittedly, losing out at his chance to run the Honeywell operation made it easier to consider a change of venue: "To say I was disappointed would be fair. I had a lot of skin in the game."

But if outside circumstances conspired to make Poses ready for a character-testing new venture, he was also given the perfect opportunity to show everyone what he's made of. From the mathematically precise, rocket-science world of AlliedSignal he entered American Standard's far more gritty manufacturing environment, an operation where some 37 out of 100 toilets or sinks that are fired in the kilns (at a production rate of 24 million ceramic pieces annually) prove to be defective. "It's the perfect Six Sigma project," Poses says, adding that all he learned in his previous job is applicable here. "We think we're potters, but we've got to become scientists."

In fact, the American Standard combine, headquartered in New Jersey like AlliedSignal, encompasses much more than its ubiquitous line of plumbing fixtures. The Trane air conditioning division is the leading supplier of central air-conditioning systems in the U.S. and its WABCO unit is the segment leader in electronic braking and control systems for heavy-duty trucks and buses. Together, sales for the divisions totaled some $7 billion in 1999, a year in which the company set records for both sales and earnings. A medical diagnostics unit was shuttered at the end of 1999 and is in the process of being sold.

Poses moved into the CEO office at the beginning of this year, following the retirement of Mano Kampouris, the well-regarded leader who steered the company through troubled times following a costly 1 988 takeover attempt by Black & Decker. That bid was ultimately withdrawn but resulted in an LBO and later, a 1995 public offering. Kampouris left his mark on American Standard with a bold gamble--introducing the Demand Flow Technology process to the company's manufacturing operation--that untimately provided a solid foundation for further reforms that Poses has begun to deploy.

The task which lies ahead for Poses is, to his mind, fairly clear-cut. As the company raises itself beyond its present two sigma performance level--lowering warranty costs and cutting development time in the same push--Poses will seek to improve profit margins and liberate cash for debt reduction. Ultimately, improved access to capital will enable the acquisitions needed to fuel growth beyond the steady 7 percent experienced in recant years.

Materials management will be an area of particular focus in the quest for cost reductions as the company is now spending over $4 billion annually for raw ingredients, components, and services. That may seem an unlikely goal for a man who sits down to an interview with a pad and three different colors of marker pens, constantly filling pages with graphs and diagrams--until you notice his faithfulness to the cause, that is: he's using both sides of every sheet. Technology interchange and shared resources among the diverse operations also hold considerable potential for improvements, Poses has learned (in part, when his teenage son secured a price quote for a new PC that matched the performance of the comnany's purchasing department), but individually the units must reach beyond present offerings. Thus, Trane will expand its air-conditioning business with installation, maintenance, service, and parts activities. American Standard, already in command of its distribution channel, and accomplishing Demand Flow Tec hnology goals for responsiveness as Supplier of the Year to the Home Depot chain, could extend its line by offering the seats that toilet buyers must inevitably purchase.

Poses readily acknowledges that his education at AlliedSignal, and the influence of Larry Bossidy, have helped to prepare him for the challenges he faces. Mapping out goals for each quarter before it starts is one important carryover from the previous position, but the animated, gregarious Poses will not simply overlay the AlliedSignal formula on American Standard. His leadership style will call for less frequent changes in job positions and a shift from the single-minded focus on productivity to a more broad-based definition of functional excellence. A readily apparent gift for people skills is reflected in small touches as well. Hallways outside the CEO office, hung with the smile-inducing weimaraner portraits of William Wegman, indicate that there's a moment for considerations beyond the cold efficiency of industrial output and quarterly results.

In a sense, rising to the top of American Standard is an act of redemption for Poses, coming from a family in which no member had ever worked for somebody else's company. As CEO he tops the org chart even if he isn't the owner, so a tradition has been upheld and a Kampouris/Bossidy legacy passed to a new generation. Clearly, if Fred Poses succeeds in applying the lessons he learned at AlliedSignal to the sound footings constructed by his predecessor, American Standard will be able to wring impressive performance from an organization that encompasses every hue in the spectrum of production technology.

FREDERIC M. POSES

Chairman and CEO

American Standard

"It's the perfect Six Sigma project."

Birthplace: Yonkers, NY

Age: 57

Education: New York University, BA. in Business, 1965; served in Peru for the Peace Corps, 1967-69

Family: Wife, Nancy; sons, Jake, 16 and Max, 13

Cars: Porsche Carerra 4, BMW 8401, BMW 750iL

Outside Activities: Board of Directors membership, the National Center for the Learning Disabled, and the 92nd Street Y; Board of Trustees, Riverdale Country School.

Leisure Interests: Golf and tennis