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Lessons from business leaders of today.

Lessons From Business Leaders of Today

Are there common attributes that make a great leader in the world of big business today? Why are these leaders where they are? Not surprisingly, many of the world's top CEOs are what they are because of hard work. Others are destined for the top job, and still others have taken initiative and made opportunities for themselves in tough situations. It is not evident that there is one and only one recipe for being a great business leader. However, it seems that the great business leaders of today share strong personalities and the ability to communicate, delegate, plan, and restructure.

All are extremely proactive. None of these men got where they are by being passive and letting things happen. Ross johnson of RJR Nabisco once made a comment about those who make it to the top and maintain the status quo: "You don't need a lot of time to decide that the corporate structure doesn't seem to be working. The easiest thing is to sit and do nothing, and you can do it at a corporation of our size and not see much effect. But your successors will sure inherit that world."

The MBA, which is much more common now than it was 30 years ago when the present CEOs were in school, is surprisingly lacking in these top positions. Most CEOs of the top 50 industrial companies in the world have graduate and doctorate degrees in engineering. Out of this group of 500, only 3 have MBAs, and some have no post-high school education at all. It is always refreshing to hear about those who made it to the top through hard work and no education. The CEO of Bayer, Hermann Strenger, started out as a relentless salesman with no formal education. He was first asked to rebuild Bayer's sales office in Sao Paolo, Brazil, which he did successfully after four years of lugging two enormous sample cases down unpaved roads in 100 degree weather. That someone would reach the position of CEO with no college education whatsoever--especially in Germany--is almost unheard-of.

Akio Tanii of Matsushita Electrical Industrial is another CEO with only a degree from an industrial high school and no college education. What's even more amazing about Tanii's success later in life is that earlier he had failed to make it into the Japanese Naval Academy, and he flunked the entrance exam to a textile company. Tanii joined Matsushita at age 28 and took over the helm at the comparatively young age of 57. Although Tanii's early life was filled with failures, he eventually triumphed through perseverance and determination. These are essential attributes in a leader and were attributes he needed when he took over Matsushita's VCR division. He spent seven years converting their oversized, expensive VCR into a small, affordable one and simultaneously received positive exposure and developed the reputation in Japan as "Mr. VCR." There seem to be some skills that are not taught in school that are exactly what the head man needs to succeed. For Tanii this was his leadership. People have always wanted to follow him, and when he was the coxswain on rowing expeditions, the rows always moved in perfect unison. The reason he is so good at leading Matsushita and part of the reason he was chosen for the top job is that he is very good at listening to workers and subsequently explaining the best way to attack the problem.

Most of the CEOs of the largest industrial corporations seem to be very tough in nature. Lawrence Rawl of Exxon is an exmarine who still carries that image with him and Raymond Levy of Renault has been known to snap colleagues off in midsentence, a style that you wouldn't learn in most management classes. One of these tough bosses who exhibits extreme competitiveness is Cor van der Klugt of the Dutch electronics giant Philips. He is an intense competitor in tennis and chess; and as far as the company goes, he is completely engrossed in beating the Japanese. However, there is an interesting lesson to be learned from van der Klugt with respect to his competitiveness and keeping Philips successful. Philips had invented the videocassette recorder years ago but lost the entire U.S. market to the Japanese firms, which adopted a different technological standard. In 1978, when van der Klugt was put in charge of consumer electronics, Philips had just developed a CD prototype and he wanted to avoid a catastrophe similar to that of the videocassette recorder. Van der Klugt could have adopted a fight-to-win strategy with respect to the CD, which would not have been surprising given his keen sense of competition. Instead, he took more of a problem-solving approach and negotiated with Sony's chairman, Akio Morita, to share Philips technology with Sony. Once Sony adopted Philips' technological standard, all other Japanese and European electronics firms followed suit. Now Philips has a 20 percent share of the world CD market and the other companies pay Philips royalties for its technology. Although van der Klugt wants to beat the Japanese at the electronics game, he is wise enough to know that sometimes the best outcome can be reached through compromise and sharing technology.

Versatility and adaptability to changing situations are qualities that are needed by an organization and its top leader. Yotaro Iida of Mitsubishi exhibited these traits as far back as WWII when he was in charge of the construction of the battleship Shinano. Japan had lost a few aircraft carriers in the Battle of Midway and so the order was given to convert the Shinano into a carrier midway through construction. The Shinano was completed four months later.

Perseverance is also evident in the great leaders of today, especially in Lee Chull of Samsung, a conglomerate consisting of 37 companies ranging from textiles to shipbuilding. He lost all of his businesses during the Korean War except for a brewery. He then started accumulating business after business, but again he lost most of them, this time to the government of a new regime. Another coup in 1980 took his television and radio stations. Lee has managed to come back from all of this adversity and maintain his strength and diversification.

Many of the top corporations of the world are committee-run. L. C. van Wachem of Royal Dutch/Shell Group is not called a chief executive officer but rather "chairman of the committee of managing directors." Things do not change much when someone new takes over the helm in a structure like this because the committee stays intact. For instance, when van Wachem took over, he kept on doing what he was good at; however, he became the presider over the management meetings.

Donald Peterson is the head of Ford Motor Company and has managed to put Ford ahead of GM in profits for the first time since 1924 when Henry Ford I ran the company. Obviously, the fact that two of Ford's most popular cars, the Taurus and Sable, have start-up costs that are now behind them has helped the financial situation. However, Peterson has a different management style than his predecessor, and that might have been just what Ford needed. Peterson is a walk-around manager who has removed the cumbersome hierarchy and pushed authority down the line to the lower levels. He likes to drop in to lower-level meetings unexpectedly, including those in the styling and engineering areas, in order to exert some input over the final product. This change in the working environment is something that was needed at Ford and goes a long way as far as increasing creativeness and efficiency. Henry Ford II was an authoritarian leader, by contrast, and when dealing with Henry one was very much aware of the fact that it was his grandfather who started Ford. He liked the big hierarchical organization, possibly because it amplified his position at the pinnacle.

There are some generalizations about the management styles of the top leaders in the corporate world that are worth noting. It seems that there is less and less of that overpowering, authoritarian type leader like Henry Ford II. Instead, the CEO of today has the management or people skills to get more out of the people and the organization. The CEO in most cases is adept in the art of restructuring, and in most cases this is one of the first tasks he tackles after getting to the top job.

But restructuring is not without its victims. Cesare Romiti of Fiat laid off 23,000 people and then had to withstand a bitter strike. Was this really necessary? The answer is obvious. Today Fiat produces the same number of cars with 30 percent fewer workers and has assembly lines that are far more flexible. Since Jack Welch took over General Electric in 1981, he has eliminated over 100,000 jobs in efforts to reorganize that giant. One interesting point of view on this subject is held by Robert Daniell of United Technologies whose candor is refreshing. He plans on eliminating a total of 4,000 jobs by the end of 1988 and claims, "I don't lose a second's sleep over it." He feels that even more jobs would eventually vanish if he did nothing at all.

Today's great business leaders all seem to agree on delegating, planning, communicating, and restructuring. Probably none of these men would trade what they are doing now; however, that is not to say that they are all having fun and are happy with where their respective companies are now. Roger Smith, the CEO of General Motors, says, "It's the best job in the world." Roger Smith will also be the first to admit that right now, with GM's 18 percent drop in market share, his job is no fun.

References and Further Reading

Terence Park and Wilton Woods, "The World's Top 50 Industrial CEOs," Fortune (Aug. 3, 1987).

Russell Mitchell, "G.E.'s Jack Welch" Business Week, (Dec. 14, 1987).

Robert Oeh and Brian H. Kleiner are with the department of Management, school of Business Administration and Economics, at California State University, Fullerton.
COPYRIGHT 1990 Institute of Industrial Engineers, Inc. (IIE)
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Author:Oeh, Robert; Kleiner, Brian H.
Publication:Industrial Management
Date:Jan 1, 1990
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