The Most Influential

Dec. 21, 2004
Six making the biggest marks on management.
Henry Ford. Alfred P. Sloan Jr. W. Edwards Deming. Akio Morita. Thomas J. Watson Jr. And Abraham H. Maslow. From introducing the assembly line to decentralizing the corporation, from quantifying quality control to stimulating innovation and demand, from computerizing companies to prioritizing human needs, these six individuals in their times had a profound impact on management during the 20th century. Now, on the cusp of a new century, a couple dozen others could carry their mantle. Among them: financier George Soroswhose words move stock markets and inspire souls; Peter Senge with his systems-science approach to shared visions and learning organizations; Charles Handy, the business executive, professor, and social philosopher who's searching for human purpose beyond capitalism; Christopher A. Bartlett, a professor at Harvard Business School (HBS), and Sumantra Ghoshal, a professor at London Business School, the classic chroniclers of globalizing companies; Kenichi Ohmae, a Tokyo-based management consultant who focuses on power and strategy in an interlinked global economy; Philip Kotler, a professor at Northwestern University's Kellogg Graduate School of Management, who is marketing to a whole generation of managers; Toronto-based, e-commerce champion Donald Tapscott, who's credited with first applying the term paradigm shift to business and technology; and Tom Peters, who since 1982 has taught executives the lessons of America's best-run corporations in the pursuit of excellence. But six individuals, ranging alphabetically from legendary author and professor Peter F. Drucker to the equally legendary John F. Welch Jr., chairman and CEO of General Electric Co., now are the people whose ideas, principles, and practices most challenge, drive, and inspire chief executives and other leaders in companies across the U.S. and around the world. Peter F. Drucker More than any other contemporary thinker, Drucker has defined management as a discipline. Since 1971 the Clarke Professor of Social Science and Management at California's Claremont Graduate University, Drucker has written 15 books on management. "There's a whole generation of enlightened executives who have profited from him and his perspective," says Robert White, founder and chairman of ARC International Ltd., Lititz, Pa. With such concepts as core competencies and management by objectives, Drucker has made managers consider what they're doing and where they're headed. "He gets people to think and rethink. He makes them ask the question that they don't think of themselves," notes Susan Tynan, a principal in the change management group at Sibson & Co., Chicago. "'What business are you really in?' is a really provocative, profound question." But Drucker is about much more than business. For example, in his latest book Management Challenges for the 21st Century (1999, HarperBusiness) Drucker insists that management's domain extends beyond any organization and that the scope of management is defined neither legally nor politically. "What I love about Drucker is that his contributions aren't [only] to business; they're to the world," says Tynan. In that world, Drucker sees collapsing birth rates in developed countries and dramatic shifts in disposable income among changes that are fundamentally altering the management environment -- and raising questions "that strategy so far has rarely, if ever, considered." But "unless an institution starts out by considering these new realities, it will not have a strategy," Drucker warns. "Peter takes the holistic view. He looks at society globally. He takes a view that looks forward but takes lessons from the past," says Iain Somerville, a managing partner at Andersen Consulting in Los Angeles. "And what I get is a tremendous humanism and a caring. He wants society to work for all people." Bill Gates Chairman and CEO of Microsoft Corp., William H. Gates III may be the best-known, certainly the richest (a net worth nearing $90 billion, by one estimate), but not always the most-admired executive on the short list of most-influential individuals. A perceived disregard for some norms of business behavior -- partially the product of the continuing U.S. Justice Dept.'s antitrust suit against the company -- has dulled some of the former luster of the phenomenally successful, Redmond, Wash.-based software firm and its leader. Yet, virtually no one can conceive of a roster of the most influential without Gates. "Say what [negatives] you will, but . . . , " remarks a business observer in Japan. Only after visiting Microsoft and its Harvard junior-year dropout CEO, says HBS' Bartlett, did he begin to understand that "the source of their sustainable competitive advantage is their ability to attract, motivate, and retain terrific people." States Bartlett, whose most recent work centers on the care and nurturing of individuals and initiative in such benchmark firms as Intel Corp. and Microsoft, "You have to be terrifically smart and you have to be driven" to work at Microsoft. There's nothing said "about being a team player -- or being adaptable or flexible." However, Gates' impact on management goes well beyond his being a successful commanding general in the war for talent. Indeed, more important is that Gates has been defining his industry as well as his company, says David R. Bliss, a former Xerox Corp. executive who's now vice chairman of Delta Consulting Group Inc., New York. "Part of the issue that the [U.S.] government has with a Bill Gates is that his thinking about organizations and markets is way out ahead of the business models that are imbedded in the sort of litigation that the Justice Dept. does," Bliss observes. "Saying that the world is going after talent is fairly obvious. [It's] what you do with it when you get it," and Gates is focused on "where the values are going to be created for consumers or for investors." What distinguishes Gates (and also Andrew S. Grove, Intel's chairman) from so many other executives is that they are constantly upgrading their business models -- even to the point of casting aside their models, Bliss says. "Uniquely, for guys who had staked out positions in the marketplace [and] staked out positions for their companies, [they] have been willing to come back to the board or to the analysts and say, 'Guess what? We're making a 90-degree turn -- or a 180-degree turn.'" Example: About three years ago, Gates took Microsoft, a very successful company built around a world without the Internet, and bet its future on an Internet and e-commerce world, Bliss illustrates. Gates had to move financial resources and people; he named a president, Steve Ballmer; and he had to create, to some extent through others, a new structure. "You'd have to look real hard in the history of companies to find [another] CEO with a business model and a paradigm and approach that were operating so successfully who would be willing to risk it all and to head in a very different direction." Andrew S. Grove More than any other executive in any other company anywhere in the world, Andy Grove, Intel Corp.'s chairman, had made paranoia a business virtue. His continuing insistence that Intel -- or by implication, any other company -- can never rest on its laurels is even more relevant and urgent today as R&D becomes increasingly expensive and increasingly essential to keeping a competitive edge in world markets. Indeed, the title of Grove's 1996 book, Only the Paranoid Survive (Bantam Doubleday Dell), has had a greater impact on people outside the semiconductor industry than on those inside, asserts Larraine Segil, partner in the Lared Group, Los Angeles. "That phrase is so translatable," she muses. "People repeat it, and they interpret it, and they apply it." Grove says he worries about products getting messed up or introduced prematurely, about factories underperforming or there being too many factories, about hiring the right people, and about morale slacking off. But he worries most about what he calls "strategic inflection points," about missing that moment when the fundamentals in a business are about to change -- the kind of change that cannot be accommodated simply by adopting a new technology or fighting the competition. "A strategic inflection point can be deadly when unattended to," says Grove in the preface to his book. "Every once in a while, somebody comes out with a management book that really articulates a sound theory about the way the world works -- and it doesn't matter whether you're in an up cycle or a down cycle, or a fast-moving industry or a slow-moving industry," says Clayton Christensen, a professor at HBS. "And Andy is a theoretician in that sense. He can see patterns amongst all the confusion -- and draw lessons and chart a direction based on a mental model about the way the world works." One of the core lessons that Grove has distilled, Christensen says, is that the low end always wins -- that if you lose the low end of technology today, you will lose the high end tomorrow. "He understands that the big waves of growth are created when you have . . . breakthroughs that make the technology accessible to a larger population of less-skilled people." Michael E. Porter With a recognizable "brand name" and in great demand around the world, Porter, an HBS professor, basically is an enterprise himself. His book Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980, Free Press) is in its 53rd printing and has been translated into 17 languages. And there have been 14 others, notably The Competitive Advantage of Nations (1990, Free Press). "I see his books and insights everywhere. I see them in Europe. I see them in Asia," says the Lared Group's Segil. Porter argues that while many companies have been preoccupied with improving operational effectiveness -- primarily through restructuring and reengineering -- that's not enough in an increasingly competitive world. Each company must carve out a distinctive way of competing. "CEOs -- certainly the ones I have worked with and work around the world with -- have figured out that the profit is directly related to the prophet. And when it comes to the prophet, Porter is at the very top," states Joey Reiman, CEO and founder of BrightHouse, an Atlanta-based consulting firm. "He acknowledges the fact that breaking the rules may be the most difficult action a CEO can take. But he suggests that if they don't, it's over. ". . . He has asked many CEOs and many companies to take their eyes off their direct competitors and look elsewhere [to] where the competition is really coming from. He would want people to build 'visioning' into their company structure. And I think that is why people love this guy, because he's in real time. He's saying, 'Throw out the analysis. Throw out the other strategies . . . and turn this thing on its head.'" What's more, emphasizes Reiman, Porter legitimizes the thinking process. He gives CEOs permission "to experiment, to dream, to deconstruct and construct, and permission to move geographically, emotionally, and financially," Reiman says . "There isn't anyone [else] who has his kind of academic status who gives these CEOs . . . the permission to do some of these things." Adrian J. Slywotzky On the list of the most-influential, Slywotzky is "Northwestern Mutual Life, the quiet company." Although his name isn't rewarded with anything like the instant and widespread recognition that Drucker, Gates, Porter, or Welch garner, this Lexington, Mass.-based Mercer Management Consulting Inc. vice president has had a significant impact on such major global players as Microsoft, Honeywell Inc., and Raytheon Co. In 1998 Slywotzky spoke at Honeywell's senior-management meeting about "value migration" in the rapidly transforming industries in which Honeywell competes and about changes in the customer value chain. "At Honeywell, we always have prided ourselves on our customer orientation and ability to delight our customers," notes Michael R. Bonsignore, chairman and CEO. "Slywotzky challenged us to go further, to move from 'little-box' to 'big-box' thinking, looking at the customer's total economic needs, not just a narrow product-centric view. While we had already started on this path, Slywotzky's insight accelerated this concept into our strategic-planning process, helping us to redefine who we are: a provider of solutions, not just products." Says David J. Morrison, a Mercer vice president who has coauthored two books with Slywotzky and was a fellow student at HBS, "I am in awe of this guy. . . . It seems his brain works 25 hours a day." He is "the broadest-ranging and clearest-thinking strategy person I have worked with in 25 years." Many other strategists focus on such issues as cost, market segmentation, and distribution channels to try to improve product performance. But Slywotzky urges companies to concentrate on how technology, globalization, information, deregulation, and infrastructure are presenting customers with multiple choices, driving decisions, and reassigning value in ways radically different from classic business models, Morrison explains. In the Slywotzky model, market share as a measure is out, and capital "value flows" are in. Patterns -- particularly profit patterns -- are preeminent. "Pattern thinking is a manager's best tool for communicating as well as making sense of chaotic change," Slywotzky believes. "Via patterns, management can communicate to others that it has a grasp on how to turn change into opportunity, that it is worthy of employee and investor trust." John F. Welch Jr. Like all strong and impatient CEOs, General Electric's chief executive has his critics, people who consider him too driven -- even ruthless. Yet there's no doubt that Welch during the last 19 years has made a major difference in the ways that GE and a lot of other companies are managed. His business mantra of be "No. 1 or No. 2 in global markets -- or fix, sell, or close" has become a basic principle for corporate restructuring in companies around the world. Equally important is the prominence he has given to setting "stretch" goals, conducting decision-oriented "work-outs," practicing "boundaryless" behavior, and implementing Six Sigma quality systems. "One of the arts of good leaders is the ability to convince staff that their vision is sufficiently attractive to justify the sacrifice and to give them confidence that their extra efforts will turn into a reality," notes the Andersen Consulting Institute for Strategic Change. "In that, Welch has succeeded triumphantly." People may not always realize right away how savvy Welch is, suggests Lawrence A. Bossidy, chairman and CEO of AlliedSignal Inc. But "he sees around corners better than most, and his savvy is often masked by his disarming charm. He does have a hard-bitten reputation, but he's in fact charming -- and charms a lot of people. "He's also honest and straightforward, so people don't have to wonder about what he's thinking. These qualities, particularly in combination, help to set Jack apart from many of his peers."

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