Global Judgments

Dec. 21, 2004

Panel renders its best-managed verdicts.

Chairman and CEO John F. Welch Jr.'s ego aside, America's $100.5 billion General Electric Co. clearly is more than a legend in its leader's mind, say the panel of experts who helped select IndustryWeek's 100 Best-Managed Companies. "I continue to put GE at the top of my list," states R. Charles Moyer, dean of Wake Forest University's Babcock Graduate School of Management, Winston-Salem, N.C. Adds Jude T. Rich, chairman of Sibson & Co., Princeton, N.J., "A common characteristic of the Best-Managed Companies is their wealth of talent, and GE is the wealthiest of all." CEO Welch provides "exemplary leadership," says Warren Bennis, distinguished professor of business at the University of Southern California, Los Angeles. Howard Singer, managing partner for manufacturing and distribution at Grant Thornton LLP, Appleton, Wis., praises IBM Corp., another U.S.-based "Blue Chip," for reincarnating itself as a technology and services firm. Its "strategy, quality of leadership, [and] attitude toward employees will help propel the company into new markets and [provide] better service to existing customers," he predicts. And AlliedSignal Inc., the Morristown, N.J., aerospace and materials firm that's acquiring Honeywell Inc., gets Singer's applause for aggressively embracing lean manufacturing. Alcoa Inc., Mexico's Cemex SA de CV, Japan's Honda Motor Co. Ltd., Johnson Controls Inc., and the UK's Smiths Industries PLC impress Edward E. Frey, a San Francisco-based vice president of Booz, Allen & Hamilton Inc., with their abilities to manage "aggressive organic growth while still managing the rest of the business -- cost, balance sheet, productivity, assets -- to deliver exceptional shareholder value." Frey cites Abbott Laboratories, Amgen Inc., Merck & Co. Inc., Finland's Nokia Corp., Qualcomm Inc., and Japan's Sony Corp. for systematically developing and marketing "a stream of new products to capture or continue to dominate markets." And he singles out Cisco Systems Inc., GE, and Solectron Corp. for growing through acquisitions and "actually [creating] value" after the acquisitions. EMC Corp., Eli Lilly & Co., and Nokia are among the companies that Piero Morosini, a professor of strategy at IMD (International Institute for Management Development), Lausanne, Switzerland, says "epitomize the great opportunities of growth and profitability given by technological revolutions, careful R&D management, and manufacturing excellence. They ride the wave of our profound economic transformation into the 21st century." Zurich-based ABB Group grabs Peter T. Ward's attention. "They have a terrific approach to manufacturing and logistics and have built great capabilities to win in a competitive [industrial-products] industry," says the associate professor of operations management at Ohio State University's Fisher College of Business in Columbus. Michael E. McGrath, managing director of Pittigglio Rabin Todd & McGrath in Weston, Mass., praises Xerox Corp. for successfully executing the transition from a light-lens to a digital firm, a switch that he observes "has been fatal for most companies." Intel Corp. is among the companies ranking high with Edward A. Snyder, dean of the University of Virginia's Darden School. "I see the beginnings of a vision of broader scope." Meanwhile, India's Hindustan Lever Ltd. is "a fine example of a multinational corporation that has demonstrated excellent performance and retained market leadership in one of the world's most complex and demanding markets," judges Munesh Khanna, a partner in corporate finance at Arthur Andersen in Mumbai (Bombay). Germany's SAP AG "has become the closest thing to the Microsoft of ERP [enterprise resource planning] and will keep dominating their market," says Jeffrey Liker, professor of industrial and operations engineering at the University of Michigan, Ann Arbor. And while asserting that Volkswagen AG is Europe's leading automaker, Liker contends Japan's Toyota Motor Corp. "is still the world's best automaker in manufacturing, logistics, and product development." Indeed, despite Japan's economic recession, "Toyota continues its operations excellence when others have fallen away," states Danny Samson, a professor at the University of Melbourne in Australia. In Michael Lord's estimation, Dell Computer Corp. remains the standard by which many other companies are judged. "Dell's business model has helped revolutionize thinking about supply chains, outsourcing, inventory, working capital, and mass customization," contends Lord, a professor at Wake Forest's Babcock School. Dell has "one of the finest lean-manufacturing operations I have ever seen," says John H. Puckett, president of Visions of Excellence, Broomfield, Colo. But among all the kudos comes a note of caution. "Many of this year's 100 Best-Managed Companies have two critical problems to solve if they are to stay on future years' lists," warns John Mariotti, president and CEO of the Enterprise Group, Knoxville, Tenn., and an IW contributing editor. Those issues are, first, success, which Mariotti says breeds arrogance and complacency, and second, bigness, which he contends slows decision-making, builds bureaucracy, and turns focus inward. "Even behemoths like GE and IBM must develop strategies and structures that support speed -- in both decision and execution," Mariotti insists. "With strong leadership, they can do this. But it is neither easy nor certain."

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.