25 WHO HELP THE U.S. WIN Innovators everywhere are generating ideas to make America a stronger competitor. They range from a boss who demands the impossible to a mathematician with a mop.
By Louis Kraar REPORTER ASSOCIATES Alan Deutschman and Alison Rogers

(FORTUNE Magazine) – IN HIS State of the Union address in January, President Bush asked, ''Which of our citizens will lead us in this next American century?'' The answer, in part, can be found here and on the following pages. Through extensive interviews with corporate executives, academics, and consultants, FORTUNE has identified 25 individuals who are making the country more competitive. They include scientists, business leaders, teachers, and public officials. A few are well known; most are not. Some hail from the likely places -- Washington and Silicon Valley -- while others are from the likes of Fort Smith, Arkansas (pop. 72,798), and Johnston City, Illinois (pop. 3,873). All, however, have great ideas for making the U.S. more productive and wealthier -- and are dedicated to putting those ideas into action.

THE MAN WHO KEEPS THE JUICES FLOWING AT THE SKUNK WORKS SHERM MULLIN -- A backstage hero of the recent Persian Gulf war, Mullin, 55, has one of the world's most secret jobs. He's president of the so-called Skunk Works -- officially Lockheed Advanced Development Co. -- that created such warplanes as the F-117A Stealth fighter. ''A little-known fact of the war,'' says Mullin, ''is that Stealth fighters faced significant numbers of Russian-built surface-to-air missiles, particularly around Baghdad. What's gratifying is that every plane and every person in them is coming home -- the objective of Stealth.'' In another crucial role, Mullin led development of the Advanced Tactical Fighter that in April won the Pentagon's nod. Lockheed, in partnership with Boeing and General Dynamics, beat out Northrop and McDonnell Douglas to build that fighter in a $60 billion program. Says Mullin: ''This is the plane that can extend U.S. air supremacy into the 21st century.'' A tough manager, Mullin was lent by the Skunk Works to inject a creative approach into the Advanced Tactical Fighter program. He greeted his new team members with a briefing slide that said, simply, ''Lead, follow, or get the hell out of the way.'' Later, Mullin exhorted his staff to keep that fighter on schedule with a memo he entitled ''The Coming Fury'' -- meaning of course, his fury if the plane lagged. The son of a New England dairyman, Mullin aspired to be a novelist, dropped out of Princeton, and discovered his latent technological genius when he joined the Army in 1954. After only a year at the Army's missile school, Mullin, 19, was assigned to its teaching faculty. He wound up working at Lockheed as an electronics engineer and now considers the Skunk Works his real alma mater. Abhorrent of bureaucracy, Mullin deliberately put the Stealth fighter into production before the aircraft was perfected. ''We delivered several airplanes to the Air Force when we were still in the early phases of flight testing,'' he explains. As a result, the program was driven by demands of fighter pilots rather than engineers. Another advantage, says Mullin: ''The kind of missions flown in Iraq were being practiced in 1982, when we delivered the first plane.'' Mullin, who became president of the Skunk Works late last year upon the retirement of famed aircraft designer Ben Rich, maintains that its methods for building fabulous new flying machines have broader applications. ''Even though the work we do is secret,'' he says, ''how we do it is not secret at all.'' In essence, he picks small teams of highly motivated people, gives them very austere budgets, and puts them in isolation to keep senior management off their backs. ''You don't let anyone in, and you give them the freedom to do their thing,'' he remarks. Most Skunk Works projects come in well under their budgets, although for a while the Stealth lagged behind a purposely demanding schedule. Explains Mullin: ''That's the challenge -- to do it faster and cheaper.'' Surprisingly, the Skunk Works technique has few emulators. Says Mullin: ''Most U.S. companies have huge amounts of unnecessary bureaucracy. The illusion is that bureaucracy brings stability and control. The fact is that it brings inertia and slowness.''

HE GETS ACADEMICS AND EXECUTIVES TO WORK TOGETHER RALPH GOMORY -- Cooperation between business and academia feeds new ideas into the economies of Germany and Japan, but it is scarce in the U.S. For example, most American universities couldn't care less about manufacturing. Gomory, 62, president of the Alfred P. Sloan Foundation in New York City, aims to change that. Says he: ''Our No. 1 goal is to start building an academic community that really has some understanding of what goes on in industry.'' Dispensing seed money for research (about $15 million so far), Gomory helps such universities as Carnegie Mellon and Harvard build expertise -- each in a different key industry. He's backing MIT's studies of the global auto industry, for instance. Gomory expects his program to generate ideas for improving both product development and manufacturing methods, and hopes to see results starting in the next few years. He has already scored one success in getting executives and academics to team up. As head of a presidential advisory panel on superconductors last year, he persuaded a trio of technology powerhouses -- AT&T, IBM, and MIT -- to join in researching applications for new high-temperature superconductors. Potential uses: computers, telecommunications, and weaponry. Gomory describes the effort as trying to recreate the Japanese government- business-university model, but in a more voluntary American way. & A mathematician with broad-gauged concerns, Gomory headed IBM's research labs for nearly two decades before going to Sloan in 1989. He is also a science and technical adviser to President Bush. Gomory sees industrial competitiveness as a gut social issue. ''The real thought is, Let's do what it takes to raise the American standard of living,'' says he. ''You can't do that if you're not competitive.'' The soft spots for the U.S., he believes, are not new technologies but businesses that have been around a long time -- including autos, semiconductors, and steel. These industries do not need high-tech miracles, he says; they must learn to slog ahead with small, continuous improvements in production and quality. Gomory allows that American industries are improving, but warns that they need to do more: ''The difficulty is that you can't win by comparing yourself with where you were last year. You've got to remember that the other guy is learning too, so you actually have to go faster than the leader to catch up.''

THE AMERICAN WHO TAUGHT QUALITY TO JAPAN COMES HOME W. EDWARDS DEMING -- The world's preeminent quality master is 90 -- and working harder than ever. On Mondays, Deming, based in Washington, D.C., lectures at New York's Columbia University in the morning, then rushes downtown to spread his wisdom at New York University. He consults with such clients as General Motors, where a seminar in March attracted his biggest audience -- 7,000 people, including those tuned in via satellite. Somehow this curmudgeon of quality finds time to work on another book and pick up honorary degrees -- three in May, for a grand total of 13. Deming says he is ''having more fun every day.'' Not bad for a prophet long ignored in his own land, at least until Americans realized that his techniques were potently applied in Japan. Deming's basic ideas, both starkly simple and effective, are finally becoming ingrained in many U.S. corporate cultures. He stresses the need for management leadership, understanding employees, and carefully measuring variations in a production process so as to pinpoint and reduce causes of poor quality. Inspecting afterward for defects is wasteful, he says; better to prevent errors during manufacturing. Deming is also revered in Japan for his humanistic ideas. Ranking individual employees, he says, ''robs people of joy in their work.'' Instead, he would organize them into teams with clearly defined goals. They wouldn't have to be - told how they were doing, because they would know on their own. He also thinks business schools should focus less on past practice and more on finding new and better ways: ''They ought to be preparing students for the future.'' Deming's own future includes speaking engagements well into his 92nd year.

SHE UNLEASHES CREATIVITY IN THE CORRIDORS OF GOVERNMENT SANDRA HALE -- Her achievement: transforming the ho-hum job of Minnesota's commissioner of administration into a source of innovation. Appointed to the state post in 1983 by Governor Rudy Perpich, Hale, 56, showed bureaucrats how to improve services and cut costs. She stepped down in January and now serves as a consultant to U.S. agencies, advising them on how to make federal employees more efficient and creative. Hale joined Minnesota's department of administration, which handles $1 billion a year in procurement, after a decade running theater and arts programs. She found her work cut out for her. Many state officials regarded the DOA (dubbed ''dead on arrival'' by critics) a quagmire of red tape. Because of rigid purchasing practices, the wrong kind of herring was ordered for whales in the zoo -- and they wouldn't eat it. To avoid dealing with the administration department, state agencies would incorporate complex specifications into their printing orders, making them impossible for the state printer to handle. Hale turned all that around by persuading officials to treat everyone, from other agencies to the public, like paying customers. Unlike many would-be reformers, Hale makes a durable difference by getting civil servants to come up with their own ideas for change. She launched an idea-generating program called STEP, for Strive Toward Excellence in Performance. Among the results, the finance department earned $1 million a year in interest by processing transactions faster. And a regional medical center paid for $500,000 in new laundry equipment by taking in the wash of other organizations. In 1986 STEP won an award for innovative government from the Ford Foundation and Harvard's John F. Kennedy School of Government. Hale's program has encouraged bureaucrats to think like business people. The parks and recreation division, for example, alarmed by a drop in visitors to its campgrounds, did a market survey to learn customer preferences. One of their findings: Campers wanted to be able to use credit cards to pay the $77- a-week fee for a tent site. Since park facilities began accepting plastic, their business has doubled. Now Hale advises the U.S. Treasury and other branches of the Bush Administration, even though she is a Democrat. As she puts it, ''Quality and service are not partisan issues. I'm an equal-opportunity messenger to both Republicans and Democrats.''

COMPILING AN INDUSTRIAL SUPPORT FOR CHANGE DAN BURTON -- His art is translating global economics into marketplace realities and dramatizing the consequences. Burton, 37, is executive vice president of the Council on Competitiveness, a Washington coalition of business, labor, and academia that hopes to improve America's position in world markets. He has just published the first private enterprise consensus on how the U.S. is doing in technologies that drive its industrial performance. The gist of the two- year study is that the U.S. is weak or seriously lagging in more than a third of 94 key technologies. Says Burton, an economist who does impressionistic paintings in his spare time: ''The report is a barometer of where we stand in the world, put in terms that we can do something about.''

HOW TO WIN MARKET SHARE BACK FROM JAPAN PAUL ALLAIRE -- Many Americans assume that once the Japanese start to conquer a market, it's all over. Xerox CEO Allaire can show them otherwise. ''In the early Eighties we had a very precipitous decline and lost half of our market share,'' he says. ''We've turned that around -- and intend to take back a little bit more each year.'' Allaire, 52, is an electrical engineer who spent most of his career at Xerox in Europe, where he sliced expenses and won back business the company had lost to Japanese rivals. Summoned home to Stamford, Connecticut, in 1983 by then chairman David Kearns, whom he calls the father of quality at Xerox, Allaire became the point man for dealing with a genuine crisis. Japanese competitors, offering higher quality and cheaper prices, were squeezing Xerox, which introduced the world's first plain-paper copier, out of the industry that it had created. Says Allaire: ''My role was to take the concept of quality and make it a reality, with the customer as the focal point.'' Growing up on a truck farm in Massachusetts, Allaire learned about pleasing customers at an early age. He recalls that his father ''made sure that the fruit on the bottom of the basket was as good as that on the top.'' Adds Allaire: ''That has probably come through, even to an engineer.'' He wants to make sure there are no bad apples at the bottom of the Xerox basket. Through a total-quality drive, the company has reduced manufacturing costs, improved reliability of products, and developed new equipment faster. In 1989, Xerox won the Malcolm Baldrige National Quality Award. Allaire, who became CEO last year, has gone on to introduce an unprecedented three-year ''total satisfaction'' guarantee of all Xerox's document-processing products -- no strings attached. If a product fails to please a customer, Xerox replaces it with a new one that does what the buyer wants. ''Customers don't want their money back, they want a product that works properly,'' he says. ''This really puts power behind the rhetoric and shows people we are serious.'' Few machines have been returned. Having helped engineer an impressive turnaround in Xerox's core, Allaire hopes to shape up its money-losing financial services businesses. He's starting by selling off the weakest ones, keeping only those that can earn a 15% return on equity -- presumably by providing total satisfaction to the customer.

HIS SUCCESS FORMULA? ''WE DECIDED TO BE THE BEST'' EUGENE GWALTNEY -- A flood of imports has battered the American apparel industry. So what does Gwaltney say? ''Let 'em come on.'' The chairman of Russell Corp. has transformed his Alabama underwear mill into a worldclass manufacturer of active wear and sports uniforms, ready to compete with almost anybody. Gwaltney, 73, constantly modernizes his fully integrated operations. His plants never lay off workers, who are provided adult education and child care centers. Says he: ''We decided to be the best.'' Trained as an engineer at Georgia Tech and MIT, Gwaltney takes the long view. Executives who look at their company's stock price every morning lose sight of their goals, he says. During slack periods in the economy, ''times like these,'' he pours on capital investment: ''If you wait for business to pick up, it's almost too late to grow.'' His company is erecting a pair of $50 million plants in Alabama and rebuilding several others. To get highly educated engineers to work in towns like Alexander City, Alabama, where Russell is based, he sends bright local employees off to college if they promise to return. One of the best engineers is a former janitor who earned his Ph.D. from Purdue at company expense. Gwaltney has high hopes for the rest of American business. During the past decade, he says, ''we got lazy. We started manipulating, carrying on, and LBOing everything we could get our hands on. Quality often suffered, but now there's a revival. I honestly think American industry is going back to work.''

HOW AN ORDINARY GUY CAPTURES WORLD MARKETS ROLLIE BOREHAM -- The chairman and chief executive has made middle-size Baldor Electric a mighty exporter. From his headquarters in Fort Smith, Arkansas, he pushes electric motors into over 40 countries. Says Boreham, 66, whose company had $294 million in sales last year: ''It's a myth that exports are for big guys only. You can't afford not to export.'' Selling abroad, he says, lets you ''see what's going on out there'' -- that's the only way to keep foreign rivals from surprising you in the U.S. market with newer and cheaper products. How did he learn the export business? He just sent Baldor people abroad to sell. To keep most of Baldor's production at home and still remain competitive in foreign markets, Boreham in the past decade has installed just-in-time manufacturing, upgraded production skills, and above all rallied factory workers to the challenge. Says he: ''Most companies have all the management guys talking about what to do and don't ask a great resource just 100 feet away, the line employee.'' He eliminated quality problems on the night shift, for example, by taking the advice of the workers (who wanted to get off before midnight) and starting 1 1/2 hours earlier. The day shift was moved up accordingly, and those workers like the change too. As a result, Baldor motors, which power heart pumps in hospitals, the windshield wipers of battleships, and thousands of other things, are attaining record revenues at home and abroad. Exports account for 12% of revenues but are growing more than twice as fast as domestic sales. Trained as an electrical engineer at UCLA, Rollie Boreham cares so passionately about motors that his wife once hung a picture of one over their bed. He has spent most of his career peddling Baldor motors, initially as a self-employed sales representative in Los Angeles. In 1961 he joined Baldor as vice president for sales ''at less money than I was making in California.'' He could hardly refuse the job after writing countless letters to Arkansas praising the company for superb engineering but criticizing its ''lousy marketing.'' Says a Baldor executive: ''You can almost trace the growth of the company from the time Rollie hit town.'' Boreham's most potent management tools are probably his low-key personality and accessibility. He disdains expensive clothes -- Boreham looks like a small-town pharmacist -- and draws a modest salary of $190,000 annually. On a recent cruise along the U.S. coastline, he could be found in the engine room talking to the crew -- about motors. His door is so genuinely open that managers are forbidden to punish employees for going over their heads. Says Boreham: ''Having a hierarchy is old-fashioned. You can't control people, especially Americans, but you can enlist their support.''

A JAPANESE-SPEAKING PROPHET OF U.S. RENEWAL STEVEN SCHLOSSSTEIN -- Schlossstein, 49, knows Japan and gives hands-on advice to American companies on how to compete there and in Asia's other rising economic powers. An international business consultant and author, he speaks fluent Japanese and is steeped in the country's history. He put together some of Japan's first U.S. acquisitions during 13 years as a banker with Morgan Guaranty Trust. Now, as head of SBS Associates, he helps such clients as IBM, AT&T, and Texas Instruments hone strategies for penetrating Asian markets. Rather than writing reports, Schlossstein works directly with managers, often introducing them to potential partners. His firm has been profitable since its start in 1982. Having laid out the economic challenge from Asia in five books, among them The End of the American Century, he urges Americans to participate in fast-growing Asian markets. Says he: ''A new American century is well within our capabilities.'' A pragmatist from Texas, Schlossstein argues that many fresh ideas for revitalizing the U.S. spring from states and local communities that experiment with educational reforms and incentives for business expansion. Schlossstein, who lives in Princeton with his wife and two adopted children from Korea, wants to promote what he terms ''entrepreneurial government,'' meaning more competition, innovation, and efficiency. Acting on his theories, he's running as an independent candidate for the state legislature.

ONLY RESEARCHERS WHO WANT TO BE FAMOUS NEED APPLY EDWARD SCOLNICK -- Merck claims global leadership in prescription drugs today, but Scolnick, the company's research chief, is preparing for tomorrow. Says he: ''Pharmaceutical R&D will be increasingly competitive in the 1990s.'' At home, mergers have produced companies with bigger research organizations. And competition from foreign firms is getting hotter. The Harvard-trained M.D. and cancer researcher hopes to keep ahead by spending $1 billion in R&D this year. Other companies spend more in relation to their size, but Merck has produced more breakthroughs than most. Scolnick has added money and brainpower to Merck by striking alliances to jointly develop drugs with Du Pont, Sigma Tau of Italy, and Banyu Pharmaceutical of Japan. Scolnick, 50, who says he encourages a spontaneous atmosphere in Merck's West Point, Pennsylvania, labs, has a proven technique for finding talent: ''I wouldn't hire anyone who didn't want to be famous.'' In case fame is not enough, Merck also gives stock options to its drug inventors. His major goal is to win approval for at least one new therapeutic discovery, ''a novel chemical structure,'' each year.

THE NEW WEALTH OF NATIONS COMES FROM SKILLED PEOPLE ROBERT REICH -- Creating wealth in an increasingly global economy ''depends mainly on what our people can do,'' says Reich, 44, a Harvard political economist. In lively lectures and a new book called slyly The Work of Nations, Reich defines U.S. competitiveness in terms of ''our skills, education, insights, and capability to add value.'' He says only 20% of American workers have those strengths. They are flourishing; the other 80% face shrinking opportunities. No one has better described the challenge, though many dislike his liberal solutions, which include a big redistribution of wealth through taxation. But Reich's global paradigm shows how his thinking has evolved on one important subject. An advocate in the past of heavy-handed industrial policies designed to pump up domestic companies, he now emphatically warns against protectionism. The biggest exporter of computers from Japan, he notes, is IBM. Though Japanese and European companies dominate television manufacturing, some 15,000 Americans design and fabricate TV sets here. Q.E.D.: The wealth is in the making as well as the owning. As he puts it, ''There's no them and us anymore.''

HE FINDS WISDOM AT THE END OF A MOP HANDLE NORMAN DARDEN -- Darden, 56, an entrepreneur who specializes in maintaining wood floors, preaches the glories of artisan skills -- floor polishing, window washing, carpentry -- to inner-city youths. These oft-devalued crafts can instill a healthy work ethic, provide a good living, and even teach some basic math and physics. Darden, who hired New York City high school dropouts for his business, says that kids who couldn't grasp abstruse scientific theories learned elementary principles and relationships -- measurements of space, for example -- behind a mop. A former textbook editor who majored in math at New York University, Darden originally studied to be a concert pianist. But, he says, ''I decided I wanted to do something simple. I bought some machinery, made some phone calls, and it worked. Even with a college degree, I had no trouble getting down on my knees to scrub.'' His startup grew to $250,000 in annual revenues, employing 18 people at its peak, and he became a highly respected expert on the care of wooden floors. These days Darden spends most of his time writing about them for technical and home improvement journals. He is also working on a book of philosophical and practical advice titled: My Life as a Cleaning Man, or 100 Mistakes of Decorators. Hiring laborers for construction jobs convinced Darden that artisan skills are the best hope for giving young black men economic mobility. As he puts it, ''Every great society has an artisan community, but it is lacking among blacks. Not everyone can go to a university, but anyone can generate business with such skills.'' He proposes that high schools should teach courses in ''maintenance arts.''

DEMANDING THE IMPOSSIBLE KEEPS EVERYONE RUNNING HARD T. J. RODGERS -- ''Be realistic -- demand the impossible,'' says a prominent sign in the San Jose, California, office of Rodgers, 43, founder and CEO of Cypress Semiconductor. He has made Cypress one of the toughest global players in specialized chips. And one of the most productive: Revenue per employee is now $160,000 annually, triple that of its mature rival National Semiconductor. Cypress stays lean by spinning off subsidiaries so they can operate like hungry startups. Rodgers dismisses such government-backed enterprises as Sematech as boondoggles. He controls the company tightly through 25 computerized management systems, such as his ''killer software from hell'' -- it shuts down any operation that falls four weeks behind schedule. Everyone gets equal quarterly bonuses, ''from the receptionist to myself.'' His compensation ($250,000 last year) is near the bottom of his industry, but he wants it that way; his 2% of Cypress is worth $16 million. ''When I look at overpaid executives,'' says Rodgers, ''I feel like a New England Protestant minister watching Jimmy Swaggart on TV.'' Older competitors call him a kid who needs to grow up. Says Rodgers, who earned his Ph.D. at Stanford: ''Well, bull. I run what this year will be a $300 million company in sales. I'm older than John Kennedy was when he got elected President. And we've had eight good years back to back.''

HIS STUDENTS GET HIGH MARKS IN MATH AND IN THE WORK ETHIC RONALD NAGRODSKI -- In the small Illinois farming and coal-mining community where he lives, Nagrodski, 36, is waging a campaign against low math skills among American youngsters -- and winning. Last year 11 of his 87 graduating students at Johnston City High School (enrollment: 372) took the College Board advanced- placement exam, and four attained top scores -- almost one in eight, compared with a national average of one in 15. Says Nagrodski, who won a presidential award for teaching excellence last year: ''We don't have the academic talent of big schools. We don't have any selective gene pool. We just grind it out on hard work.'' A native of Johnston City, Nagrodski learned the value of hard work from his grandparents, immigrants from Italy and Lithuania, and his father, who worked in a factory and ran a family farm. Returning home to teach in Johnston City High in 1985, he persuaded administrators to let him launch honors courses in algebra, trigonometry, geometry, and calculus. Fellow teachers argued that the old curriculum was good enough. Says Nagrodski: ''They didn't realize that using methods of 20 years ago means that you are preparing a kid real well for the job market of 1972.'' Now his ninth-graders are learning from the textbook previously used by seniors. In addition to beefing up his school's course work, he coaches a team that captured the state's Class A championship last year in math. It competes in a variety of events, from written tests to oral analyses of problems. He believes the math team instills discipline and ambition. Before big matches, Nagrodski drills some students in the early mornings, others during lunch break, and all 32 team members for three hours a night. Nagrodski tells them, '' 'I can' is more important than IQ.'' The burly, bearded martial arts practitioner (he says he never encounters behavior problems) earns about $30,000 a year. Nagrodski's wife, Jeanie, teaches at another high school, and they have a 9-month-old daughter, Ashley. He winds up every day at the family farm, feeding the cattle that provide extra income. Says he: ''The only thing you get out of working hard as a teacher is the gratitude of your students and the feeling of doing a good job.''

BUILDING A CONSENSUS ON HOW TO DO IT DAN SHARP -- Everyone wants to hone U.S. competitiveness, but Sharp, 59, helps create a consensus on how to compete. President of the American Assembly, located at Columbia University, he brings together leaders from business, government, labor, the media, and academia to hash out detailed prescriptions. To attract ideas and promote the consensus, he uses what he terms ''outreach'' -- assembly-style town meetings around the U.S. and abroad. Assistant Secretary of State Richard Solomon found attending the assembly's meetings useful in shaping tactics for dealing with Japan. And congressional staffers credit its debates with helping them draft legislation. An attorney and former Xerox executive, Sharp transformed an organization that started four decades ago as a small gathering of establishment pillars at Arden House, an estate in Harriman, New York, donated by Averell Harriman -- where the assembly still meets. ''In those days many believed that 60 people were all that counted on any issue,'' he says. ''Today competitiveness involves the total society.''

PAINLESS TECHNIQUES FOR EXTRACTING OPPORTUNITIES CARLA HILLS -- Try to think of America's chief trade negotiator as a skilled dentist. Hills, 57, persistently drills away at trade barriers, then eases off to give adversaries a chance to spit out concessions. A seasoned attorney, she knows how to bargain. Case in point: Last year she lectured Japanese Prime Minister Toshiki Kaifu for six hours on his nation's resistance to consumer imports and, among other things, won an easing of restrictions against large retailers that sell U.S. goods. Three weeks later, Hills helped dissuade Congress from imposing punitive tariffs against Tokyo. Hills, who grew up in Southern California, graduated from Yale law school near the top of her class in 1958 but quickly discovered that law firms had little room for women. She became an assistant U.S. attorney in California, then founded a law firm with her husband, Roderick Hills, and other partners. Both husband and wife landed at the top levels of the Ford Administration, where she served as Secretary of Housing and Urban Development, the third woman to hold a U.S. Cabinet post, and he was chairman of the Securities and Exchange Commission. Carla Hills left private practice (and the boards of such corporations as IBM and Corning) when she took the trade post in 1989. To help U.S. companies compete internationally, she is pushing the European Community to cut farm subsidies and provide better protection for intellectual property. Hills is also working to establish a North American Free Trade Area -- the U.S., Mexico, and Canada -- which she says would be ''the largest, richest market in the world.''

A FACTORY DOCTOR WHO DISPENSES BRUTAL CANDOR TOM BLUNT -- A bearded, 6-foot 4-inch manufacturing engineer, Blunt, 53, of Louisville, Kentucky, is as outspoken as his surname suggests. A consultant to major consumer products companies that want to improve the efficiency of their plants, he has been known to tell manufacturing executives, ''You've got your head stuck up your armpit.'' But they take it and come back for more. Reason: He promises clients no less than a tenfold return on the cost of his services. Blunt's biggest strength is intimate knowledge of most key jobs in a factory; he has done them all over the past 25 years. He learned to build things as a teenager in Atlanta when his father, a journeyman toolmaker at Ford, bought him a motorbike, took it apart, and presented young Blunt with the parts to reassemble. Starting his career in 1963 as a trainee at a General Motors Cadillac plant, he eventually wound up as the engineer who supervised the installation of the first automated factories at Ford in the 1970s. Then Blunt joined General Electric's major-appliance business in Louisville, where he helped persuade management to invest $120 million in a highly automated refrigerator plant and then built it. His experience at GE confirmed his notion that confidence is the key to innovation. ''If engineers don't have a champion, some wacko out front leading them, they tend to fall into a Rip van Winkle coma.'' He not only used GE's engineering staff to design the state-of-the-art factory but also insisted on American-made equipment to prove that the U.S. could supply it. Frustrated with corporate life, Blunt struck out on his own 2 1/2 years ago. To test his ideas about factories, he bought Southern Builders Supply, a small, ailing building supply manufacturer in Louisville, and turned it into a highly profitable operation. He spends most working days, however, doctoring other people's factories -- and dispensing peppery opinions. ''Many of the people in management are expert at getting promoted, not at running their companies,'' he says. In his spare time, he enjoys a new home on the Ohio River and relaxes by writing computer programs, tinkering with fast cars, shooting skeet, and flying a small plane.

SPENDING AGGRESSIVELY TO STAY ON TOP OF THE WORLD ANDY GROVE -- The president and CEO of Intel is outspending every rival on earth to maintain supremacy in microprocessors, the chips that contain the brains of personal computers. ''When you have a winning product cycle,'' says Grove, 54, ''you have to ride it no matter what it takes.'' The Santa Clara, California, company's R&D spending is jumping 20% to $600 million this year, and Grove expects to raise capital outlays 40% to over $1 billion. That's one reason Intel's products win in a fiercely competitive market (about 10% of sales go to Japan). Another is Grove's 11- to 12-hour workday. ''It's not a very dramatic life,'' he says. ''There are no drum rolls. You just kind of chip away at problems and make tough choices.'' That could describe Grove's own ascent. An immigrant from Hungary, he struggled through City College of New York, earned his Ph.D. in chemical engineering at Berkeley, and helped found Intel. His big break came when IBM picked Intel's microprocessor for its first personal computers, which set standards for the industry. Exploiting that opportunity fully, however, demanded what Grove terms a ''disciplined, tough-minded approach.'' Intel spurns the common practice of licensing other companies to produce its microprocessors, which Grove says ''puts more of the onus on us to have an aggressive manufacturing investment.'' Though Intel thrives, Grove worries about the global challenges to America's key industries: ''We are becoming, technologically speaking, a less developed country.'' He insists that the U.S. can maintain its living standard only by creating many more sophisticated jobs. Says Grove: ''You can't sell enough corn to make up for the disappearance of the most value-added high-tech industries, one after another.''


-- Peddling semiconductor manufacturing equipment to the Japanese might seem like a pipe dream, but Applied Materials gets 40% of its business from Japan. No wonder Chairman Morgan, 52, has just written a book called Cracking the Japanese Market. Says Morgan, an engineer and former venture capitalist: ''To survive against your Japanese competition, you have to project a Japanese face and be very Japanese.'' Morgan began cultivating business relationships in Japan in 1977, when Applied sold its semiconductor-making equipment through a Japanese trading firm. When problems arose, he turned them into opportunities. In 1979, for example, Tetsuo Iwasaki, one of the most effective salesman of Morgan's products, formed his own company with six colleagues. Morgan went into partnership with them, but ''within a year, the honeymoon was over,'' he says. Iwasaki and another Japanese executive clashed over growth strategies. Morgan threw his support to Iwasaki and made the operation a wholly owned subsidiary of Applied Materials. That move paid large dividends. About three years later Morgan decided to get closer to his Japanese and other Asian customers by turning the subsidiary into a full-fledged manufacturing and technology center located near Tokyo's Narita airport. Because the operation was headed by a Japanese manager, Morgan got part of his initial capital from the Japanese Development Bank, a government agency that had never before extended a cash loan to a U.S. company.

At home in Santa Clara, California, where two-thirds of Applied Materials employees work, Morgan puts on a global face. Much of the company's manufacturing technology is generated by a headquarters group that includes Israelis, Chinese, and Japanese. He says this ethnic diversity helps give the company a ''powerful capability'' -- employees can establish rapport with customers almost anywhere, from Europe to Taiwan. As a teenager, Morgan was foreman of his family's cannery in Cayuga, Indiana. That experience convinced him that he wanted ''to run something.'' After graduating from Cornell (first as an engineer, then an MBA) he wound up, at 29, running two divisions of Textron. Later, as a partner in a San Francisco venture firm, Morgan was drafted to be CEO of then-struggling Applied Materials. Gaining a foothold in Japan helped revive the company. Morgan credits his wife, a California state senator, with sharpening his political awareness, and his son and co-author, Jeff (who worked for Mitsui in Tokyo), with helping him understand Japan -- though he does not seem to have done badly on his own.

SHE HELPED MAKE EDUCATION REFORM A NATIONAL ISSUE POLLY WILLIAMS -- This outspoken six-term Wisconsin state legislator is a pioneer in introducing publicly paid vouchers that enable children from low-income families to attend private schools. Her stand has stirred controversy (and a court challenge), but it has already improved the performance of participating students -- and gained endorsement from the Bush Administration. Says Williams, 54: ''Education of poor children is now on the national agenda.'' The President's recently announced education program not only endorses choice but also provides federal money for such programs. Raising four children alone on a poverty-level income before she became a legislator inspired Williams to push through her parental choice plan for Milwaukee. The aim, she insists, is not to undermine public schools, but to pressure them to do a better job. With a Jesse Jacksonesque rhetorical flourish, she says, ''We have desegregation, integration, and transportation. We still don't have education.'' So far her pilot program, started last fall, has given the parents of 400 Milwaukee children grants of $2,500 a year to put their kids into private schools -- where most are doing well. The parents sign agreements with the schools that they will participate fully in their children's education, which, says Williams, ''is how we get success.'' Without parental choice of schools, she argues, children from poor families would have no future choices in the job market.

A PHYSICIST TURNS THE WHITE HOUSE AROUND ALLAN BROMLEY -- Last year the Bush Administration saw the erosion of U.S. industrial competitiveness as a problem mainly for business leaders. Today, however, it views it as a crucial element of national security. That about-face is largely the work of Bromley, 64, a nuclear physicist from Yale. Until he took on the job in 1990, the White House science adviser seemed to operate in the twilight zone. The position, which was established in the Eisenhower Administration, had virtually no status or visibility during the Reagan years. But Bromley enjoys the support of his friend George Bush, who wanted a stronger voice for science within earshot. As a result, Bromley attends all Cabinet meetings and belongs to the influential White House councils for both domestic and economic policy. His official title: Assistant to the President for Science and Technology. As an insider, Bromley has broken through a decade-long ideological impasse over how to respond to the Japanese economic challenge. He is the architect of a landmark technology policy announced last September. Most notably, the policy encourages government agencies to help business with grants and research assistance to develop such things as robotics, high-performance computers, and biotechnology. Bromley has accomplished this while managing to avoid any suggestion that he is promoting an industrial policy -- that is, using government to pick corporate winners and losers -- still a no-no in the Bush White House. Bromley gets high praise in Washington. Says Tom Murrin, a former Westinghouse executive who recently served as Deputy Secretary of Commerce: ''He's doing a spectacular job.'' Bromley certainly has his boss's attention. Bush meets monthly with the President's Council of Advisers on Science and Technology, which includes Bromley and a dozen technology leaders, such as David Packard, chairman of Hewlett-Packard, and Solomon Buchsbaum, senior vice president at AT&T Bell Labs.

A QUALITY DRIVE LIFTED HIS FIRM FROM OBSCURITY JOHN W. WALLACE -- The Wallace Co. was little known until, in the company of heavyweights IBM, Cadillac, and Federal Express, it won the Malcolm Baldrige National Quality Award last year. Based in Houston, Wallace is a family-owned distributor of industrial pipes and valves with just 280 employees. When the Gulf Coast oil industry collapsed in the early 1980s, so did the firm's business. Wallace snapped back by becoming a model service company, giving customers what they wanted faster and more reliably. Says Wallace, 55, the CEO and son of the founder: ''People who don't get with the quality movement won't survive.'' The turning point came in 1985, when Celanese, one of Wallace's biggest customers, announced plans to winnow its suppliers to a small group that demonstrated a commitment to quality. Wallace Co. put every worker through training in teamwork, statistical analysis, and techniques for continuous quality improvement. Employees took the training seriously because the Wallace family participated, including C. S. Wallace Sr., 90, the founder and chairman, and C. S. (Sonny) Wallace Jr., 57, John's brother and the company president. Winning the Baldrige award was really like icing on Wallace's rising cake. In the past four years, sales have grown 69% to $90 million in 1990. Profits, which the company does not disclose, have expanded more than sevenfold in that period. Says John Wallace: ''Practically everything has changed in our company.'' Among other things, the firm has improved its rate of on-time deliveries from 75% in 1987 to 92%. Employees, which the company now calls ''associates,'' are geared to answer customer inquiries within 60 minutes. Chief Executive Wallace especially likes another outgrowth of the quality drive: ''All of a sudden I am relieved of the burden of making decisions. They are made through team consensus among the associates.'' As a result, he says, he has more time for hunting and fishing.

INSPIRING THE EMPLOYEES WHO ADD VALUE PAUL FIREMAN -- Reebok International Chairman Fireman, 47, shows that there's more to competitiveness than manufacturing expertise. Reebook shoes are made by contractors in such places as South Korea, Taiwan, China, and Indonesia. But most of the value added comes from the smart designs and clever marketing his 3,500 U.S. employees dream up. The Stoughton, Massachusetts, company thrives, he says, because those employees would rather talk about shoes and sportswear than money. That may sound ironic from a man who has drawn a lot of flak for making $14.8 million last year, placing him among the highest-paid CEOs. But, he explains, his compensation was based on corporate earnings. In 1990 they ''exploded beyond anyone's dreams -- which I guess is good.'' This year, under a new contract drawn up by his board, his salary drops to $1 million, plus a bonus of up to $1 million. The change suits him just fine, he says: ''That contract needed to come to an end.'' Fireman started literally at the bottom. After dropping out of Boston University, he was put to work in ''the bowels'' of his family's sports equipment company, a warehouse, ''and I dug my way out.'' Searching for a new career in 1979, he acquired the U.S. distribution rights for England's Reebok running shoes and built an American corporation with $2.2 billion in sales last year. Says Fireman, who later bought the British company and now owns over 18% of Reebok International: ''I believe that an entrepreneur is a successful bum, someone willing to take a risk to make something of himself.'' Fireman inspires Reebok's mostly young employees to be entrepreneurial -- and more. He's trying, he says, ''to create an environment that offers competitiveness through creativity and excitement, not on getting ahead at ruthless cost.''

HIT 1,000 SINGLES AND YOU'LL ALWAYS WIN BIG DAN KAPLAN -- Personifying American vigor in service industries, Kaplan, 48, president of Hertz Equipment Rental Corp., has fixed a money loser and pushed it into Europe. The essence of his winning strategy, says Kaplan: ''Hit 1,000 singles. You almost never hit a home run to turn something around overnight, but you keep cracking away with small improvements -- like the Japanese do.'' Kaplan, who is restlessly intense, likes tough assignments. Amid the fuel crisis in 1978, he left a job trading oil cargoes at New England Petroleum and joined Hertz, where as purchasing director he used his trading skills to fill the tanks of Hertz cars. His reward four years later was the top job at the equipment rental outfit, located in Park Ridge, New Jersey, which Kaplan says ''lacked all the things that made Hertz rental cars great.'' Loathing bureaucracy and paperwork, Kaplan took to the road with a few colleagues, visiting up to 20 cities a week. Every time he saw a broken dump truck or backhoe, he photographed it and mailed a print to the branch manager. Swiftly those dogs were either repaired or scrapped. Above all, Kaplan has motivated his people in the field to think and work as entrepreneurs. He takes pains to measure their productivity, normally a tricky matter in a service business. A system he devised monitors 30 key components of the business, such as the percentage of equipment being rented at any moment by the 86 outlets in the U.S. and the eight in Europe. He also has employees tally their phone calls soliciting new business and note the results. To reduce reliance on the cyclical construction industry, Kaplan increasingly rents equipment to such national customers as General Motors and Shell Oil.

A CITIZEN-SCIENTIST SPREADS SUPERCOMPUTER POWER LARRY SMARR -- An astrophysicist with down-to-earth ideas, he has put the world's most potent computers to work enhancing American competitiveness. Smarr, 42, who led a campaign in the early 1980s that established four national supercomputing centers, runs the one at the University of Illinois at Urbana- Champaign. There, corporate researchers work alongside academics in a federally supported facility. Eastman Kodak, for instance, used the Illinois center to develop new manufacturing processes. The Cray and Convex supercomputers enabled the company to visualize (on color video screens) how plastic flows in an injection molding system. Likewise, FMC improved its Bradley Fighting < Vehicle using Smarr's supercomputer, and Eli Lilly routinely designs pharmaceuticals with it. The quintessential citizen-scientist, Smarr converses as easily with schoolchildren as with academic peers about black holes and other arcana. One subordinate remarks, ''He has the sort of charisma that gets you caught up in his ideas.'' Not bad for a guy who admits that in Columbia, Missouri, where he grew up, ''a lot of people thought of me as a nerd.'' He spent his youth tinkering with old radios and in high school soaking up three semesters of college-level calculus. Other kids would beat him up during recess, then seek his help on homework. Says Smarr: ''I got trained in competitiveness fairly early.'' After earning his Ph.D. in 1975 at the University of Texas, he took a series of teaching posts. But to pursue his research into quasars, he worked summers as a guest scientist at government nuclear weapons labs -- practically the only way to get access to supercomputers in those days. In 1981 he went to the Max Planck Institute in Munich, where he continued his research full time. Says Smarr: ''It was ironic that American scientists had to go to Germany to use American-built supercomputers.'' Returning home in 1983, Smarr focused national attention on this amazing gap, demonstrating his gift for public relations. ''It's part of every scientist's responsibility to share the incredible excitement of being a scientist,'' says he. ''Science is the closest thing to magic that we've got.''