TOMORROW'S CEOS MEET SIX HOT YOUNG MANAGERS WHO HAVE WHAT IT TAKES TO LEAD IN THE 21ST CENTURY. ONE OF THEIR SECRETS: INSPIRING PEOPLE TO GREATER HEIGHTS.
(FORTUNE Magazine) – Squads of Armani-clad consultants, flip charts at hand, warn of dastardly global competitors and of technology that changes faster than the latest management fad. Thousand-dollar-a-day seminar instructors drone on about a diverse work force and how reengineering will change your life or, er, maybe won't. These wizards of workplace wisdom are not wrong--the world of business is changing. But they do fail to address the fundamental management question. What does it really take to be a successful leader in today's new environment?
To find out, FORTUNE tracked down six of the best and the brightest in the under-50 talent pool, managers with the experience, vision, and towering type-A personality necessary to be a top leader in the 21st century. All were highly recommended by recruiters, business school professors, and other industry watchers. And all have hands-on operations experience and a history of business success--prerequisite to being CEO material regardless of age. But what most separates these six from the pack is an ability to adapt to ever-changing demands, whether it's taking a big risk on a new technology or reviving loyalty in a dispirited work force.
Tomorrow's CEOs share traits radically different from those of the generation that preceded them, such as favoring a style that's participatory rather than autocratic (see From the Front). Three of the six have MBAs: Yes, it's an edge in business, not merely an empty credential. And several have consulting experience, apparently a good way to gain exposure to different industries before choosing one in which to kick butt.
Otherwise, the managers featured in this article are a diverse lot, diversity itself being a commonality of this under-50 set. There's Greg Brenneman, a Mennonite wonder boy, who at age 34 helped turn ailing Continental Airlines into a highflying outfit. Catherine Hapka went from taming a bunch of union workers at a Schlitz brewery to overseeing a $6.8 billion telecommunications business for US West. Chad Holliday built up Du pont's chemical business in the treacherous mazes of Tokyo--a long way from the sheltered life he led as a boy in Tennessee.
Of course, life takes funny bounces, and the executives here may not all make it to the top job. Nevertheless, those we've chosen are well worth meeting, both as models of management savvy and simply as all-round fascinating folks. If you're also under 50, you may be able to pick up some tips on how to steer your own career. And if you're older than 50: watch your back!
--A Recent memo from Greg Brenneman to a fellow executive is typical of the genre--clipped, dry, technical. But it ends on a high note: "Yesterday was a good day! Our stock closed at $60a and I picked up my '64 'Vette."
Oh, to be young and involved in the turnaround of a major airline. Brenneman is that rarest of combos, an analytical whiz who's also a people person. It was those skills he applied to Continental, a bloated and demoralized airline, when he came on board as COO in 1994. Fiscal 1995 saw Continental turn its only profit in 15 years, save for a bit of black ink in 1986 due to the quirks of bankruptcy law. And over the past 18 months the company's stock has risen nearly ninefold. Brenneman's job, though, has only begun. He now needs to prepare his company for the highly cyclical nature of the airline business, where any major turbulence--a recession or a spike in fuel prices, say--could etherize profits.
Reviving a longtime sky lemon like Continental takes incredible energy, something Brenneman has in abundance. He sleeps an average of four hours a night; his workday typically starts at 5 a.m. Brenneman spends 75% of his time traveling, much of it abroad.
The ability to maintain this pace stems in large part from Brenneman's upbringing. He was raised a Mennonite in the tiny Kansas community of Hesston (pop. 3,000). His family subscribed to the church's more progressive views, in contrast to the Holdemans, conservative Mennonites who eschew various aspects of modern life, such as owning a radio. Still, extraordinary emphasis was placed on the value of hard work. Summers during high school, Brenneman worked three jobs a day, among them bucking bales on his grandparents' farm. Says Brenneman: "That's motivation enough to go to college."
Brenneman attended Washburn University in Topeka and became one of the few graduates in the college's history to make the leap to Harvard business school. From there he went to Bain & Co., where he developed a reputation as a turnaround expert for clients such as Continental. As a consultant, he helped the airline lower its maintenance costs, among the highest in the industry at the time, from $777 million to around $500 million. Simply moving a maintenance operation out of high-priced Los Angeles saved $65 million a year.
So impressed was Gordon Bethune, newly minted as Continental's CEO in 1994, that he offered Brenneman the chance to join the company as his lieutenant. Brenneman jumped at the opportunity to move into management. "Being a consultant is like flying first-class," he says. "The food is terrific, the drinks are cold. But all you can do is walk up to the pilot and say, 'bank left.' If you're in management, you have the controls."
When Brenneman seized the controls, however, he was shocked by the degree of rancor that existed between labor and management, the legacy of former CEO and hatchet man Frank Lorenzo. The executive suites were kept locked. Brenneman's secretary had a secret button under her desk that could be bumped with her knee to call the police. She did it by accident one time.
Brenneman and Bethune, himself a pilot, went about dismantling the destructive culture. They set up an 800 number for employee complaints, instituted a profit-sharing plan, and started paying bonuses based on the airline's on-time record. The two then visited 15 cities, preaching to employees a message of pride and accountability.
But it wasn't prairie populism alone that made one so young so successful. Brenneman balances his people skills with the punch of rigorous analysis. A favorite saying: what gets measured gets managed. He likes to arm himself with all the relevant data, such as the fact that trained airline reservations attendants generate $22 per sales call, vs. $14 for untrained attendants. "Training takes only five hours," he says. "Yet somebody at Continental, in a rash of cost cutting, took out the training." Brenneman reinstituted it. "I love making a difference," he adds, "and doing it quickly."
So what's next for a 34-year-old, vintage-'Vette-driving, Mennonite-bred airline executive in a hurry? Brenneman says that on occasion he actually toys with the idea of enrolling in a seminary. "My wife says I'd be miserable," he adds. "It's such a different pace." Mostly, though, the youthful Brenneman has an awfully long time to ponder something he terms the "what-will-I-be-when-I-grow-up question."
--Amid washed-out white shirts and nonconfrontational neckties, Catherine Hapka is wearing a searingly red jacket, one that puts the blaze back in blazer. She's at US West's Minneapolis office conducting a meeting--an "event" in her lexicon--to discuss how the company can win back market share in the local long-distance telephone business. Hapka is known around the company as a master motivator, a trait she credits for her success. Today her stated goal is to "raise the temperature in the room."
Hapka kicks off by exhorting her charges: "We need to retake Pork Chop Hill." A half-dozen executives proceed to lay out their battle plans. Hapka listens intently, tapping her pen, rocking back and forth, literally vibrating with energy. She makes frequent interjections. "What's the headline," she demands when confronted with insufficiently digested data. At another point, she simply urges: "speed, speed, speed, speed!" She wraps up the meeting with a rousing, "I smell victory already."
Equal parts intensity and acumen, Hapka is charged with supercharging US West Communications, which provides phone service to 25 million customers in 14 states. Marketing, sales, customer service, and new-venture development are all her bailiwick. "My job is to get us ready for brutal competition," she explains. "No one believes a Baby Bell can be a lean, mean machine." But Hapka seems to relish the challenge and states with a grin: "I love to do things that people say can't be done."
Hapka learned this aggressive style early in her career. Her first job after graduating from the University of Minnesota was as a financial management trainee with GE in Syracuse, New York. Driving to work each day, Hapka passed a brand new Schlitz brewery in nearby Baldwinsville. "It looked like more fun," she says. So she signed on as a supervisor, overseeing 40 union workers through two shifts a day. In this gritty environment, Hapka began to evolve her management philosophy, what she terms "existential leadership." In essence: try to involve workers in big ideas that matter to the survival of the company rather than small processes. Within the brewery, the big idea was ever-increasing productivity. End-of-shift beer blasts proved a potent incentive. Says Hapka: "I learned to be more of a coach and less of a supervisor."
After two years of beer, Hapka was ready for something new. She made the unique transition from brewery to the University of Chicago business school, followed by a more conventional move to McKinsey & Co. But Hapka also soon found herself itching to seize the controls. She decided to give GE another whirl, and at age 29 she interviewed with Jack Welch. "I'll never forget that meeting," she says. "He was larger than life."
Hapka recalls that Welch found her beer-making experience amusing and took to calling her "Laverne" after one of the characters in the TV show Laverne and Shirley, which featured a couple of women who work in a Milwaukee brewery. Welch hired her, and fittingly, shipped her off to Milwaukee to work in Special Health Products, a business that made ultrasound equipment. Hapka put in a requisite 18 months in strategic planning before being named general manager of the $150 million unit.
The stakes are much higher at US West Communications. Hapka needs to balance the competing demands of the traditional telephone business with those of new ventures, such as Internet-access services. Her existential approach means finding the big ideas that will motivate unionized phone workers in one breath, entrepreneurs in the next. The process, she says, leaves her feeling like "Jekyll and Hyde."
As for her future, she's as direct as Brenneman is small-town polite: "My goal is to be the CEO of a major corporation. Period." After a pause to let that sink in, she continues: "Ambition is good for the people who hire me, good for the people who follow me. I don't know why people are so worried about talking about ambition. It's what drives this country."
--There's a joke oracle employees like to tell. "What's the difference between Oracle and the Boy Scouts?" Answer: "The Boy Scouts are led by adults." Further proof that techies have an odd sense of humor? Certainly. But it also speaks volumes about a warp-speed Silicon Valley outfit used to churning out millionaires, not managers.
Perhaps it's because he does act like an adult that Ray Lane's career has sizzled. It has fallen to him to guide this adolescent organization through its growing pains. He landed at Oracle, an information management company, in 1992, just after the company had suffered a loss. Lane, ex-IBM, ex-EDS, set about putting the kinds of controls in place that a maturing tech company needs. He didn't want to cramp Oracle's entrepreneurial style. At the same time, he says, "people want leadership. They need to know what's expected of them." Lane, 49, organized the business along five lines, thereby clarifying employees' roles and reporting relationships. And he introduced a system of personnel evaluation, a first for Oracle.
Lane also put a program in place called "Vision and Values," spelling out how people should interact and communicate. With the company pushing 20,000 employees, for example, an end had to be put to the practice, left over from startup days, of taking problems straight to the top, to founder Larry Ellison. Horizontal communication became the new norm; employees were required to discuss issues first with peers, then, if necessary, take them to the next step in the formal command chain.
Armed with a McKinsey consulting report--summed up by Lane as "people love your technology but hate dealing with you"--he also set about radically overhauling how Oracle approached customers. As it stood, customers could have as many as five competing Oracle salespeople come calling. They could expect the hard sell too; the high-velocity force more closely resembled boiler-room stock salesmen. Lane reorganized the sales force, shifting the culture toward relationship building rather than beating customers into submission.
Lane also saw gold in Oracle's consulting practice. As a former senior vice president at Booz-Allen & Hamilton, he had some notions about what needed to be done. When he joined Oracle, consulting was folded into the sales organization and viewed as something of a poor relation. The renegade salesmen were in the habit of giving away consulting services to close a deal. Lane made consulting a separate business line, with equal status, and recruited talent from Big Six firms. Currently around 25% of Oracle's $3 billion in sales comes from consulting. Oracle has fared well during Lane's four-year tenure. The value of its stock has grown almost tenfold, to $33.12.
Always having to be the adult can take its toll, something Lane learned way back, during his first leadership post. As a sophomore at West Virginia University, Lane was elected president of his fraternity, Kappa Sigma. The frat was in disarray, failing financially, and the president's job turned out to be paying the bills while the other brothers partied into the night. "I was never part of the crowd," he laments. The demands of leadership also contributed to the dissolution of his first marriage. These days, Lane says he's determined to spend more time with his second wife, Stephanie, enjoying golf, scuba diving, and other fruits of the California life.
--Chad Holliday grew up in Nashville playing football, mowing lawns, dating--the usual. It was a comfortable life. He fully expected to take over his father's industrial equipment distribution business. Never did he imagine he would one day work for a multinational corporation and live in Japan. But during his senior year at the University of Tennessee in Knoxville, his dad called one day and said, "How're your grades, son? They'd better be good, because I just sold the business."
Holliday didn't miss a beat. With the flexibility that has come to be his trademark, he simply parlayed a summer job at Du Pont into a full-time one. Thus was set in motion a 26-year career at the Delaware chemical giant, which has seen him rise through various plant-level supervisory jobs and executive positions to his current duties. At Du Pont he now has responsibility for eight global businesses generating $10 billion in revenues and producing everything from fabric to paper coatings. A second hat, chairman of Du Pont Asia Pacific, puts him in Tokyo and in charge of 7,000 employees and businesses totaling $3.5 billion in sales.
Holliday is truly an internationalist. Certainly everyone featured in this article has substantial foreign experience--Brenneman had a Mexico assignment with Bain, for example, and Hapka did an overseas stint for McKinsey. A foreign assignment, it seems, is no longer considered a backwater but rather a fast track to the top. Holliday has to oversee Du Pont's doings in 15 Far Eastern countries. Not surprisingly, he devotes roughly half his time to personnel decisions. "For me to be knowledgeable about any single business decision is almost impossible," he says, his Southern drawl in evidence even halfway around the world. "I have to try to put the right people in place."
Exhibit A is Holliday's decision in 1991 to recruit local talent to head up Du Pont in Japan. It was a controversial move and provoked grumblings by several of Du Pont's top managers back at headquarters in Wilmington, Delaware. They worried about loyalty. And what about the possibility that valuable trade secrets might be stolen?
Holliday stuck to his decision. He homed in on Akira Imamichi, president of a joint venture between Du Pont and Mitsui Petrochemical. Because Imamichi spoke virtually no English and Holliday's Japanese wasn't much better, the interview was conducted with the help of translators. Prior to hiring Imamichi, Holliday, as a trust-building exercise, took him on a tour of Japan (translators in tow). The two visited plants and got to know each other. They even stopped at the Hiroshima Peace Memorial Museum, dedicated to the World War II atom bomb explosion. "We got that out of the way," Holliday says with a sigh. "That's probably the most sensitive subject between an American and a Japanese person."
Imamichi has worked out well. Earnings have been growing more than twice as fast since he took the reins, even as the Japanese economy has been in a rut. And as Holliday had hoped, Imamichi has been able to eliminate some biases of Du Pont's American managers in Japan toward the local work force, which is 98% Japanese. Holliday feared that favoritism was being shown toward employees who spoke English well or demonstrated "Western" traits, such as taking personal credit for business success. "Sure enough, Imamichi came in and made many personnel changes," says Holliday. "People we thought weren't very good he thought outstanding, and vice versa."
Perhaps the most telling tribute to Holliday's natural adaptability is his current living arrangement. He and his wife, Ann, live in downtown Tokyo, a far cry from John Overton High School in Nashville, where they met. Their apartment is just 800 square feet, with low tables and screens and no dishwasher. Ann has become an excellent Japanese cook and is fond of ikebana, the Japanese art of flower arrangement. As for the couple's two sons, well, they are fluent in Japanese, unlike Dad, who's still working hard on it.
--Paula Cholmondeley is a consummate risk taker, and that's led to plenty of intrigue in her recent career. She's president of an Owens Corning business unit that's undertaken a top-secret product initiative, code-named Thunderbolt. All told, only about 50 people--Owens Corning's top brass, some scientists, and a few key contractors among them--were clued in during the early stages of Thunderbolt. Even the factory crew, which Cholmondeley (pronounced Chumley) helped screen, knew only that they would be working for a FORTUNE 500 company.
As for the factory: Owens Corning set up a new corporation, with a separate name, THB Development, and bought land in Mount Vernon, Ohio. To speed up construction, Cholmondeley's plant was built from a basic blueprint with the details worked out on the fly. Engineers continued ordering new equipment and perfecting processes right up until 60 days before the plant opened, in September 1994. "I had to learn to operate at a new level of risk," says she. "Sometimes we ordered costly equipment after just one trial."
All the speed and stealth paid off big-time. Cholmondeley helped to cut by half, from four to two years, the time it usually takes for the company to move an invention from a gleam in a scientist's eye to a product rolling off a factory line. Owens Corning was also able to sneak the new product, dubbed Miraflex, right onto retailers' shelves, taking competitors completely by surprise.
Miraflex is a new fiberglass that's more compressible than the conventional material. This quality alone has Owens Corning projecting that a business that will do an estimated $20 million in sales this year will grow to $500 million by the year 2000. But fingers are crossed that Miraflex may also turn out to have all kinds of as-yet-undiscovered properties and applications way beyond such current mundane uses as insulation in homes. "Running the Miraflex division is a unique, once-in-a-lifetime opportunity. It's like the Starship Enterprise, going where no one has gone before," says Cholmondeley, a fan of Star Trek, the X-Files, and all things sci-fi.
As both the highest-ranking female and the highest-ranking minority officer at Owens Corning, Cholmondeley is herself used to going where no one has gone before. She attributes her pioneering style to the fact that she grew up in Jamaica and Guyana. "I'd look around and see black doctors, black lawyers, a black prime minister," she says. "It had a strong impact on me: that blacks can do anything, that there are no limitations."
This message was reinforced at home by her achievement-oriented family. Cholmondeley's mother was a social worker, her father a psychiatrist. "Every night at the dinner table he would hold forth," she remembers. "Whether it was classical music, escargots, or business, he was going to educate his kids about it."
To advance her career Cholmondeley has been willing to move to a number of cities over the years, everywhere from New York to Boston to Toledo, Ohio. She and her husband, Thomas Watson, founder of a CPA firm, have an arrangement whereby neither accepts a job that puts them apart by more than a two-hour plane ride. Cholmondeley once had to turn down a job in Boise for this reason. Nevertheless, she's managed to pick up valuable experience at a number of companies, including Arthur Andersen and Westinghouse Elevator.
In many ways Cholmondeley feels that she has received some of her most valuable professional experience from what might be termed extracurricular activities. Over the years she's held positions with Gifts in Kind International and the Executive Leadership Council and Foundation. She views such outside professional organizations as a great opportunity to learn to run a meeting, do some strategic planning, or push people for money. "The benefit," says Cholmondeley, "is that you can learn vital skills in an environment where your real job isn't on the line."
The ultimate experience, she says, was being named a White House Fellow, an honor that in prior years has fallen to such luminaries as Colin Powell and Robert Haas, CEO of Levi Strauss. She was one of just 14 selected from a field of 1,200 in 1982. For her fellowship assignment, Cholmondeley took a year off from Westinghouse and worked as a special assistant to the U.S. Trade Representative. Perhaps the biggest perk of being a fellow, though, was getting to take part in an intensive series of meetings--roughly 200 in all--with prominent politicians, business leaders, and members of the clergy. Their war stories continue to inspire Cholmondeley to this day. "Those leaders were all creating change," she says. "They had the strength to believe in themselves and their visions."
--Business books preach it, business schools teach it, but Brian Ruder is a real-life practitioner of the new, more participatory management style. He walks the walk, wandering the halls of Heinz's Pittsburgh headquarters chatting up janitors and hobnobbing with employees on the cafeteria lunch line. And he talks the talk: Rather than shouting orders, the self-professed "overcommunicator" relies on everyone from leadership pooh-bah Stephen Covey to the Godfather--"he made things happen"--to inspire his charges at Heinz U.S.A. to sell ever more ketchup, beans, and vinegar. Market share at the $500 million-plus unit is up in nine of 11 categories over the past year. Only stubborn relish and pickles have failed to get the message.
For Ruder, a communications-heavy style comes quite naturally. As the son of Bill Ruder, founder of Ruder-Finn, a large New York City public relations firm, he knows the power of a well-chosen slogan or rallying cry. Over the course of his career, Ruder, 42, has also seen management approaches evolve to suit flatter organizations. "When I first joined corporate America, the person in the corner office was a hallowed big guy with a loud bark and a very nasty bite," says Ruder. "Now everything has changed. You have to be more like [NBA coach] Pat Riley, warm and motivating."
Ruder's take on coaching has a distinctly food-industry bent, though. "I'm a can opener for people's brains," he says. "I pry the tops off people's heads and stuff some ideas in there." Consider, for example, the "ketchup is fun" idea. Ruder didn't dictate to his staff that they must put the joy back in ketchup or suffer the consequences. Instead, he merely planted the notion: "ketchup is finger paint for kids; we're not building intercontinental ballistic missiles here." This set the tone for a series of free-form discussions, directed by Ruder and aimed at coming up with ways to capitalize on ketchup's natural fun appeal. One such idea was cartoon ketchup labels, which just debuted on a limited number of bottles.
It's no surprise that a manager who puts such a premium on interpersonal communication has collected a number of mentors and advisers over the course of his career. Ruder, in fact, has elected a group of people, including his father, to a personal board of directors. He canvasses them whenever he's faced with a major decision, such as introducing plastic ketchup bottles in 1982. "I rely on them," he says, "for total frankness and objectivity." Obviously, it's helped.
--Each of these six high-potential managers blazed a different trail to the top. Oracle's Ray Lane did it through organizational savvy; Du Pont's Chad Holliday earned his stripes overseas. But all share a crucial characteristic--they know how to coach and inspire people. Make your employees winners, and you can be one too.
REPORTER ASSOCIATE Amy Kover