When asked who his industrial heroes are, Sir Hermann Hauser, father of the UK’s semiconductor industry, ignores the obvious. Not for him the Henry Fords or Andrew Carnegies. Instead, the man who founded Acorn Computers and has been called in by the UK government to help revive British industrial innovation, chooses the mathematicians and computer scientists whose work brought the power of computing to the world of manufacturing.
“The great brains, like Alan Turing or Maurice Wilkes, laid the foundations for everything we do now,” he says.
Equally he might have chosen Charles Babbage, who in the 19th century came up with the concept of a programmable computer, or James Watt, who improved designs for the steam engine that would transform manufacturing. The difficulty in drawing up a list of just 50 business pioneers is that they have all built on the work of previous generations of equally determined and original thinkers.
Henry Ford is often credited with inventing the assembly line, which brought down costs and workers’ injuries while increasing productivity and output. But, like Watt, he merely expanded on an idea that had been around for more than 100 years. His success, though, was copied on a wider scale than ever before across a variety of industries as technology and communications improved in the 20th century.
The impact adapters such as Ford have had on the way people live, work and consume is undeniable. These pioneers “made it easier to manufacture large quantities, and to market them through the world’s ever-stronger distribution and communication networks”, Lord Bhattacharyya, British industrialist and founder of WMG, a consultancy at the University of Warwick, said in a speech. “These changes created the factory, urbanisation, new transport systems and a shift in the nature of the ‘maker’ — from craftsman to labourer. Ultimately, they created the mass market.”
They also created vast economic wealth. Wages, even in a world where manufacturing jobs have plummeted, are generally higher than in the lower-skilled services sector.
In the 20th century, unlike the 19th, many of the revolutionary changes were brought about by those who found better ways of organising production than those who invented tools or machines.
Taiichi Ohno is considered to be the founder of lean manufacturing, the philosophy otherwise known as the Toyota Production System, which helped the Japanese car company to survive after the second world war. The lean approach aims to eliminate waste in every aspect of a manufacturing process — from workers’ actions to the supply and use of raw materials. Partly based on theories described in Henry Ford’s 1926 book Today and Tomorrow and on the methods of US supermarkets, the principles devised by Ohno have become common practice in world-class industrial companies and in their supply chains.
Hauser, meanwhile, cites Sir Robin Saxby, founder of Arm Holdings, whose chips are used in 95 per cent of the world’s smartphones. His genius was in sensing there could be a different business model for a chip company than the traditional make-and-sell approach. “Arm does not sell chips — it sells licences (on its design) to make chips to 350 chip companies that all compete with each other,” says Hauser. “This helped Arm to become the dominant player in microprocessors.”
The world is on the brink of a new industrial revolution — one where manufacturing is network-based and data will flow through the production process into the customer experience and back again. This will open up new ways to produce more customised and affordable goods that people want. In the days of Henry Ford, to keep costs down, customers could have any colour they wanted as long as it was black. But now, with intelligent systems that can inform manufacturers earlier of consumers’ desires, manufacturing is entering the era of mass customisation. Bhattacharyya cites Jaguar Land Rover, the UK-based carmaker owned by Tata Group of India. Using social media, JLR has cut the costs of marketing a car by 70 per cent.
This new revolution will create new industrial pioneers, who may not be traditional industrialists.
Ineke Dezentjé Hamming-Bluemink, a former politician, is leading the Dutch government’s strategy to adapt to the labour, educational and social challenges implied by the next phase of industrial development. “The next innovator will not be some big company. It will be someone working in his or her garage coming up with an idea,” she says.
In a way, this is a return to a golden age of innovation, when a humble locksmith like Benjamin Huntsman could invent new ways to make steel that would make the industrial age of the 19th century possible. Now engineers with heart problems, for example, are using the possibilities created by the internet, social networks and advanced manufacturing techniques such as 3D printing to create innovative medical solutions for their own needs.
Elon Musk is challenging the mighty aerospace and defence companies with SpaceX, a company that aims to develop rocket technology by making commercially viable reusable space launch vehicles. Jim Cantrell, former vice-president of SpaceX, is reported to have said of Musk that he “used $1bn to do what Nasa couldn’t do with $27bn”.
These are the people who will transform industry for the future. The knowledge that will be gathered in the development of rocket technology will be fed back into other sectors — just as Ford’s own success was absorbed and copied in other industries.
There will be failures along the way, but as Musk told New Scientist magazine: “One failed experiment does not invalidate the greater goal. If that was the case, we’d never have had the lightbulb.”
Very few management consultants deserve the title “pioneer”, writes Andrew Hill. It is not consultants’ style to lead from the front. A more appropriate — cynics would say safer — approach is to help provide the tools with which their corporate clients can break new ground.
Bruce Henderson, the founder of Boston Consulting Group, would merit a mention for the way in which he helped define strategy. But BCG was only founded in 1963. By then Marvin Bower had already shaped McKinsey into the model of a modern management consultancy, creating the sector as we now know it.
As Duff McDonald writes in The Firm, his portrait of McKinsey: “Bower was obsessed with making sure he and his peers would not be dismissed as corporate parasites and would enjoy a respect similar to other early 20th-century professionals such as doctors, lawyers, engineers and ministers.”
McKinsey might have made just a footnote in business history if Bower had not taken the lead when the group’s official founder, James O “Mac” McKinsey, died suddenly in 1937. The group split in two: the other half became AT Kearney and Bower kept the McKinsey name for the part he went on to head.
One of Bower’s achievements was to move McKinsey consultants up the corporate hierarchy until they became the trusted advisers to senior executives. He deliberately left behind Mac McKinsey’s original concept of the group as “management engineers”, hired to solve the lowlier challenges facing big US companies. As in law, where Bower had started his career, McKinsey would be a “practice” rather than a business and have “clients” rather than customers. He also developed many of the techniques that helped McKinsey — and ultimately other consultants — become efficient moneymakers.
But Bower also established a set of principles for the group. Framed copies of his mission statement and values — including “Put client interests ahead of the firm’s; observe high ethical standards; preserve client confidences” — still hang on the wall of McKinsey offices. One reason why the insider-trading scandal that embroiled McKinsey in 2011 was so shocking to the consultancy was that it involved breaches of these principles and ended in the conviction of Rajat Gupta, who, like Bower, had risen to become managing director of the firm.
Bower died in 2003, aged 99. His longevity — and his continuing influence over McKinsey even after retirement — cemented his reputation as the soul of the consultancy. But by bringing rigour to the consulting sector as a whole, and to consultants’ corporate clients, his influence also rubbed off on business as a whole.
Sir Richard Branson regularly appears on lists of the UK’s most successful businesspeople, or most inspiring entrepreneurs, writes Sarah Gordon. His reputation as a challenger to the status quo is due in part to his launch of a range of businesses, from mobile telephones to trains to airlines, that challenged complacent incumbents such as British Airways and often gave consumers a better choice and lower prices.
He opened his first record shop on London’s Oxford Street in 1971 and two years later launched Virgin Records, which signed controversial bands such as the Sex Pistols. This was followed by a variety of other businesses, such as the Virgin Atlantic airline, founded in 1984. Some have been more successful than others — Virgin Mobile may be a familiar name but Virgin Brides, a bridal wear company, is probably best forgotten. Virgin Atlantic itself has just returned to profit after three years of losses.
The precise nature of the Virgin business empire is little understood by the public. About 80 businesses bear the Virgin name, but Virgin Group Holdings, which manages Branson’s investments and his personal brand, holds a direct stake in fewer than half. Virgin Group owns just over a quarter of the 12 largest Virgin companies by revenues, and most Virgin-branded companies pay the holding company a licensing fee for use of the name.
The recognisability of that name, and of Branson himself, is in part due to a series of high-profile exploits he has engaged in over the years, from hot-air ballooning to high-speed boating. His buccaneering image, with blond beard and mane to match, has played a considerable part in the success of the Virgin brand, which he has parlayed into a franchising model that has given him a fortune, estimated by Forbes, of $5bn.
The contradictions underlying this image — for one, Branson is a socially liberal philanthropist but lives as a tax exile on his Caribbean island of Necker — appear not to have undermined its financial value.
In 2005, he stepped back from day-to-day running of the Virgin Group to focus on his philanthropic activities and Virgin Galactic, his project to send tourists into space. In October, the endeavour was rocked by the fatal crash of a spaceship in the Mojave desert in the US, killing a test pilot. Despite such setbacks, Branson has vowed to continue with the business — and his personal brand seems to have suffered little as a consequence.
Barbe Nicole Clicquot-Ponsardin
If life had taken a more predictable course, Barbe Nicole Clicquot-Ponsardin would probably have spent her years as a devoted wife and mother in a wealthy, connected family in northern France, writes Adam Thomson.
As things turned out, she became one of France’s first successful female business leaders in a male-dominated world, selling her Veuve Clicquot champagne in international markets and pioneering a technique that transformed the drink from a cloudy wine into the crystal-clear tipple we know today.
The event that sparked the change was the death in October 1805 of François Clicquot, the man she had married just seven years before and with whom she had helped build the family’s wine business.
Barbe Nicole Clicquot persuaded her father-in-law to allow her to take over the company — a move that later prompted the inclusion of “veuve”, or “widow”, in its name. But Europe was at war and business proved exceptionally tough.
Production slumped initially, and Britain’s naval blockade forced her to look east to Russia, at one point shipping champagne bottles hidden in barrels to skirt an embargo the Tsar had placed on French wine.
To survive, she cut costs, reined in overdue payments from clients and diversified into selling red wine in the domestic market, according to Tilar Mazzeo in her book The Widow Cliquot: The Story of a Champagne Empire and the Woman Who Ruled It.
“Barbe Nicole’s workday, in the cellars or at her desk, began at seven in the morning, and she rarely set aside her account books and letters until nine or 10 in the evening,” writes Mazzeo.
With her husband, she had the idea of putting an anchor on each of the corks as part of an early attempt at branding in an era when bottles were not even sold with labels.
She also continued to develop her marketing: in 1810, she produced the world’s first vintage champagne; in 1811, an outstanding vintage, she began putting a star on each of the corks in homage to the comet that appeared in the night sky that year.
But beyond her industry and tenacity as a business woman, Clicquot’s lasting contribution was pioneering the remuage, or riddling process — tilting the bottles and turning them for several weeks to collect the dead yeast in the neck and then removing it — that gives champagne its clear appearance.
The result was what is generally considered the first modern champagne, and its popularity spread among Europe’s elites, who soon began to associate it with celebration and luxury.
Clicquot died in 1866, when the company sold 750,000 bottles, compared with about 100,000 when she took it over. It seems only fitting that, even during her lifetime, she became known as the grand dame of champagne.
For an invention so momentous, the origins of the moving production line remain obscure, writes Robert Wright. Henry Ford is celebrated as the father of the invention but, according to The People’s Tycoon, a biography of him by Steven Watts, Ford gave two different stories, claiming it had been inspired by how carcasses moved in Chicago slaughterhouses or by the workings of a watch factory.
What is certain, though, is that, in 1913 and 1914, workers in the Ford Motor Company’s Highland Park plant, in a city on the north side of Detroit, started to assemble first components then whole vehicles on a moving production line. The effect on productivity was astonishing — and led Ford to a second extraordinary innovation.
Far more than contemporaries such as William Durant of General Motors or the Dodge Brothers, Ford had focused from his company’s earliest days on trying to bring down the cost of cars to within the reach of ordinary people. The company started production of the vehicle intended to do that — the Model T — in 1908.
But despite Ford’s determination to make his factory’s layout as logical and efficient as possible, there were still substantial problems smoothing the flow of parts and vehicles through Highland Park, opened in 1910. Managers started, according to Watts, experimenting with different techniques, including pushing vehicles along with bars and pulling them with ropes to carry them smoothly past individual workers’ workstations. The company finally settled on a chain to pull vehicles along.
The system ironed out the effects of different workers’ different work styles, speeding up the slow and slowing down the fast. The added efficiency quickly put Ford in a virtuous circle of cost-cutting that fuelled demand. The company made 68,773 Model Ts in 1912. The basic model sold for $590, already a sharp reduction from $900 in 1910. By 1920, Ford was producing nearly 1m Model Ts a year and selling the basic model for $395. At points in the 1920s, the Model T accounted for half of US vehicle sales.
However, the tedium of work on the assembly line quickly pushed up Ford’s workforce turnover. In response, he increased wages to $5 a day — twice the average for the time — and cut the working day to eight hours. It was the kind of idiosyncratic decision-making that would later cause the company many problems. But, by creating for the first time large number of workers with spare time and money, the move is widely credited with creating the US’s 20th-century consumer society.
No chief executive is irreplaceable. But Carlos Ghosn may be about as close as it gets, writes Andy Sharman. The Lebanese Brazilian has taken a multinational upbringing and applied it to a carmaker that accounts for one in 10 new cars sold worldwide and employs 450,000 people.
Ghosn has done something almost unprecedented in the world of cars by forging the Renault-Nissan alliance. Now 15 years old, its longevity is testament to his principles of mutual respect and cultural sensitivity in an industry littered with failed partnerships (DaimlerChrysler, BMW-Rover, Ford-Volvo-Jaguar Land Rover).
The Renault-Nissan universe — which is regularly orbited by Ghosn’s Gulfstream jet — includes ownership of Avtovaz in Russia, which he chairs, and a cross-shareholding and electric vehicle development partnership with Daimler of Germany.
Then there is the Romanian brand, Dacia, which has been resuscitated as a low-cost marque and has taken a bite out of Europe’s biggest carmakers.
“It’s cross-cultural squared — not just people from different cultures but different companies too,” says Chris Donkin, one of the car industry’s leading headhunters.
When Ghosn arrived at Nissan in 1999, it was sitting on $20bn of debt and nearly $5bn in annual net losses. To an anti-foreigner outcry in Japan, he closed factories, cut jobs, sold off non-core assets and redesigned the cars. Since then, the diminutive polyglot has inspired bento boxes and manga cartoons.
Nissan is sustainably profitable and the French and Japanese groups have integrated, using a big joint-purchasing unit to haggle down prices from suppliers.
The supremely confident Ghosn is in his element addressing international media at global car shows — fixing reporters with piercing eyes and gravity-defying eyebrows. He is respected for an ability to think and communicate clearly despite the complexity of the organisation.
But some say his success and durability at the top of Renault-Nissan has been to the detriment of the companies’ future. Aspiring successors — including Andy Palmer and Carlos Tavares — have turned elsewhere for top roles in the car industry. And his success with Dacia contrasts with the continued underperformance of the upmarket Infiniti marque.
Meanwhile, sharp declines in Russia and Brazil have raised doubts over his historic focus on pushing the alliance into emerging markets.
As the 61-year-old nears the end of his contract with Renault-Nissan in 2017, speculation is rising over how he might be replaced — or rather, how many people will have to replace him.
Ghosn himself is cryptic. “A lot of people think that the only solution is to have one person running two companies,” he says. “[But] the present organisation of the company is not the only one.”
With a fortune made from the early days of the mobile phones, the Sudan-born entrepreneur Mo Ibrahim has emerged as a key mover in attempts to rebrand Africa as a success story in both politics and business, writes Peter Marsh. His Mo Ibrahim Foundation, established in 2006, gives substantial sums to people promoting the best standards of leadership and transparency in government across the continent.
But Ibrahim’s unusual awards would never have been possible without his own exceptional business record. He moved to the UK from Sudan in 1974 and later joined BT, where he helped the telecoms business become established in the then new world of mobile phones. After that, he started a successful business in operating mobile phone networks across Africa. In 2005, he sold his company Celtel for $3.4bn.
His foundation’s biggest award is an annual prize for a former political leader who has “developed [his or her] countries, lifted people out of poverty and paved the way for sustainable and equitable prosperity”. The amount of money handed out in these prizes — even though in some years the cash is left unawarded — is eye-popping, especially by the standards of a continent where incomes are low.
But Ibrahim argues his awards are a practical encouragement to politicians to quit and hand over to someone else rather than cling on with incomes supplemented by, as often happens, bribery and corruption.
This year’s award — which gives the recipient $5m over 10 years, followed by $200,000 a year for life — was given to the Hifikepunye Pohamba, the outgoing president of Namibia.
The size of these awards — which are accompanied by smaller disbursements of scholarships and fellowships to others lower down the ladder of African politics — has created some controversy. This is on the grounds that many African leaders are well remunerated and hardly need handouts when they step down.
But Ibrahim’s big theory is that on the back of a rise in standards of government, helped by the potential of people given his awards to act as role models, the climate for business will gradually improve. That in turn should help improve standards of living in a continent blighted by poverty. Some tentative support for his ideas has emerged in the indications in recent years that African economies have started to ramp up, helped by signs of sometimes impressive entrepreneurial activity.
As his battle with cancer neared its end, Lee Byung-chull became concerned about the biblical warnings of rich men struggling to enter heaven, writes Simon Mundy. “Does this mean the rich are bad?” he asked a priest a month before his death in 1987.
Lee had plenty of time to ponder the meaning of wealth, spending most of the second half of his life as South Korea’s richest man. Samsung, the group he founded, remains by far the country’s biggest; it includes the world’s biggest technology company by sales and 73 other businesses, from stockbroking to theme parks.
Lee was born to a wealthy family in southern Korea in 1910, the year the country was formally annexed to the Japanese empire. Like many upper-class Koreans he went to study in Japan, although he did not complete his economics degree at Tokyo’s Waseda University.
His business career began in 1936, when he set up a small rice mill in the southern town of Masan, buying a truck to gain an edge in distribution over competitors, who relied on ox-carts.
After a failed foray into property speculation, Lee founded Samsung, which began by exporting foodstuffs to China. It prospered despite the tumult of the second world war, becoming one of Korea’s biggest trading companies by 1950.
That year Lee had to flee Seoul in the face of North Korean invasion but continued to trade in his southern homeland for three years until the civil war drew to a close. He played his political cards right, making generous campaign donations to President Syngman Rhee, who smoothed his entry into sugar refining, textile manufacturing and financial services.
Lee’s links with the old regime became a liability in 1961 when it was overthrown by army officers who threatened to confiscate the assets of top businessmen. But Lee persuaded the dictator Park Chung-hee to allow him to retain capital to invest in new industries, while sharing the profits with the state.
Samsung and its fellow chaebol, or family conglomerates, were at the core of Park’s export-focused economic strategy, under which South Korea developed at a speed matched by few countries in modern history.
Lee’s most significant moves, however, were in manufacturing: between 1969 and 1978 he set up businesses making consumer electronics, ships and semiconductors, in each of which Samsung now stands among the world’s biggest producers.
His achievements went alongside a steely personality: the chain-smoking Lee once intervened in a recruitment process to rule out a man whose shoes he deemed too dusty, and fired two of his own sons for underperformance.
“They were not fit to hold executive positions,” he told a reporter from Time in 1976. “The life of a man is short, but that of a corporation must never be.”
Flee China, produce plastic goods, then move into property. Put like that, Li Ka-shing’s beginnings are similar to many other Hong Kong tycoons of his generation, and they track the territory’s own economic development, writes Jennifer Hughes. Li’s trick is doing it better, bigger and more globally than anyone else.
Today Cheung Kong and Hutchison Whampoa, his flagship conglomerates, operate in more than 50 countries in businesses ranging from ports and property to pharmacies, oil, hotels, telecoms and more. The geographic spread alone makes Asia’s richest man stand out among the region’s tycoons, who tend not to venture farther than neighbouring markets. Even Jardine Matheson, his most storied rival, has mostly restricted itself to Asia after ill-fated ventures into the UK and the US in the 1980s and 1990s.
Li’s reputation is as a bargain-seeking buccaneer — indeed, in the past 20 years alone, he has bought and sold assets worth about seven times those traded by Jardine. His biggest bargain may have been the acquisition of Hutchison in 1979 from HSBC for a knockdown price reportedly well below book value. In one swoop, that acquisition expanded his interests beyond the property portfolio that is the bedrock of most Asian fortunes.
But behind the wheeler-dealer façade is a businessman who favours protected profits and legal certainty, neither of which are exactly swashbuckling traits. Most of his operations are based in countries with strong legal traditions to limit risk. Many are also utilities or are utility-like in that they have high barriers to entry that protect profits and increase certainty. That even includes his Hong Kong property interests, a sector still dominated by a handful of tycoons, and even his local supermarkets in the city that operate in a near-total duopoly with those of Jardines.
Li can also play the long game. Hutchison’s foray into European 3G mobile telecoms in the early 2000s was viewed for years outside the company as a cash-draining disaster. But more recently it has begun to deliver profits — and has emboldened the company to consider buying UK operator O2 from Telefónica for $15bn.
In Hong Kong Li has often been dubbed “Superman” by the press, helped by his beginnings in poverty — he assumed responsibility for his family aged 15, three years after fleeing the mainland. He may not be superhuman, but the scale and range of his businesses clearly sets him apart from others of his generation.
He was the founder of the world’s most prestigious award for peace — and someone known as a “merchant of death” for inventing dynamite, writes Peter Marsh. Few have left such a legacy of contrasts as the Swedish industrialist Alfred Nobel, who before he died assigned the majority of his vast wealth to establish the Nobel Prizes.
Born in 1833 in Stockholm, Nobel studied chemical engineering in the US. He learnt enough about nitroglycerine, a volatile liquid known for its explosive properties, to work out how to turn it into a reasonably safe compound. In 1867, after mixing nitroglycerine with other substances to make a paste, Nobel patented this invention as “dynamite,” from the Greek dunamis, or power, and built factories in Hamburg and Stockholm, and later New York and California. Dynamite revolutionised the mining, construction and demolition industries. Railroad companies could now safety blast through mountains, opening up vast areas to exploration and commerce. As a result, Nobel — who was responsible for 355 patents and set up companies and laboratories in more than 20 countries — grew hugely wealthy.
But his name became controversial after many accidents in the use of his product, including an 1864 explosion at the factory in Stockholm that killed Nobel’s younger brother Emil. Undeterred, military authorities soon began experimenting with the compound for use in weaponry.
In an obituary printed erroneously in 1888, eight years before his death, Nobel was described as a man “who became rich by finding ways to kill more people faster than ever before”. The writer was perhaps looking ahead too far because at that time the use of dynamite had not become established in conflicts: it was not until the first world war that it really took off as a tool of destruction.
Understandably stung, Nobel was determined to leave behind something other than a set of formulas for blowing things and people to pieces. His will provided for sufficient funds to establish a set of prizes that for more than a century have been celebrating the achievements of people in physics, chemistry, medicine, literature and economics, and for work in peace.
Nobel’s name also lives on in Akzo Nobel, a Dutch company that is one of the world’s biggest makers of paint and evolved partly from a business he started in 1895. Elements of his work linked to warfare can be glimpsed in several companies — among them RUAG, a Swiss munitions maker, and Dynamit Nobel Defence, a German producer of tank armour — whose origins can be traced to some of Nobel’s early business ventures.
It is hard to think of anyone who has served as chairman of one of the world’s best-known companies and has been more vilified than Cecil Rhodes, writes Peter Marsh. The British imperialist and mining entrepreneur was the founding chairman in 1888 of De Beers, the South Africa-based diamond business, now owned by Anglo American, and which since it started has been bracketed with opulence and power.
Rhodes also possessed views that few other than members of neo-Nazi organisations would now want to be associated with. In June 1877, after he became a Freemason while at Oxford university, he wrote: “It is our duty to seize every opportunity of acquiring more territory. More territory simply means more of the Anglo-Saxon race, more of the best, the most human, most honourable race the world possesses.
“The absorption of the greater portion of the world under our rule simply means the end of all wars.”
Rhodes is widely regarded as one of the prime forces leading to the all-out 19th-century “scramble for Africa” led by the UK and other European countries. As a result, he has been blamed by many for policies that consigned millions of Africans to lives of poverty and abuse.
The son of a vicar, Rhodes had become interested in South Africa’s mineral wealth after arriving in the country in 1870 with £3,000 from his aunt to invest in business ventures. He teamed up with others to form the goldminer Gold Fields of South Africa (now Gold Fields).
But Rhodes always appeared to be more interested in politics — in particular, imposing UK-centred rule on as much of Africa as he could target — than in operating businesses.
With the help of a fortune gained from his mining operations, in 1890 he was appointed prime minister of Cape Colony, a region established by the British and later subsumed into the new country of South Africa.
One of his most cherished ambitions was to create a railway along a continuous pink strip of land from Cape Colony to Cairo.
Closer to home, he introduced laws that would benefit mine and industry owners, at the expense of local people. The police force of the British South Africa Company — an administrative operation under Rhodes’ control — moved into lands north of South Africa to form what became Southern and Northern Rhodesia, named in his honour. Today, these are Zimbabwe and Zambia.
The political legacy of Rhodes has not lasted nearly as well as the businesses he founded. But in his will, Rhodes left behind enough money to fund the Rhodes scholarships, which are used to tutor future world leaders in traits of “excellence in intellect, character, leadership, and commitment to service”. The assistance programme for students counts former US president Bill Clinton among its alumni.
Alfred P Sloan
He trained as an electrical engineer and started in business devising roller bearings, writes Robert Wright. But Alfred P Sloan’s genius was nothing to do with the underlying technology of the automotive industry, which he transformed in the years after the first world war.
He was, instead, one of the first great geniuses of American management. His Organization Study, a report produced in 1919, provided the blueprint for the modern corporation, leaving individual divisions’ entrepreneurial energy undimmed but allowing the central corporation to maintain control.
At a time when Ford was focused primarily on making a single vehicle — the Model T — ever more cheaply and efficiently, the Organization Study propelled General Motors towards the brand strategy most carmakers still pursue.
GM’s range, from the mass-market Chevrolet to the exclusive Cadillac, was meant to offer consumers options that would ensure they stuck with GM as their tastes and priorities changed over a lifetime.
Sloan also, just as importantly, recognised that cars could be fashion statements. While Henry Ford was trying to build vehicles that would last in perpetuity, Sloan developed vehicles he knew would wear out in time. He introduced annual design changes to encourage sales.
It is perhaps easy to forget in the wake of GM’s Chapter 11 bankruptcy in 2009 and subsequent scandals over some vehicles’ unsafe ignition switches, that GM was the most admired company of its time. It seized market share from a once-dominant Ford and became the world’s most valuable company by every measure.
Much of Sloan’s thinking was developed in reaction to the chaos Sloan was horrified to discover in 1916 after Hyatt Roller Bearing, a parts supplier that he had been running, was bought by United Motors, an arm of General Motors.
GM’s head then was William Durant, the company’s brilliant founder, who managed GM on the gut instinct that guided many executives in the early car industry.
“Durant was a great man with a great weakness — he could create but not administer,” Sloan wrote later.
Sloan sought for the first time to measure every metric affecting the company, from component costs to consumer opinions of its products.
He consistently sought to subordinate his own personality to that of the corporation he helped to shape.
He was, however — according to surviving accounts of his personality — clipped, careful, cautious, correct and calculating in his behaviour. Perhaps the greatest tribute to Sloan is that it is his thinking, rather than the freewheeling style of Durant, that continues to shape corporations in the US and elsewhere.
Ratan Tata began his career in 1961 shovelling limestone and handling the blast furnace at the Tata Steel factory in Jamshedpur, writes Peggy Hollinger. But by the time he retired 51 years later, he had created an industrial conglomerate with more than 100 companies spanning 80 countries.
Tata was never destined to stay on the shop floor, given his family name. But friends say he did not lose his appreciation of the factory that those early experiences left with him.
Almost as soon as he took over from his uncle JRD Tata as head of the Tata Group in 1991, he set about taking advantage of the economic reforms sweeping India to shake up and expand a sleepy group.
He pulled out of cement, textiles and cosmetics to focus on software, telecommunications, finance and retail. At the same time, he wanted to expand internationally and chose industrial and manufacturing companies to take him into the UK with the purchase of Tetley Tea in 2000, and into Europe with the acquisition of Corus — now Tata Steel — in 2007. But it was the purchase of Jaguar Land Rover in 2008 that made Tata’s reputation as a global industrialist.
When Tata Group bought the British carmaker, few would have bet on its chances of success. The company had cost its previous owner, Ford, billions of dollars over eight years and failed to deliver the necessary profitability. But Tata — at the time a manufacturer of low-priced cars and vans in India — invested heavily in updating JLR’s facilities to produce top-of-the-range cars, and now even the group’s once troublesome unions are generous in their praise.
On a recent visit to JLR’s Halewood plant in Merseyside, Frances O’Grady, general secretary of the Trades Union Congress, held up JLR as an exemplary employer that invested in its workforce even as it sought greater productivity through automation.
The turnround at JLR has not only confirmed Tata’s reputation as one of the best industrialists of his generation, but has also helped to buoy the British economy, as the UK is now exporting more cars than ever before.
Eiji Toyoda and Taiichi Ohno
Eiji Toyoda was a pioneer in many ways: in rebuilding Japan after the second world war, turning Toyota into one of the first truly global Japanese companies, and fathering the luxury Lexus marque, writes Robert Harding. But what changed the world of business was his creation, with renowned engineer Taiichi Ohno, of the Toyota Production System.
The system encompasses a host of practices, from just-in-time manufacturing to the use of kaizen, or continuous improvement, all aimed at eliminating waste from the process. The TPS — and less consistently the principles underlying it — have been copied and adapted all over the world.
Toyoda and Ohno formed a particular kind of business double act. Toyoda was the visionary chief executive, willing to take bold bets on new models and overseas factories, but also to instil the remarkable culture that explains why the TPS never works quite as well for others as it does at Toyota. Ohno, meanwhile, was the relentless, focused engineer who turned the ideas and principles of the Toyoda family into a systematic method for eliminating waste and constantly driving up productivity in the company’s factories.
The origins of the TPS lie in a 1938 experiment by the founder of Toyota Motor, Kiichiro Toyoda, who created a flow-based system based on keeping the production line running smoothly rather than at the maximum speed.
“With our new system, making too much of anything was against the rules, and so was making too little of anything. But it was a flexible system. If you had done everything you were supposed to do, you could go home,” Eiji Toyoda would later recall according to The Birth of Lean, a book of interviews with Toyota managers. After the war, Japanese industry was on its knees, and seemed likely to stay that way given the vast scale advantage enjoyed by its US rivals. “The Toyota production system evolved out of need,” said Ohno. “Certain restrictions in the marketplace required the production of small quantities of many varieties under conditions of low demand.”
In the years ahead, the vision and drive of Toyoda and Ohno would help Toyota surpass those competitors.
Famed for a hard-driving, straight-talking, “can-do” approach, Jack Welch stands out as one of the most successful industry managers of the past half-century, writes Peter Marsh. From an unprepossessing background, Welch ran as chief executive the sprawling operations of General Electric, the US conglomerate, for 20 years from 1981.
Welch made the company leaner and more profitable and instituted a set of business principles, based around sticking to a narrow series of core objectives, that have won him admirers in many sectors.
Welch advocated striving incessantly to make customers happy, as well as being fair to company workers. But he said that treating workers according to their merits, even if this meant sacking them, was always preferable to allowing the underperforming employees of a company to stick around when this meant reducing the chances of success for the business as a whole. This reputation for ruthlessness earned Welch, for much of his GE tenure, the epitaph “Neutron Jack”, after the neutron bomb with its ability to wipe out people while leaving buildings and equipment largely untouched.
After retiring from GE — whose market capitalisation and income increased 30-fold and 10-fold respectively during his tenure — Welch has forged a new career in teaching, setting up the Jack Welch Management Institute near Washington DC. The institution, in which Welch has a leading role in engaging with students, organises online MBA courses and other facets of executive training.
But the 79-year-old has done his best to signal that his embrace of the apparently softer elements of management has not removed the rougher edges of his outlook. He scoffs at the fashionable idea of younger employees having mentors to guide them through tough periods. “Whatever you do in your career, never get a mentor, because your mentor can turn out a turkey,” he told an interviewer.
Welch was fortunate that for much of the time he held sway at GE the world economy was in a relatively benign phase. After he stepped down, managing big global corporations became a lot more complex. Welch never had to cope with the rise of China as a new economic powerhouse, the 2008–09 financial implosion and the concerns about a potential break-up of the EU.
Even though it has sometimes been hard to separate out how much of Welch’s influence is down to talent and acuity as opposed to chutzpah and self-promotion, there is no denying his legacy has lived on for longer than that of most other comparable company bosses.