Who is the best chief executive of the past 50 years? Jack Welch perhaps? Dubbed “manager of the century” by Fortune magazine in 1999, he oversaw General Electric for 20 years between 1981 and 2001. He gave shareholders fantastic returns: $1 invested at the start of his tenure would have been worth $48 by the time he handed over to his successor Jeff Immelt.
But, according to William Thorndike, author of The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success, Welch emphatically is not the best. Thorndike concedes that Welch, during whose tenure GE outperformed the S&P 500 index by 3.3 times, was “an undeniably great CEO”, but “wasn’t even in the same zip code as Henry Singleton”.
Who? Singleton was a mathematician who played chess blindfolded and became “one of history’s great CEOs”, founding the conglomerate Teledyne in the early 1960s. If you had invested $1 in Teledyne in 1963, writes Thorndike, it would have been worth $180 when Singleton retired as chairman in 1990, during a bear market. The company outperformed the index by more than 12 times during his tenure.
Singleton and seven other chief executives – including Bill Anders of General Dynamics, the aerospace company, and John Malone of TCI, the cable television company – are identified by Thorndike as exemplary corporate leaders. All were humble, unassuming and prudent, shunned the celebrity status loved by Welch and shied away from hot management trends.
Instead, their management style shared common traits – a focus on per share value rather than sales or earnings; a talent for allocating capital and human resources; a focus on cash flow; and a decentralised management structure – allowing local managers autonomy to release entrepreneurial zeal.
These “geniuses”, says Thorndike, are the “Isaac Newtons of business, struck apple-like by enormously powerful ideas that they proceed to execute with maniacal focus and determination”.
Unlike Citigroup’s former chief executive, Chuck Prince, who famously declared “as long as the music is playing, you’ve got to get up and dance”, these chief executives tended to “dance when everyone else was on the sidelines and to cling shyly to the periphery when the music was loudest”. They were, he says, “intelligent contrarians willing to lean against the wall indefinitely when returns were uninteresting”.
Thorndike wants to give “any manager or business owner” the confidence to “occasionally do things differently from your peers … to make the most of the cards they’re dealt and to delight their shareholders”.
Thorndike’s focus on these unassuming chief executives lends the book a somewhat boring tone. After all, one reason why so many people are likely to name “Neutron Jack” Welch as the best chief executive of the past 50 years is that they know who he is. His larger-than-life personality lends itself to interesting copy.
However much Thorndike insists his group of chief executives were “neither conventional nor complacent – they were positive deviants and they were deeply iconoclastic”, they were also, he concedes, “happily married, middle-aged men (and one woman) [leading] seemingly unexciting balanced, quietly philanthropic lives”.