THE NATIONAL BUSINESS HALL OF FAME
(FORTUNE Magazine) – Their skills, their fields of accomplishment, and even their social behavior could hardly be more different. But this year's laureates elected by FORTUNE's board of editors to the National Business Hall of Fame all shared a common abhorrence: They could not bear boredom. Liz Claiborne and her husband, Arthur Ortenberg, were so dissatisfied with being well established but confined in their trade that they put together a business whose growth and profits startled even them. James Burke of Johnson & Johnson quit the company after a year because he felt stifled, and then returned to deal with murder mysteries unique in the history of American business. Charles Brown of AT&T moved around as a young man to broaden his experience and keep ennui at bay; as chief executive he negotiated an end to the life of the revered Ma Bell -- and the beginning of a new corporate age. Samuel Goldwyn and Louis B. Mayer, poor immigrants on the East Coast, gave up their orthodox trades -- selling gloves and scrap metal -- to find glory in Hollywood. Thomas Watson Sr. founded IBM to accept a new mission in his life, and Juan Trippe created Pan American to explore the burgeoning globe; neither would settle for less. Begun in 1975, the National Business Hall of Fame is sponsored by Junior Achievement, the nonprofit organization that seeks to educate young people about how private enterprise works. Each year, at Junior Achievement's request, FORTUNE's board of editors chooses laureates from two broad categories: those who are alive but have left the jobs in which they made their mark, and those who are dead. This year's laureates will be inducted April 11 at a banquet in St. Louis. For a list of the 120 past laureates, see last page of story.
LIZ CLAIBORNE (born 1929) ARTHUR ORTENBERG (born 1926)
WHETHER STYLE makes the woman or the woman makes the style is now a settled question. Liz Claiborne has forever solved the conundrum: She is the woman who made the style that made the company bearing her name. She was the chief executive and creative force, what her husband, Arthur Ortenberg, calls ''the bearer of the flame.'' He served as vice chairman and supplied managerial talent to match Claiborne's creative brilliance. Their splendid record complete, they have now retired. Says Ortenberg: ''We always intended to leave before we became irrelevant.'' A tall, slender woman who looks smart and is smart, Claiborne spent 25 years as a fashion designer. Ortenberg had been running his own textile company, had done some consulting in that field, and was well connected. Both decided they were bored. In 1976 they founded Liz Claiborne Inc. with $50,000 in savings and $200,000 raised from family and friends. Great strokes in business are sometimes elegantly simple, a point never more forcefully made than in the Claiborne case. ''The goal was to clothe the working American woman,'' says Claiborne today. ''I was working myself, I wanted to look good, and I didn't think you should have to spend a fortune to do it. Only a couple of companies were catering to that emerging woman -- both in traditional, suited ways. I felt we could do better.'' Claiborne created a line of soft, attractive, colorful clothing styled for the women who were flooding into the working world. ''I'm a great believer in fit, in comfort, in color,'' Claiborne says. ''And I listened to the customer. I went on the selling floor as a saleswoman, went into the fitting room, heard what they liked and didn't like. Not that you do exactly what they want. What you do is digest the information and then give them what you think they ought to have.'' In a managerial innovation, Ortenberg looked on new styles in clothes almost as new styles in cars: Good designs required good engineering, which in turn required good organization. Prompt delivery and quality control became Ortenberg's hallmarks. Says he: ''I believed that we could bring order, discipline, and planning to this highly fragmented industry. We felt that if we could run a proper company, with high-quality products coherently presented to a defined customer, the rewards would follow.'' The rewards have indeed followed, in a size barely dreamed of. The first chunk of capital lasted only a couple of months, but by that time the company was already in the black. Sales ran around $2.6 million the first year. They stood at $117 million when Claiborne and her husband went public in 1981; over the past 12 months they were $1.3 billion, and Liz Claiborne Inc. was the second-largest apparel company (after V.F. Corporation) on the FORTUNE 500 list in 1989. Profits have been dazzling. The company's ten-year average annual return on equity from 1979 to 1988 hit 40.3%, ranking it first among 21 FORTUNE 500 stars. That performance has been good enough to earn around $100 million for the two founders. All the corporate decisions were made jointly, although Ortenberg insists that ''Liz was a chief executive of elemental force. She embodied all the qualities that we held critical to our success.'' He adds, ''Decisions were relatively easy in a company whose market was exploding. We had a tiger by the tail. What we were looking for was how to control the growth.'' Occasionally, one or the other insisted on going slow. She dragged her feet for two years before entering the field of men's clothing, and for a long time he was less than enthusiastic about a scent that the company is now marketing. Their caution and foresightedness show in what Claiborne and Ortenberg have left behind: a solid company run by executives who grew up around the place. Now the two have set up the Liz Claiborne and Art Ortenberg Foundation (1989 assets: $10 millon) to support environmental causes.
JAMES E. BURKE (born 1925)
FEW MANAGERS of corporate crises have survived an episode of the perfect crime -- unsolved murder -- in which their product was the murder weapon and their customers the innocent victims. Indeed, James Burke of Johnson & Johnson may be the first CEO ever to have confronted such a horror -- twice. He managed it so well that he not only restored Tylenol, his company's single most important profitmaker, to preeminence, but he also enhanced the company's fine reputation in the process. During his tenure Burke also took J&J's earnings and stock prices to new highs. A naval officer in World War II, Burke became a member of the Harvard business school's class of 1949, along with Tom Murphy of Capital Cities/ABC, Peter McColough of Xerox, and other stars. He joined Johnson & Johnson in 1953 but quit after a year. ''The company was stifling, and I was bored,'' he recalls. ''We did not have a new-products division, and when I left I suggested we should have one.'' In three weeks he returned as the new division's head. Later he was called before Robert Woods Johnson and congratulated for a costly failure. ''We won't grow unless you take risks,'' Johnson told him. Says Burke today: ''Any successful company is riddled with failures. There's just no other way to do it.'' Rising as a marketing man, Burke became Johnson & Johnson's chief executive in 1976. The company was sailing along serenely when the deadly squall hit in 1982. Among its thousands of products, J&J had a world champion in Tylenol, which at the time had a remarkable 35% share of the $1 billion analgesic market and accounted for an estimated 15% to 20% of the company's earnings. Smart marketing and J&J's prestige explained the success, since Tylenol's only active ingredient is a compound that any pharmaceutical company can make. Burke was having coffee with the company's president when the bad news broke: Cyanide-laced Tylenol capsules caused, in the final count, seven deaths in the Chicago area. Burke ordered a recall of 31 million bottles of Tylenol and decided to stand by the Tylenol trademark (which industry analysts were insisting could not survive). But he believes his most important decision in those wild days was ''to go to the public directly.'' He looked concerned and candid on Donahue and 60 Minutes, making the latter appearance over the strong protestations of a colleague, who stormed out of Burke's office, slammed the door, and knocked a favorite painting off the wall. After the second episode four years later, when a New York woman died of cyanide poisoning, Burke ended the production of Tylenol capsules. Since then J&J has been marketing the product only in pills and caplets, compressed elongated ovals easy to swallow and hard to invade. Tylenol's share of market dropped from 35% to 7% after the Chicago murders, and took a second steep slide after the New York death. But despite new competition, Tylenol has climbed back to a 35% share -- and now the market has doubled to $2 billion. Further, the whole experience enhanced J&J's reputation as a socially responsible corporation. Says Burke: ''Every relationship that works is based on trust, and you don't develop trust without moral behavior.'' Murder is hard to beat for general interest, but there was more to Burke's tenure than coping with it. Following Robert Woods Johnson's precept, CEO Burke took chances and made mistakes (he bought Technicare, a maker of diagnostic machinery, and sold it at a big loss a few years later). But he did many more things right. He positioned J&J for the future with promising new products, such as Retin-A for wrinkled skin and disposable contact lenses. In 1988 the company was first among U.S. pharmaceutical makers in size and second only to Merck in profitability. And it ranks No. 1 among FORTUNE's most admired corporations in corporate citizenship, in no small part because of Jim Burke's leadership. Now he is transferring his talents to the Partnership for a Drug-Free America, a coalition campaigning against drug abuse.
CHARLES L. BROWN (born 1921)
TO TAKE APART a century-old American institution valued at $150 billion -- the darling of widows, orphans, and brokers -- and then to strip it down to a company one-fourth the size is not the usual lane to laurels. But that is the path that Charles Brown took in 1982 when he signed a decree ending the antitrust case against AT&T that had spanned eight years, four presidential Administrations, and five antitrust chiefs. Brown was virtually a son of Ma Bell. His mother was a telephone operator and his father a district traffic manager for the company's Long Lines Department. Brown started by laying cable for AT&T over summer vacations from the University of Virginia, where he majored in electrical engineering. After a stint on the U.S.S. Mississippi in World War II, he returned to AT&T, and during his career he moved freely around the U.S. ''I was willing and able to do lots of different jobs and to go anywhere,'' he says today. By the time he took over as chief executive in 1979, Brown had worked for AT&T in 23 jobs in ten cities. Yet in a curious twist, the biggest decision he ever made was one for which no hands-on experience could ever have prepared him. Behind Brown's determination to settle the antitrust case lay his conviction that the battle to protect the monopoly was doomed. With a sharpness that must have shocked the old guard, Brown told AT&T executives: ''Ma Bell is a symbol of the past . . . Mother Bell simply doesn't live here anymore.'' He concluded that to prolong the case would damage AT&T regardless of the ultimate verdict. Although an antitrust attorney was calling for ''severed limbs -- AT&T limbs -- on the table dripping blood,'' company lawyers, Brown says, ''were willing and able to continue defending the case. They thought we could win.'' Brown saw the situation differently. ''The case against us was going to drag on for an unknown length of time,'' he says today. ''The corporation couldn't plan for its future. I thought it was impossible for us to remain a regulated company in a competitive world.'' Brown agreed to divest not in ''a moment of revelation or instant of clarity,'' but out of a calm estimate of what had to be given up and what could be retained at the peace table. In the decree -- a seven-page statement that was the outcome of millions of pages of legal documents -- he gave the Justice Department those ''severed limbs'' by stripping away AT&T's regional phone companies. He retained for AT&T its big, renowned manufacturing and research subsidiaries -- Western Electric and Bell Labs -- and the long- distance phone lines, setting the company's future in the fields of data processing and long-range transmission. The slimmed-down company started life with $40 billion in assets and 365,000 employees. The years since divestiture have revealed the wisdom of Brown's decision. Local phone rates are higher, but the rise has not been steep over the six- year period. The seven Baby Bells have averaged an annual return to investors of 25%. After a painful period of disorientation, AT&T is achieving excellence in research and development, and its computer operating system is poised to become the industry standard. The company still maintains about 70% of the expanding market for long-distance phone service. The forecast Brown made when he became chief executive of AT&T still looks pretty good ten years later. ''Competition is here and it's growing,'' he said then. ''But the world has not come to an end. Nor does the sky show imminent signs of falling.''
JUAN T. TRIPPE (1899-1981)
AIR WAS ONCE the favored element for visionaries, and history has appointed Juan Trippe a captain among them. Born to the purple, Trippe took Pan American < into the wild blue, bringing along the fledgling until it became the world's leading airline. In the 1930s, Trippe made Pan Am the American flag carrier. Later he led the company and the nation into the age of commercial jets. Trippe attended flying school and learned radio communications and Morse code before entering Yale in 1917. After flying for the Navy in World War I, he raised money from fellow Yalies to start his first airline -- Long Island Airways -- buying seven surplus single-engine pontoon biplanes from the Navy for $500 apiece. In 1927, helped along by investments from such patricians as Cornelius Vanderbilt Whitney, Trippe took over Pan Am. There he made the world his oyster. He first piloted Pan Am to Latin America, originally with U.S. mail contracts and then with passenger service. As the company expanded, Trippe used to measure its reach with a piece of string he laid against a huge globe in his office. When Charles Lindbergh became America's hero, Trippe hired him to help establish the company's over- ocean routes, which soon included Pan Am's famed Clipper service to China. Flying together, the two men made a striking pair: Lindbergh, often the pilot, wearing a solemn gray suit, Trippe jaunty in white linen and saddle shoes. A dour and secretive man -- he kept ''even his most innocent intentions dark,'' FORTUNE said of him 50 years ago -- Trippe was smooth both as diplomat and politician. After World War II he lobbied Congress interminably, arguing that since other countries were subsidizing national airlines, the U.S. should make Pan Am America's exclusive international carrier. He failed to persuade, but that didn't stop him from becoming a herald of the jet age, pressing Douglas and Boeing to manufacture the big jets -- the DC-8 and the Boeing 707 -- that he believed the expanding traffic would bear. By the early 1960s Pan Am stood astride the globe, flying into 86 countries on six continents along a route system covering some 80,000 miles. In 1968 the airline had assets over $1 billion. Financial storms lay ahead, but by then Trippe had completed the visionary's long flight.
THOMAS J. WATSON SR. (1874-1956)
MASTER SALESMAN, master purveyor of homilies, tough taskmaster with a heart of gold, a stiff-necked man supported by a stiff collar and by a moral code of limpid simplicity, Thomas J. Watson did everything for IBM. He gave the company its name and made the name into the world's most respected , corporation, whose growth became an object of international envy. He also showed himself a giant among planners by fathering the man who led IBM to new heights after him. Tom Watson spent his boyhood in the thriving metropolis of Painted Post, New York (1989 pop: 2,196), where he acquired his belief in God and in what He expected of Watson. As a crack young salesman for National Cash Register Co., Watson had the first of several brushes with antitrust laws. He moved on to become president of Computing-Tabulating-Recording Co., which in 1924 he renamed International Business Machines and set out to transform into a kind of corporate clone of himself. High-minded and single-minded, Watson tried to imbue every member of ''the IBM family'' with his beliefs. At sales gatherings that resembled revival meetings, he urged his people on with platitudes that Polonius might have envied. ''Pack your todays with effort -- extra effort! Your tomorrows will take care of themselves'' and ''Do better than average'' were higher than average among them. He put adjurations to THINK everywhere, and was greeted with rousing company songs (With Mr. Watson leading / To greater heights we'll rise / And keep our IBM / Respected in all eyes). Behind that style of another age lay accomplishments that have lasted to the present. Watson's strategy of selling customers punch cards and renting the machines to tabulate and sort them endured profitably for decades. As early as the 1920s, IBM had installations around Europe and Asia, allowing Watson to crow that ''the sun never sets on IBM.'' By paying people well and eliminating piecework in IBM's factories, Watson, in son Tom's words, ''strove to blur the distinction between white-collar and blue-collar workers'' so that unions never cracked IBM in the U.S. Numbers sing Watson's praises louder even than the old songs. Expanding profits, sky-high multiples, a climbing stock price, increasing market penetration, a sales force of well-dressed and well-mannered tigers -- stir well, and you have Watson's IBM. In 1956, his last year, the company had revenues of $734 million -- 170 times greater than the sales of the company he joined in 1914. Throughout the years, Watson kept debt low, but still invested heavily in research and development. In the end, Old Tom left Young Tom with a marvel: a company with the reputation, the resources, and the skills to lead the way into the age of electronic computers -- and, for the 20 years of Young Tom's tenure, to dominate it.
SAMUEL GOLDWYN (1882-1974) LOUIS B. MAYER (1885-1957)
SAMUEL GOLDWYN and Louis B. Mayer were personal enemies and fierce competitors, and had talents as different as glorious Technicolor is from black and white. But they united in helping to create Hollywood. Moguls in a mythic land, they lived extravagantly, inventing a factitious world peopled by gorgeous chorus girls and chaste heroines and handsome leading men. For a few decades Goldwyn and Mayer -- members of a remarkable group of Eastern European Jewish immigrants who went to Hollywood -- made and exported more than just a product: They were purveyors of American culture. An impossible man to deal with, even in lotus land, Goldwyn had faith only in himself and in his remarkable powers of persuasion. In moments of depression, he would say, ''I've still got Sam Goldwyn.'' Although Marcus Loew, the man who assembled Metro-Goldwyn-Mayer, bought production facilities Goldwyn once ran, Goldwyn never worked at MGM. To share responsibilities for corporate decisions was beyond his ken. With his own small studio, he would recruit writer, director, and star; film and distribute a moneymaker; and then do it all over again, in a bravura performance even for Hollywood. Goldwyn's tellingly accurate gut feelings about the public's mood made him a virtuoso of Movieland. He came out with comedies in the Roaring Twenties; musicals crowded with ''Goldwyn girls'' swinging to the music of Irving Berlin and George Gershwin during the Depression; and films of heroic patriotism during World War II. He bought top writing talent, although he could hardly be called literary. Warned that Lillian Hellman's The Little Foxes was a caustic play, he replied, ''I don't care what it costs, buy it.'' Every malapropism ever uttered, starting with ''Include me out,'' was attributed to him. But many of his films -- Arrowsmith, The Best Years of Our Lives, Wuthering Heights -- were among the age's best. And Goldwyn's successes, like those of more orthodox entrepreneurs, were his own. Louis B. Mayer's first interest was managerial, not entrepreneurial or creative. After Loew installed him as boss at MGM, Mayer turned the studio into the industry's best. He hired directors and actors, arranged schedules, and dictated budgets for his films. Mayer was no genius, but he was a good enough manager to have in his employ Irving Thalberg, who produced hit after hit for MGM. Stars included just about ; everybody whose name ever glittered on a marquee: Greta Garbo, Joan Crawford, Clark Gable, Fred Astaire, Judy Garland, Cary Grant. Out came movies not yet forgotten, such as The Postman Always Rings Twice, North by Northwest, and, with David O. Selznick, Gone With the Wind. Mayer was enough a man of his time to vent imperial rages. But in a sometimes lunatic environment he usually managed professionally, taking MGM through good times and bad until he was ousted in a power play. After Mayer, MGM was to become little more than a collection of films on tape. Mayer was a famous boss; Goldwyn never had a boss. Together the two men, who spoke to each other rarely and loathed each other heartily, share the glory of the golden days.
ROSTER OF PAST LAUREATES
WILLIAM M. ALLEN ROBERT O. ANDERSON LEO H. BAEKELAND WILLIAM M. BATTEN STEPHEN D. BECHTEL SR. ARNOLD O. BECKMAN OLIVE ANN BEECH WILLIAM BLACKIE WILLIAM E. BOEING MARVIN BOWER EDWARD E. CARLSON ANDREW CARNEGIE WILLIS H. CARRIER WALTER P. CHRYSLER FREDERICK C. CRAWFORD TRAMMELL CROW HARRY B. CUNNINGHAM ARTHUR VINING DAVIS JOHN DEERE WALT DISNEY GEORGES F. DORIOT DONALD W. DOUGLAS PIERRE S. DU PONT GEORGE EASTMAN THOMAS A. EDISON CYRUS W. FIELD HARVEY S. FIRESTONE HENRY M. FLAGLER HENRY FORD BENJAMIN FRANKLIN ROSWELL GARST A. P. GIANNINI KING C. GILLETTE LEONARD H. GOLDENSON BENJAMIN GRAHAM FLORENCE NIGHTINGALE GRAHAM WALTER A. HAAS GEORGE H. HALAS JOYCE C. HALL EDWARD H. HARRIMAN H. J. HEINZ MILTON S. HERSHEY WILLIAM R. HEWLETT JAMES J. HILL CONRAD N. HILTON EDWARD C. JOHNSON II REGINALD H. JONES J. ERIK JONSSON HENRY J. KAISER W. K. KELLOGG DONALD M. KENDALL CHARLES F. KETTERING BERNARD KILGORE ROBERT J. KLEBERG SR. RAY KROC ALDEN J. LABORDE EDWIN H. LAND WILLIAM F. LAPORTE ALBERT D. LASKER ESTEE LAUDER ROYAL LITTLE FRANCIS CABOT LOWELL HENRY R. LUCE IAN K. MACGREGOR JOHN J. MCCLOY CYRUS H. MCCORMICK MALCOM P. MCLEAN RENE C. MCPHERSON FORREST MARS JACK C. MASSEY GEORGE J. MECHERLE ANDREW W. MELLON CHARLES E. MERRILL J. IRWIN MILLER GEORGE S. MOORE J. PIERPONT MORGAN HOWARD J. MORGENS S. I. NEWHOUSE ROBERT N. NOYCE ADOLPH S. OCHS DAVID M. OGILVY DAVID PACKARD WILLIAM S. PALEY JOHN H. PATTERSON WILLIAM A. PATTERSON J. C. PENNEY H. ROSS PEROT WALLACE R. PERSONS ABE PLOUGH WILLIAM COOPER PROCTER SIMON RAMO M. J. RATHBONE DONALD T. REGAN JOHN D. ROCKEFELLER JAMES W. ROUSE DAVID SARNOFF JACOB H. SCHIFF CHARLES M. SCHWAB IGOR I. SIKORSKY ALFRED P. SLOAN JR. C. R. SMITH CHARLES C. SPAULDING ALEXANDER T. STEWART JOHN E. SWEARINGEN JR. J. EDGAR THOMSON THEODORE N. VAIL CORNELIUS VANDERBILT DEWITT WALLACE LILA ACHESON WALLACE GEORGE WASHINGTON THOMAS J. WATSON JR. GEORGE WESTINGHOUSE FREDERICK WEYERHAEUSER ELI WHITNEY C. KEMMONS WILSON JOSEPH C. WILSON T. A. WILSON ROBERT E. WOOD ROBERT W. WOODRUFF OWEN D YOUNG