FINDING NEW HEROES FOR A NEW ERA America's abrupt change in values is real. Greed is out. But this isn't the Sixties. Here are some innovative exemplars tackling our toughest problems with market forces.
By John Huey REPORTER ASSOCIATE Andrew Erdman

(FORTUNE Magazine) – OUR HEROES define our times. At the turn of the century, America elected a rough-riding President, Teddy Roosevelt, to spur along its Horatio Alger- fueled dreams of getting the job done, of producing. But by the dawn of the Jazz Age just 20 years later, the corrupt Harding Administration governed a society whose Gatsbyesque heroes -- gangsters and well-born polo players -- were best known for consuming. In the wartime Forties, industrialist Henry J. Kaiser epitomized the renewed premium placed on production. But by the Sixties, sybaritic, pajama-clad Hugh Hefner personified the primacy, once again, of consumption. History tells us that these things, with allowances for each era's eccentricities, run in cycles: production and consumption, boom and bust, war and peace, liberal and conservative, Democrat and Republican, yin and yang. Now, say the people who chart such cycles, we are embarked on a new round, one that holds profound implications for how our lives will unfold well into the next century. ''The shift from the Eighties to the Nineties has turned out to be about as abrupt as one can imagine,'' says Daniel Yankelovich, a longtime analyst of social trends. ''There is a yearning out there to rise above partisanship. People are tired of one group of people making points off another. And their intuition tells them that the trouble we're in is moral, that there really is such a thing as decadence.'' Whatever good may have been accomplished during the Reagan-Bush era, nostalgists for the gilded Eighties are now in the minority. Most Americans aren't likely to remember Michael Milken, Donald Trump, or Leona Helmsley -- symbols of that era's excess -- any more fondly than they recall those earlier models of excess: Abbie Hoffman, Jerry Rubin, or Timothy Leary. Historian Arthur Schlesinger Jr. believes that American politics also runs in cycles -- of roughly 30 years -- that start out activist-liberal, then wind down into conservatism. He says we are now on the cusp of one of those cycles: ''Clearly there has been a great change in national mood. These phases are partly generational, but they also occur when the country gets fed up.'' IN THIS CASE, both shoes fit. The baby-boomers have landed, in the person of Bill Clinton, whose inauguration should mark 1993 as the beginning of the next cycle as surely as the inaugurations of Franklin Roosevelt in 1933 and John F. Kennedy in 1961 marked their eras. And as Ross Perot demonstrated so vividly, the country is fed up. Positioning himself as the ultimate ''truth teller,'' Perot appealed to frustrated voters who see businessmen as greedy, workers (other than themselves) as lazy, and politicians as careerists beholden to special interests. If greed defined the Eighties, ideas, energy, and action so far look to distinguish the Nineties. Says Tenneco CEO Michael Walsh: ''This is going to be the decade of character, the 'Do It' Decade.'' Walsh, 50, sees the ability to make things happen as the competitive edge for individuals and companies. ''People who can make fundamental changes and wrestle big issues to the ground are going to be the real heroes.'' The Eighties had a few business leaders who might be called heroic, notably General Electric CEO Jack Welch. He built the prototypical global company -- with 120,000 fewer people on the payroll than when he started. Described early on by FORTUNE as a ''sharp-elbows executive,'' Welch approached personnel cuts in the early Eighties in a manner that earned him the moniker ''Neutron Jack.'' In the spirit of the times, it was a badge of honor. But that was then, when Jack Welch was a regular guest at the White House. Tenneco's Walsh, an early Clinton supporter, is now. A curious mix of tough- mindedness and soft-heartedness, Walsh is as emblematic of the new era's values as Welch was of his. The onetime running back on the Stanford football team exudes competitiveness. Like the President-elect, he is a Yale Law School graduate; he worked both as a public defender and as a U.S. attorney. More recently, he has overseen corporate restructurings, first at Union Pacific Railroad and now at Tenneco, so far eliminating a total of 25,000 jobs. He worries about the people losing their jobs. ''Layoffs have an enormous, unfair impact on working men and women, middle managers, all kinds of people whose skills are left behind by technology,'' says Walsh. ''In this decade we have to deal with the human, as well as the financial consequences of all this | change, and government is going to have to get involved.'' One reason we, as a nation, haven't been as hopeful about where we're headed as the statistics might suggest we should be is that we have run short on leaders, or heroes, who can convincingly demonstrate that they care about the rest of us. What we crave is a few good men and women willing to attack problems on whatever front they occur: business, labor, government, education, environment, health care, child development, technology, medicine. It remains to be seen just how effectively Bill Clinton can fill this role. But his campaign message was very much along the lines of ''we're all in this together.'' In the meantime, some less well known exemplars are out there already, applying fresh, market-oriented solutions to festering problems -- and doing what it takes to become the heroes of a new cycle. Worried about urban decay? Meet Ronald Grzywinski:

In the late Sixties, while heading a Chicago bank that financed some neighborhood redevelopment, Grzywinski realized that small-business loans alone weren't sufficient to solve the problems of the Windy City's ''underinvested'' neighborhoods. So in 1973, he and his colleagues bought the ailing South Shore Bank and transformed it into Shorebank Corp., a publicly held, comprehensive neighborhood development corporation with assets of over $200 million and annual earnings of around $2 million. Today, Shorebank still lends money to mom and pop entrepreneurs and real estate developers in struggling neighborhoods, and its fiscal track record would strike envy in many a less civic minded bank. Last year it lent $33 million, mostly to minority developers; its average loan loss rate over the past five years is 0.05%, vs. an average rate of 1.32% for all banks. Shorebank's nonbank subsidiaries include a for-profit real estate development company, a nonprofit business training and development center, and a consulting firm. The corporation acquires or renovates about 1,000 apartments a year in seriously deteriorated areas, spearheading the way for small developers -- without public subsidies -- to follow. Keith Banks was one of the first Chicago businessmen to benefit from Shorebank's approach. Grzywinski's institution gave him a $43,000 loan in 1975 to restore a dilapidated South Shore apartment building; he has since gone on to rehabilitate 11 other buildings in the area. Banks also gives renovation and finance advice to other developers looking to get into the rehab market. Grzywinski, 56, a former computer salesman, admits that his venture is inspired by Sixties-style idealism but sees nothing out of the American tradition in its mission. ''Our forefathers invested in things like hospitals and universities to take care of public needs. I think our generation is figuring out that it has to create permanent development institutions to take care of today's needs.'' TODAY'S GENERATION of leaders has also figured out that many governmental institutions are as badly in need of restructuring as corporate America ever was. David Osborne, co-author of the surprise best-seller Reinventing Government, calls for revolutionizing government at all levels in such a way that bureaucrats find incentives to start acting like private-sector entrepreneurs. Bill Clinton calls the book a must-read ''blueprint'' for revitalizing government. In the lingo of our times, Osborne describes his blueprint as a ''new paradigm'' that ''is both post-Reagan and post-liberalism. It is activist but much more market-oriented than in the past. It emphasizes power and choice, not big government.'' In other words, it is not necessary to spend billions solving society's grandest problems to be a hero in this era -- you don't have to cure AIDS, save the ozone layer, or make a leap in quantum physics. It's enough to find and implement solutions to local problems. Like Ron Jensen, who figured out a better way to pick up garbage.

Jensen, the 59-year-old head of Phoenix's Department of Public Works, has spent the past 15 years proving that words like ''productivity,'' ''competition,'' and ''the bottom line'' are as important in the public sector as in private enterprise. A devoted aficionado of business management theory, he pioneered an unusual system of public-private competition to address the city's maintenance needs and saved taxpayers more than $20 million on solid-waste disposal alone. His theory was simple enough: Pit the city's workers against private industry in competitive bidding. Originally, his department lost Phoenix's garbage contracts to Browning-Ferris Industries, which agreed to hire most of the city workers whose jobs it had replaced. (Jensen redeployed the rest, though he says that flexible unions and high employee turnover helped the transition.) To win the contracts back, Jensen started running Public Works more like a competitive enterprise, introducing cost-control accounting procedures, forming customer service teams, and awarding incentive bonuses to employees whose ideas improved productivity. Says Jensen: ''Today we know the cost per house per month of garbage collection; we know the cost per mile of vehicle maintenance; we know the cost per hour of running heavy equipment.'' It took Public Works six years to win back all five garbage districts from the private sector. It lost one this fall, when Waste Management reclaimed the North District with a very low bid. ''I'm sure it's a money-losing bid,'' says Jensen. ''But we'll learn from them just like they learned from us, and we'll bring the cost down again.''

At the heart of such success stories lies a willingness to ignore traditional borders, a trend of great interest to those trying to divine what comes next for corporate America. ''All kinds of boundaries are collapsing: social, political, economic, informational,'' says Steve Weiss, chairman of Quest & Associates, a marketing think tank serving clients like Coca-Cola, GM, and Anheuser-Busch. ''That's why things are going to be so different.'' Weiss cites examples that run from the mundane to the complex. Shoppers used to line up for department store sales; now a whole new channel of distribution -- warehouse clubs -- has broken down the border between retail and wholesale. People used to watch Ed Sullivan every Sunday at 8 P.M. on CBS; now the arrival of VCRs and cable stations has all but obliterated any boundaries governing when and where we watch what. Government leaders used to operate within discrete social, political, and economic boundaries; today we recognize that their efforts must all be part of an integrated policy. ''As the old silos collapse, the new heroes are going to be people with ideas,'' says Weiss. MANAGEMENT guru Peter Drucker would agree. In his forthcoming book, Post- Capitalist Society, he maintains that the central means of production in our economy is no longer capital, natural resources, or labor. ''It is and will be knowledge,'' he says. ''Instead of capitalists and proletarians, the classes of the post-capitalist society are knowledge workers and service workers.'' The challenge is to create more knowledge work, while maintaining the dignity of service work. At the same time, we must get those who don't work at all boosted at least to the level of service jobs. Lee Bowes and Peter Cove are addressing that challenge by putting welfare recipients to work.

A wife-husband team, Bowes, 41, and Cove, 52, run a private for-profit firm called America Works Inc., which places welfare recipients in long-term private-sector jobs. Unlike a traditional employment agency, their 20-person firm in New York City subjects candidates to from one to eight weeks of screening, orientation, and training before sending them to interviews. They teach such basics as workplace demeanor and appearance, as well as word processing and basic computing. Even then, the candidate isn't hired right away. After placement at a company, job candidates remain on welfare and Medicaid for four months, during which time they receive a small dispensation from their employer via America Works. The hiring company pays no benefits and only a small service charge to America Works during this period. Meanwhile, America Works staff members run interference for the job candidates to help smooth the transition from public assistance to self-support. They arrange day care, schedule welfare case worker meetings, even pick up welfare checks -- anything to avoid interference with their charges' work schedules. If a candidate proves herself capable and willing, she goes off public assistance and on to full salary and benefits after four months. The average starting salary for clients placed by American Works is $15,000 a year. America Works gets a placement fee from the state of between $4,000 and $5,300. Its reps, who receive a commission based on the number of people they place, communicate regularly with their clients' supervisors for up to a year. Including a $1,400 tax credit to which the hiring company is entitled, it realizes a savings of up to $4,000 over the fees it would pay to a conventional placement firm. The big winner is the taxpayer, given that the typical welfare case costs the government $23,000 a year. So far, America Works has found employment for some 4,000 welfare recipients in New York and Connecticut. A government study has shown that 85% are still on the job at least one year after being placed. Cove believes it would be feasible for large industrial corporations to adapt America Works' principles and create workable in-house placement systems. ''Contrary to popular belief,'' he says, ''most people don't want to be on welfare. Trouble is, there aren't enough incentives to get them off.'' That a successful small company could be launched purely on the idea of getting people off welfare seems paradoxical, but it says a lot about today's evolving social compact between business and the rest of society. Just because people still want to crusade against poverty doesn't mean we're returning to the antibusiness Sixties. The lessons of the boy wonders -- Bill Gates and Steve Jobs -- weren't lost on many who lived through the Eighties; today just about everybody is an aspiring entrepreneur. Here's the zeitgeist: It's okay once again to pursue a liberal objective, but it's much better, maybe even heroic, if you have an idea that earns you money, maybe creates jobs, and saves taxpayers' dollars. Like Bowes and Cove and Jensen. Those who pursue such ideas -- call them social entrepreneurs -- now feel they are about to stop paddling upstream and, in fact, become mainstreamed by the confluence of the two great currents that have run through American domestic politics since F.D.R.'s time: to spend or not to spend on social causes. The last great social spender, Lyndon Johnson, left office a quarter of a century ago. Jimmy Carter, despite his liberal image, ''did not really believe in government,'' argues Arthur Schlesinger, who notes that although Clinton does, his actions will be severely limited by the deficit legacy of his predecessors. Ironically, what seems destined to develop is a much more intimate relationship between government and big business, aimed at addressing many of our overarching problems. Michael Walsh isn't afraid to say that government has a clear role to play in helping America manage change, from retraining workers to downsizing the Defense Department to devising a new health care system. ''I have never bought the simple-minded view that there's a tremendous chasm between business and the more institutionally collective side of ourselves that we call government,'' says Walsh. If government should have a greater responsibility toward business and its victims, a growing number of leaders also believe that it is in the long-term interest of business to assume more responsibility toward society. It has been less than a decade since Peter Ueberroth, the former baseball commissioner and travel agent, achieved fame by staging a profitable, market-driven Olympics in Los Angeles. Now he heads an organization whose name is sadly self- explanatory: Rebuild L.A. Ueberroth, a conservative Orange County resident, says he seeks investment, not charity, and his aim is to revitalize the riot- torn areas of America's most sprawling megalopolis by proving to business that it can make money in the inner city. Across the continent in Georgia, Jimmy Carter -- driven more by his religious mind-set -- is recruiting companies to get involved with his Atlanta Project, an effort to attack a whole host of urban ills. Perhaps the most ambitious of these self-styled urban reformers is James Rouse, the 78-year-old developer whose for-profit creations include the planned community of Columbia, Maryland, and a whole generation of downtown- reviving Festival Marketplaces such as Baltimore's Harborplace and Boston's Faneuil Hall. His latest project is an all-out attempt to revitalize the blighted 72-square-block area of Baltimore known as Sandtown. Rouse provided the leadership to help organize the neighborhood into task forces addressing such issues as education, family support, community spirit, health care, and crime and safety, and some redevelopment already has begun. Rouse doesn't mince words. ''I see the central cities not just as a disaster, but as a severe threat to the survival of our civilization,'' he says. ''If we don't change these dreadful conditions -- joblessness, homelessness, drugs, crime, school dropouts -- the erosion of our way of life will eventually leave us unable to compete, and this country will go right down the chute.'' Rouse says those who have chosen to abandon the cities don't understand how big a threat urban decay poses -- morally, economically, and financially. ''The cost of these conditions is around $750 billion a year, yet there's a pervasive state of mind that nothing can be done about them,'' he says. His Sandtown goal is to demonstrate that it is not only possible, but economical, to transform the conditions of poverty. ALL THESE contemporary crusades have one element in common: persuading disparate groups of people to work together as teams. ''Participation'' is the watchword these days, says Sara Little Turnbull, the 78-year-old director of the Process of Change Laboratory at Stanford University's graduate school of business. ''The best companies are those that do fresh new things with teams. The great leaders of tomorrow will be the ones who understand how to get everyone to participate. Unless we find a way to empower people to want to get together, the participation is going to happen anyway -- only it may be unpalatable for society.'' There are few better examples of Turnbull's beneficent participation than that mounted by Warren Valdry, a 55-year-old Los Angeles real estate developer.

As president of 100 Black Men of Los Angeles, a consortium of upper-middle- class African Americans dedicated to putting something back into the community, Warren Valdry was already a ''participant'' in 1985 when he read a report that disturbed him. It showed that less than 4% of California's annual 23,000 African American high school graduates had the grade average and college-prep courses necessary to attend the state's public university system. ''I felt it was unacceptable to have that many kids falling through the cracks,'' he says. So he founded the Young Black Scholars program. Working with teachers in L.A. County to identify 2,000 black high school freshmen who had ''shown some promise,'' the program created a support network that included afternoon and weekend tutoring workshops in writing, algebra, and taking standardized tests. To further motivate the kids, YBS holds a yearly ''Slam-Dunk'' awards dinner; guests have included such celebrities as Bill Cosby and Sidney Poitier. In 1990, 1,700 of the Young Black Scholars graduated from high school; of those, some 1,300, or 65% of the total, had earned a B or better average. Most are now attending 133 different colleges and universities around the country, some of which have YBS support groups. And YBS has launched programs for three other classes of freshmen. One Hundred Black Men footed the original $250,000 cost of the program, which has since attracted the support of state, corporate, and philanthropic sponsors. Valdry is convinced that forming academic support and motivational groups is more important than merely finding college funds for black urban youth. ''Dammit,'' he says. ''Don't just have another scholarship fund-raiser. Get their minds ready!''

If ''giving something back'' is a component of heroism these days, Daniel Yankelovich has spotted two more elements that seem closely related: ''breaking the mold of self-centered careerism to do something you think is important,'' and ''sacrificing something important for principle -- like money or comfort.'' Moving to a job as principal of a traumatized inner-city school in California from her cozy job as head of the public high school in privileged Bronxville, New York, probably qualifies Judy Codding, 48, on both counts.

Codding came to racially mixed, financially strapped Pasadena High in 1988, she says, because she believes that ''how go our urban schools, goes our nation.'' And what she found wasn't going well: a 36% dropout rate, rampant problems with reading and writing, drugs, teen pregnancy. Knowing that ''adolescents need to feel connected,'' Codding took steps to ''personalize'' education. First, she reorganized the 2,200 students into five units called houses, each with its own humanities, math, and science teachers, student advisers, and secretaries. One house is specifically geared to bilingual students. Each morning students meet with their house advisers to discuss whatever seems relevant to their education: home problems, academic questions, peer pressures. Two years ago, with an eye toward her students' postgraduate life, Codding forged an unusual alliance with the local printing industry and created the Graphic Arts Academy of Pasadena High. Students who enroll in this division receive community college credits and are promised a job with a printing company upon graduation. Those who don't choose this route must work jointly with their family and house advisers to make firm plans about where to go after high school, be it college, the military, or a job. Codding doesn't want her kids to meet the typical fate. ''Most kids,'' she says, ''walk out of urban high schools and onto the streets or into dead-end, hamburger flipping jobs.'' She has achieved some results to crow about. Daily attendance has increased to 92% from 68%; only 25% of the students get grades of D or below, vs. 50% when Codding arrived; and Pasadena High now ranks around the 35th percentile on standardized math and reading tests, up from the 20th percentile. All of these new heroes are fairly ordinary people making extraordinary progress on problems that many among us deem hopeless. They have a lot in common: Ideas. Action. Character. A capacity for sharing leadership. Teamwork. Respect for market forces. Sacrifice. Participation. Just the qualities needed to renew America.