From Autocrat to Catalyst: How CEOs Have Changed, Along with the Businesses They Run

For 40 years, Chief Executive magazine has witnessed—and chronicled—the ways in which changes in leadership style, shareholder value, technology and globalization have framed the CEO’s world—and how they have adapted to it.


In their CEO bible of the time, In Search of Excellence, Tom Peters and Robert Waterman found common themes that they argued were responsible for the success of successful companies. Although Welch was not a subject of the book, he soon became identified with a number of the authors’ precepts, namely, a bias for action, getting close to the customer, autonomy and entrepreneurship, productivity through people and sticking to one’s knitting—staying with the business that you know.

Welch made unexpected visits to GE’s plants and offices and popularized so-called “rank-and-yank” policies, soon to be used by other corporations. Each year, Welch would fire the bottom 10 percent of his managers, regardless of absolute performance. He earned a reputation for brutal candor. He rewarded those in the top 20 percent with bonuses and stock options. He also broadened the stock options program at GE, extending availability from top executives to nearly one-third of all employees. Welch’s leadership style would dominate business thinking even after he stepped down in 2001.

There was hardly a bylined article by other CEOs that appeared in Chief Executive and elsewhere that did not extol his ideas and methods. Even business school academics were under his spell. Some might argue that there was a cult. For example, Welch adopted Motorola’s Six Sigma quality program in late 1995. Motorola had been using it for years under Paul Galvin, but it was Welch who got the glory. In 1993, he was named (by acclamation) Chief Executive of the Year by Chief Executive. By 1999, he was named “Manager of the Century” by Fortune magazine.

Since Welch, there has been no single CEO who has dominated the leadership landscape. The shift in thinking among CEOs was exemplified by the criteria used by the Chief Executive of the Year selection committee. When Welch served on the committee after he won the award, he insisted that vision should be among the most important criteria considered. And for many years, this view prevailed. Leaders such as Herb Kelleher, Andy Grove and John Chambers were extoled in no small measure because of the vision they possessed for their companies.

“By the middle of the 2000s, the judges began emphasizing a quality that was present in committee discussions, but not expressly included among the criteria: courage.

By the middle of the 2000s, however, the judges began emphasizing a quality that was present in committee discussions, but not expressly included among the criteria: courage. After the go-go days of the 1990s, CEOs were facing headwinds from global competition and pushback from government and society. Leaders such as Enron’s Jeff Skilling and Tyco’s Dennis Kozlowski were also giving CEOs a bad reputation.

CEOs were facing more risks, and business itself came under heavier scrutiny, particularly after the Great Recession in 2009. CEOs with courage, it was argued, were needed more than ever. In addition, the courage to do what’s best for the company along with the humility that comes with realizing that the CEO doesn’t have all the answers was emphasized by Jim Collins’ seminal 2001 work, Good to Great. Collins also stressed getting the right people on the bus, often trying them out in different positions, before driving strategy.

No doubt, Collins gave a framework for an emerging imperative, emphasizing the importance of employee engagement. The rise of the servant-leader was underway. Target’s Bill Ulrich, Xerox’s Ann Mulcahy, Yum Brands’ David Novak and AT&T’s Randall Stephenson, among others, were singled out for the award in part for their attention to the people and processes they fostered.

The rise of employee engagement and the CEO’s attention to talent management also saw a parallel rise in questioning what had been an unquestioned tenet for decades: the primacy of shareholder value. Every CEO since the 1970s repeated the platitude that his company was being run to maximize returns for shareholders. But as Cornell law professor Lynn Stout points out, corporate law poses no enforceable legal duty to maximize profits or share prices for investors.

In her book The Myth of Shareholder Value, she argues that corporations have longer-term interests such as providing rising wages, product innovation and customer satisfaction. Reflecting how a growing number of executives have changed their thinking, Stout says that the primacy of shareholder value thinking endangers not only investors, but the rest of us as well, leading managers to focus myopically on short-term earnings; discouraging investment and innovation; harming employees, customers and communities; and causing companies to indulge in non-value adding behaviors such as moving plants and jobs around the world.

“It is widely believed that the corporation exists to maximize profits,” says Ralph Gomory, former senior vice president of IBM and now research professor at NYU. “This is not only wrong, but destructive.”


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