Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Executive Update Date: Wed, 4 Nov 92 12:45:02 EST Message-ID: <10.1992Nov4.124502@AmeriCast.com> 11/4/92 TITLE Executive Update #m#sw#m#Does A CEO Really Need Deep Industry Experience? Some Say Background In Broad Range Of Sectors Can Be More Useful Farrell Kramer Your chief executive has just retired, and as chairman of the board of your financial services company, it's your responsibili- ty to decide who will be the next CEO. The search committee, after several months, has narrowed its short list to just two names. One has been with your company for 30 years, since gra- duating from college, Leadership and knows the business inside and out. The other is an outsider, a manufacturing executive who has turned around three divisions at two different companies, both in industries that had fallen on hard times. Whom would you choose? According to executive recruiters, management consultants and others familiar with such issues, the second executive these days may have an edge on the first. Directors, pushed by an ever-more globalized world economy and tough times that demand effective leadership, are turning with increased regularity to executives with outside, or multi-industry, experience. The days when exe- cutives could expect to work their way up the corporate ladder all the way to the top seem to be numbered. "GM is the biggest, most prominent current example," said Fred Adair, a vice president at Mercer Management Consulting. "The insularity of being born and bred in one industry is not going to give you the perspective you need as a leader," he added. The shakeup at General Motors Corp., in which Chairman and Chief Exe- cutive Robert C. Stempel resigned under pressure from an unhappy group of outside directors, provides a good example of what can happen when a company falls behind the times. GM, which has posted staggering losses for the past two years, throughout its history stayed pretty much within its own ranks when filling top management slots. It took a movement led by outside director John G. Smale, former chairman and CEO of Procter & Gamble Co., to shake things up. On Monday, fife Smale was named to succeed Stempel as chairman of the giant au- tomaker, while GM President John F. "Jack" Smith was given the title of CEO. "They've got to bring some creative thinking into the organiza- tion," said William J. Fife Jr., chairman and chief executive of Giddings & Lewis Inc., the nation's largest provider of industri- al automation equipment and machine tools. Outside influences, such as the views of an executive who has worked in other indus- tries, he adds, can generate such creativity. It can help GM, and it can help companies in a host of other industries as well. And Fife should know. He marched through much of the manufacturing sector before taking over as head of Giddings & Lewis. His resume includes varied industries: steel, glass, copper and brass, and the oil patch. He's a strong advocate of the multi-industry ap- proach. "I was a customer of machine tools, and now I'm a vendor of machine tools," he said. "I can see both sides of the fence." Companies looking to fill top leadership slots are coming to the realization that breadth breeds creativity. Knowledge of other industries can help in forming strategic alli- ances or finding new markets for goods. Multi-industry experience offers other advantages as well. "Boards are more attuned to what is needed in the CEO than they have been in the past," said Joseph E. Griesedieck, U.S. managing director at SpencerStuart,#m#cq#m# an executive search firm based in New York. "There is a trend toward getting executives with multi- industry experience," he added. The desire in general is to find executives who can think strategically and bring innovation and flexibility to the job, says Emanuel N. Monogenis, a managing partner at Heidrick & Struggles Inc., a Chicago-based executive search firm. In banking, for example, such individuals are being found more and more in industries like consumer-products manufacturing, he adds. "Board members are asking to see non-financial services executives who can come in as CEOs and chief operating officers," Monogenis said. "What they're seeking desperately is a certain attitude, a certain focus and orientation and a certain quantita- tive appreciation for the cost side of the business." An executive with such a set of general skills then can learn the specif- binder ics of financial services through effective use of the company's staff. Gordon Binder, chairman and chief executive of biotechnology leader Amgen Inc., says multi-industry experience can be useful, but warns that the experience must be relevant. He adds that skills such as financial management may be more easily translated than others. Binder himself has been through various industries, including autos, financial services and high- tech manufacturing. "I certainly learned things in other industries that have been helpful to Amgen. That's true," Binder said. "The auto industry has a tremendous emphasis on financial planning, and I think we have put more emphasis on that (at Amgen) than some other com- panies do," he added. As increased competition makes good leaders all the more valuable, many believe executives with broad experience will be in greater demand. This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM