FORTUNE selects Henry Ford BUSINESSMAN OF THE CENTURY

GE's Jack Welch Named Manager of the Century

Culminating its look back on the century in business, FORTUNE magazine has named automobile giant and entrepreneur Henry Ford Businessman of the Century-beating out runner-up Bill Gates of Microsoft-and has chosen General Electric's Jack Welch Manager of the Century. Ford was among four finalists chosen from a series of profiles on the Twentieth Century's business greats that appeared in FORTUNE starting in the April 26, 1999 issue. The other finalists who were recognized for having dominated their respective quarter century in business were: General Motors' Alfred P. Sloan, Jr. (1876-1966), IBM's Thomas J. Watson (1914-1993), and Microsoft's Bill Gates (1955- ). "Businessman of the Century" co-written by FORTUNE Executive Editor Peter Petre, FORTUNE Editor at Large Brent Schlender, and Thomas Stewart and Alex Taylor III of FORTUNE's Board of Editors, appears in the November 22 issue of FORTUNE. The article is available on www.fortune.com beginning at 8:30 a.m. ET on Monday, November 1.

As Alex Taylor writes, Henry Ford (1863-1947) didn't invent the automobile, but he invented the automobile business. And though he was the worst manager of the four finalists, Ford was also the greatest managerial thinker: "No fewer than three of the biggest management brainstorms of the century happened in Ford's head: the idea of a moving assembly line, the idea of paying workers not as little as possible but as much as was fair, and the idea of vertical integration that made Ford's River Rouge plant the chief wonder of the industrial world....[Ford] was a builder of industry that transformed the very land we live on; the first to create a mass market as well as the means to satisfy it; as great an entrepreneur as we've ever seen."

At a time when the automotive landscape was dominated by Cadillacs, Packards and Pierce-Arrows that cost several thousand dollars, Ford's genius was to make cars simple, solid and inexpensive necessities. That philosophy paid off when Ford's $850 Model T became the most successful vehicle ever produced in America which helped propel Ford Motor Company to become the largest industrial organization of the early 20th century. As Stewart explains, however, Ford's impact on Twentieth Century business was perhaps most important for the immeasurable impact he had on American life. "As Ford adapted the emerging principles of mass production to the automobile and hired tens of thousands of workers to put those principles into practice, he gave rise to an entirely new phenomenon: the blue-collar middle class." Stewart continues: "In creating a huge body of un-like-minded people who shared not only their work but many social and economic interests, Ford, to his lasting regret, spurred the development of industrial labor unions."

In describing Ford's nomination as Businessman of the Century, FORTUNE makes clear that its decision was entirely shaped by the legacy he left to the world of Twentieth Century business and to America as a whole, regardless of the personal failings that ultimately stained his reputation: "In his latter years he surrounded himself with goons, spouted ugly anti-Semitic bile, and he left his company in terrible shape."

Businessman of the Century runner-up Bill Gates is described as perhaps the shrewdest business strategist of the last quarter of the century: flummoxing much larger competitors like IBM, stealing a march on brilliant IT innovators like Apple and Netscape, and unlike most techno-entrepreneurs of his generation, using his skills as an imaginative manager to keep pace with his company's break-neck growth. According to Brent Schlender, Gates' genius lies in the fact that Microsoft Windows, and its predecessor, the MS-DOS PC operating system, were the high-tech equivalents of Ford's Model T. "They may not have been the sleekest or most elegant pieces of software, but Gates figured out how to make them almost universally used, and they transformed the entire IT world." And, Gates' decision to make Microsoft the first company to use stock options as an integral element of employee compensation minted literally thousands of millionaires, not to mention a handful of billionaires, and cemented employee loyalty in an era and industry rife with job-hoppers.

Alfred P. Sloan, Jr. earned his place among the top four finalists for Businessman of the Century for having created the modern, divisionalized corporation and showing the world how to make it work. As president of General Motors, Sloan invented the art of managing a large corporation, first by creating a corporate office to allocate resources and coordinate the company's operating divisions, second by linking the divisions by means of promulgating a set of "Standard Procedures" to guide operations, and finally by creating interdivisional councils where executives and staffs could share ideas or find ways to exploit economies of scale. According to Tom Stewart, "Every leader since stands on his shoulders-up to and including FORTUNE's Manager of the Century, Jack Welch, the ultimate practitioner of the art Sloan invented."

Thomas J. Watson, Jr. was lauded by FORTUNE for being one of the great entrepreneurs of the first half of the century. He not only put IBM on the map, the company he shaped was also the greatest success story of America's postwar boom. During his tenure, IBM created more wealth for its shareholders than any company in business history-an achievement that stood until the bull market of the 1990s, and one that led FORTUNE in 1987 to declare Watson "arguably the greatest capitalist who ever lived."

In selecting the Businessman of the Century, the editors of FORTUNE sought to choose someone who was "celebrated at the time he labored, and is still renowned today-that is, a person who was conspicuously successful in both the short run and the long. He should have been captain of an enterprise of some scale, for in this century, size matters. And the Businessman of the Century should have been part of one of the Businesses of the Century, of an industry characteristically Twentieth Century."

In "The Ultimate Manager," FORTUNE Editorial Director Geoffrey Colvin describes how the genius in Manager of the Century Jack Welch's thinking is that he returned power to the little people: the worker and the shareholder. Welch transformed GE and multiplied its value beyond anyone's expectations: from a market capitalization of $14 billion to more than $400 billion today-making GE the second-most-valuable company on Earth. As Colvin writes: "Welch wins the title because in addition to his transformation of GE, he has made himself far and away the most influential manager of his generation....As the most widely admired, studied, and imitated CEO of his time, Welch has enriched not only GE's shareholders but the shareholders of companies around the globe. His total economic impact is impossible to calculate but must be some staggering multiple of GE performance."

Welch took the reins at GE at a time when the old, manufacturing-based world started giving way to the new one. According to Colvin, Welch leads the annals of management history not for anticipating the new world's changes ahead, but for acting on them: "His great achievement is that having seen it, he faced up to the huge, painful changes it demanded, and made them faster and more emphatically than anyone else in business. He led managers into this new world, which we still inhabit, and just as important, he showed business people everywhere a method of attacking change of any kind."

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