World class: non-American CEOs are having a big impact at traditional U.S. companies.

Author:Buss, Dale
Position:Global
 
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In the middle of winter, the fact that Carlos Gutierrez isn't from the Midwest is evident in the contrasting appearance of the tall, debonair, Latin chief executive officer of Kellogg and the palefaced natives who work for him in down-town Battle Creek, Mich. Occupying his inner sanctum are people like Executive Vice President King Pouw from Indonesia and a rugby player from Australia, CFO John Bryant. Clearly, it's a globally spawned cast directing this iconic American company from their redoubt in the U.S. heartland.

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But intriguingly, says the Cuban-born Gutierrez, he and his lieutenants have so far made the greatest impact revitalizing Kellogg's U.S. operations, not its overseas divisions. Kellogg had lost the domestic market share lead in its core cereals business to General Mills and was bereft of significant new products before Gutierrez became CEO in 1999. He says his geographically diversified resume helped him recognize an underinvested market when he saw one. "We were getting so caught up in the emerging-market craze that we were almost unconsciously taking money out of the U.S. and putting it in markets where the returns weren't going to come for 20 or 30 years," says Gutierrez, who joined Kellogg de Mexico in 1975 as a sales rep. "The U.S. was still our biggest market, but we weren't

treating it that way. We had to win in the U.S."

So it goes with the growing number of foreign-born CEOs of American companies in an arrangement that very often yields great benefit--but not always in predictable ways. Although evidence is only anecdotal, it's clear that the number of non-native CEOs heading U.S. corporations in traditional industries such as food processing and heavy manufacturing is growing. They bring a fresh focus to long-festering challenges in the U.S. market as well as help for their companies' international operations.

What they offer is a cultural sophistication that allows them to speak the languages of different constituencies and build support for change. "The competitive game now is: How rapidly can you develop and diffuse innovation?" says Christopher Bartlett, a professor at Harvard Business School and a ranking expert in the management of multinational enterprises. "Maybe the newest technology in your industry isn't from America but from Germany or Japan. A new competitive threat may not be in your own backyard but in a less-developed country.

"So if you're not sensing those things--using overseas markets as sensory mechanisms as well as delivery mechanisms--your company will be behind," adds Bartlett, who resides part of the year in Australia. "Sometimes, if you've lived your whole life in the United States, you don't have as much sensitivity to all sorts of opportunities."

Cultural Conflict or Comfort?

To be sure, an international background isn't enough to guarantee success. Witness, for example, Jacques Nasser, a Lebanese who was raised in Australia and crisscrossed the world for Ford Motor. He was sacked as CEO by Ford's old guard in 2001 in the wake of the calamitous run of deaths and injuries in Ford Explorers equipped with Firestone tires. But the deeper issue may have been that...

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