What Great American Leaders Teach Us

A new database on great American leaders offers surprising insights on the nature of leadership. A Q&A with Tony Mayo, executive director of the Harvard Business School Leadership Initiative.
by Sean Silverthorne

Are there certain characteristics that all leaders possess? Could Wal-Mart founder Sam Walton be equally successful today running another company?

Harvard Business School's Leadership Initiative is attempting to answer these and other questions about the nature of leadership through its formation and study of the Great American Business Leaders database. The project identified and analyzed the accomplishments of some 860 top executives in the 20th century, and results are now starting to emerge. A portion of the database is free and accessible to the public; scholars can obtain access to the overall database.

Tony Mayo, executive director of the Initiative, describes the project and what business leaders can take away from it in this interview.

Sean Silverthorne: Can you describe the genesis and mission of the Leadership Initiative?

Tony Mayo: Chaired by Professor Linda Hill, the Leadership Initiative was organized to be a catalyst for research on leaders and leadership, and to design effective leadership development programs that are relevant for the 21st century. The goal of the Initiative is to support Harvard Business School's overarching mission to educate leaders who make a difference in the world. To that end, we search for opportunities to contribute to the study of leadership and the development of content for the MBA Program and various executive education offerings. Throughout our work, we seek to bridge the gap between the theory and practice of leadership.

Q: What is the history of the Great American Business Leaders database?

A: The Leadership Initiative rests on three avenues of research—legacy leadership, emerging leadership, and global leadership. The Great American Business Leaders database was developed as part of our flagship research on Leadership Legacies. Professor Nitin Nohria and I began to create the database approximately three years ago as part of an effort to understand historical business leadership patterns. Our initial goal was to develop a small canon of business leadership, which could help us better understand the evolution of business and specifically, the individuals who shaped it. An appreciation for the history of a field and its great masters is at the core of most liberal arts programs. We thought, why should the study of business be different? Shouldn't we strive to understand the "masters of enterprise"? Who are the captains of industry that have forged the foundation upon which business stands today?

Over the course of the last few years, we set out to address these questions. In the process, we created a database of 860 individuals who stand out for their contributions to business and society. Our plan was to select a small subset of these individuals to be included in a canon of business leadership. The result was far different; we decided to study the entire database.

Q: What criteria were used to select the leaders?

A: The candidates included in our pool of 860 business leaders had to have been a Founder or Chief Executive Officer of a U.S.-based company for at least five years between 1900 and 2000. As such, any CEO whose tenure began after 1996 was excluded from this survey. For the earlier decades of the twentieth century, we drew on the work of Professor Richard S. Tedlow and post-doctoral fellows Courtney Purrington and Kim Eric Bettcher. In their working paper, The American CEO in the Twentieth Century: Demography and Career Path, they chronicle the evolution of the CEO title, citing its first official use in business in 1917. In accordance with their research findings, we have chosen to designate an individual as a business leader (i.e., CEO), regardless of specific title, if he or she was regarded as the primary and, in some cases, sole leader in setting the company's direction, allocating resources, and monitoring its progress.

Beyond this five-year tenure requirement, business leaders had to have demonstrated at least four consecutive years of top financial performance, and/or they had to have led a business or service that changed the way Americans lived, worked, or interacted in the twentieth century. Given the sparse availability of easily accessible and complete financial information across the twentieth century (especially pre-1925), a multi-tiered financial analysis approach was utilized: (1) Tobin's Q Performance (market to book value); (2) Return on Assets Ratios; and (3) Market Value Appreciation.

A business leader's ability to make sense of his or her contextual framework and harness its power often made the difference between success and failure.

Measuring a leader's impact on society, on business, or on both is admittedly a subjective task. More than half of the business leader candidates included in our candidate pool of 860 did not qualify based on our financial thresholds. The bulk of the business leaders on our list were culled from an extensive review of historical biographical references and business rankings. The rankings included historical lists by Fortune, Forbes, Time, The Wall Street Journal, and the New York Times, business encyclopedias, and other sources. In many cases, these individuals were cited for the advances that they made in American business—opening new markets, creating new industries, instituting modern management practices, or advancing technology. Though dominated by Fortune 100-type company leaders, the list is much broader. It endeavors to capture impact beyond simply size.

Q: What was the most surprising finding or findings?

A: We initially set out to identify the 100 greatest American CEOs and founders of the twentieth century. To that end, we even surveyed over 7,000 HBS alumni, gathering their perspectives on the meaning of greatness and their votes on business leaders. While we did gather these findings, we were more intrigued by our analysis of the full set of business leaders. When we examined our database of great business leaders by the decades in which they served their companies, the role of contextual intelligence became an increasingly compelling proposition.

Q: What is contextual intelligence, and why is it important?

A: Contextual intelligence is the ability to understand the macro-level factors that are at play during a given period of time. For our study, we looked at six contextual factors that shaped business during the last century and continue to shape it in our present century: government regulation, labor, globalization, technology, demography, and social mores. Within each decade of the twentieth century, these six factors ebbed and flowed, coalescing in unique combinations. A business leader's ability to make sense of his or her contextual framework and harness its power often made the difference between success and failure.

Q: What were the main conclusions about leadership that HBS researchers drew after studying the full database?

A: Having identified our pool of great business leaders, we organized the data by the decades in which business leaders initially came into the CEO position or founded their companies. We chose to evaluate candidates based on the beginning of their CEO tenure in an effort to understand the contextual elements and influences that they faced at the outset. By analyzing our pool of great business leaders by decade, three distinct leadership patterns or archetypes emerged. We called these leadership archetypes Mold-Makers, Mold-Breakers, and Mold-Takers.

Makers essentially created or enhanced businesses that took advantage of the coalescing context of their times. They built businesses that thrived in a specific contextual framework and modified their operations and leadership styles as the contextual factors evolved. Some admittedly were in the right place at the right time, but it was often more than luck that made the difference between being merely successful and being wildly successful. In contrast, Breakers were business leaders who succeeded in breaking through the contextual mold of their times. They sought not to be constrained by the present conditions of their market; they were able to envision a future landscape for success. Finally, Takers were business leaders who saw value in industries and/or businesses that others thought were no longer viable. Takers took advantage of industry consolidations and often breathed new life into companies; extending business value well beyond what others thought was possible.

For example, in the 1910s, Frank Phillips—who founded Phillips Petroleum—was a typical Mold-Maker. He took advantage of the burgeoning automobile industry and especially the need for both natural gas and oil to support the American effort in the First World War. When the war ended, Phillips was well positioned to meet the pent-up needs of consumers. His counterpart, Clarence Saunders, who founded Piggly Wiggly, was a consummate Mold-Breaker. He fundamentally revolutionized grocery shopping by converting the local general store into a self-service model by making products accessible, installing checkout counters, and expanding product selection by tapping into national branding. Saunders, in essence, built the prototype of today's supermarket long before it became commonplace. At the other end of the spectrum, William Fairburn, a Mold-Taker, reinvented the century-old match industry when he took the helm of Diamond Match Company in 1914. Fairburn designed a manufacturing process using sesquisulphate to produce matches rather than white phosphorus, which had been publicly condemned for leading to poisoning and spontaneous combustion. Though he could have easily monopolized the marketplace with his discovery, Fairburn instead made the patented process available to the entire industry at no cost. His gesture sent the match industry on a reinvigorated growth path.

Throughout each decade of the twentieth century, Makers, Breakers, and Takers emerged in a variety of industries—all demonstrating a keen sense of contextual intelligence.

Q: What does the database have to say to boards looking for their next CEO?

A: There is a strong tendency to search for a candidate who has a specific track record of success, but board members need to understand the context in which specific CEO candidates were successful. It is all too easy to ignore both the past contextual framework of success and the present one. Are they aligned? Does success in one context predict success in a new one? Would Sam Walton be as successful today? What about Michael Eisner—has his time run out? Has he kept pace with the changing contextual framework?

Despite the overwhelming evidence to the contrary, boards tend to favor the "proven" talent, but often fail to ask "proven in what context?"

Q: What do you think the general business reader can take away after reviewing the database?

A: The database provides a rich history of the changing business landscape in America. Among other categories, readers can access business leaders through sorting by their place of birth, their industry affiliation, or their educational status. By perusing the database of 860 business leaders, it becomes increasingly evident that they are not all recognizable heroes. Some are certainly legendary, but many successful business leaders who seized the moment were simply ordinary individuals. They comprehended the context in which they lived and built businesses to succeed based on this understanding.

Q: What are you working on now, and what are the next steps for the database?

A: Professor Nohria and I have just completed the first book derived from the creation and analysis of the database focused on the concepts of contextual intelligence. The database has also sparked the development of a case series on Great Business Leadership, and is the basis of another book being shepherded by Professor Nitin Nohria, Research Associate Laura Singleton, and me. This book looks specifically at the demographic characteristics of business leaders over time to determine what has changed and what has stayed the same. It will present an analysis and social commentary on the access to business power in the country. Is it open to all? How has it been achieved? How have barriers been overcome?

The database is a work in progress, continually being updated and refined. While we have made a small subset of the database available to the public on the Leadership Initiative Web site, the full database is available to other scholars interested in studying the business leadership landscape. There is no similar database that captures the breadth and depth of CEO or Founder demographics over a 100-year period, and we welcome the use of the database for scholarship activities throughout academia. Future projects may involve the analysis of the founder-to-CEO succession process, the evolution of leadership within specific industry sectors, or the development of detailed biographies of specific individuals and/or companies that have a track record of successive generations of effective leadership.