A similar survey conducted by WEEK in May, 1985, revealed the following 10 most powerful leaders: 1) Robert Michel, 2) David Connor, 3) Ray Becker, 4) George Schaefer, 5) James Maloof, 6) Edward O’Rourke, 7) Prescott Bloom, 8) Harry Whittaker, 9) James Daken, and 10) Richard Carver. Only Jim Maloof, newly elected mayor of Peoria in May, 1985, repeated as one of Central Illinois’ 10 most powerful leaders in 1996 – appearing in the fifth spot again in this, his last year of mayoral service.
Central Illinois’ most powerful leaders, ten through six are listed below. Leaders five through one are profiled following.
1996 Most Powerful Leaders
10. Steve Kouri – Peoria City Councilman known recently for his leadership in bringing the IHSA basketball tournament to Peoria
9. Gary & Carlotta Bielfeldt – local philanthropists who recently contributed $3 million to Peoria’s riverfront
8. John Maitland – 44th District Republican State Senator known throughout McLean County and in Springfield
7. Lowell “Bud” Grieves – Peoria stockbroker, hotel operator, developer, and operator of the Spirit of Peoria riverboat
6. David Leitch – 93rd District Republican State Representative and Assistant Majority House Leader
5. James A. Maloof: Leader in Love with His Job
Eleven years ago May 7, Jim Maloof was sworn in as mayor of Peoria. In about a year, he will rap the mayoral gavel for the last time, something, it is clear, about which he has mixed feelings. “I love this job, I really do,” he says.
Maloof, a high school graduate with no college experience, is a self-described cheerleader for the city of Peoria and Central Illinois. It’s a role he relishes as much today as when he was a high school sports cheerleader and, later, a song leader for his United States Air Force squadron.
“I don’t know what the word ‘can’t’ means,” he says, remembering how, after serving in the armed forces, he returned to Peoria to take over the family dry cleaning business which had been shuttered for two years.
Within six years, says the mayor, the business was one of the most successful dry cleaners in downstate Illinois. After selling the dry cleaning business in 1968, Maloof decided to go into real estate. He says he knew nothing about the real estate industry, but by 1975 had propelled his company to the number one real estate company, by volume, in the city.
By 1983, however, his fortunes had changed dramatically. With Peoria mired in a recession – unemployment running in double-digits, empty houses, and boarded-up businesses – his company was near bankruptcy. He says it was only the help of some friends and associates that enabled him to keep his business afloat. “I’m a survivor,” he explains.
So what do you do when it takes all the energy you have just to keep your business from going under? You launch a campaign for mayor.
It was Thanksgiving morning in 1984 when Maloof received his “calling” to run for mayor. To listen to him tell it, the decision hit him like a ton of bricks. “Somebody has to step forward to arouse the people,” he states, describing the city as “crippled” and “in terrible shape.”
Not everyone thought Maloof’s decision was a wise one. He remembers his wife, Trudy, wondering aloud if, given the precarious economic climate, he shouldn’t stay home and take care of his own business. But “I’ve been a risk-taker my whole life,” the mayor says.
Maloof immediately called Dan Gura, a member of the Peoria City Council who was running for mayor, and told him of his intentions of challenging him for the mayoral post. In Maloof’s “Forward Peoria” campaign that followed – elements of which were borrowed from a campaign then-mayor of Houston, Texas, Henry Cisneros utilized – one of the campaign themes was what he called the “do-nothing” City Council, City Hall and Chamber of Commerce. In a one-hour debate in April, 1985, Maloof introduced “Forward Peoria” – a grass roots effort by some 400 volunteers – and, as he puts it, “took the campaign by storm.”
When the new mayor got to City Hall, however, he found little enthusiasm for his program to rebuild Peoria. “When I came to City Hall eleven years ago, I was not a welcome person,” he remembers. “I campaigned against the Council; there were two gentlemen on the Council who were running for mayor, and I ran against them and the do-nothing city hall. I sat in a little room down on the second floor for 30 days. I didn’t know anything about running a city, but I figured if they could do it, I could do it.”
Maloof says during the time between his election and swearing in, almost no one at City Hall wanted to even talk to him, let alone offer assistance. Veteran councilmen said they didn’t want any part of Maloof and wouldn’t support his “Forward Peoria” efforts. He remembers that the city manager at the time, Jim Dakan, gave him some help, but had to be very cautious because his job depended on council votes.
Over the years, the Mayor’s relationship with the City Council has improved overall, but controversy has been no stranger to the Council chamber. Maloof smilingly admits he currently has an ongoing conflict with a particular councilman, but readily volunteers that this individual adds a valued dimension to city leadership. “I guess my role as the leader of this Council is to understand all of those ten people – to understand what their desires are, what their strengths are, and what their weaknesses are – and work with them,” he states.
Through the years, Maloof has not been afraid to interject morality and religion into community issues. Although the City of Peoria is benefiting from tax revenue from the local riverboat gambling operation (which he discouraged from locating in Peoria), the mayor says he is still adamantly opposed to it. “It’s a terrible cancer,” he says of gambling, noting statistics that show gambling as a cause of family problems.
Maloof wont’ talk long about himself, business, or city government without revealing his faith, sprinkling his conversation with phrases like “the good Lord” or “God-willing.” Says the mayor, “I’m not one of those guys who wears his religion on his sleeve. I’m a believer. I believe there is someone greater than all of us. I believe there is a good Lord above.”
“I pray to St. Jude every day,” he says, referring to the patron saint of the hopeless, to whom he says he was introduced in 1957 by a mentor, the late Danny Thomas. Danny Thomas had prayed to St. Jude when he was down and out. Later, Maloof trailed Thomas all over the country for 30 years and watched him do what he calls “many incredible things.”
“There’s an expression, ‘It’s pretty lonely sometimes at the top.’ Being a mayor, a president of your company, or whatever, there are some tough moments when you have to make some tough calls,” comments Maloof. “Let me tell you, in the middle of the night or early in the morning, I never forget St. Jude.”
While finishing his third and last term in office, Maloof still has the desire to continue as mayor, but says he will stick to his decision to step aside.
“I want to go on but my conscience tells me I shouldn’t,” he says, noting that his is a firm believe in term limits. “It’s going to be tough for me to leave. We are on a winner right now, and I feel absolutely great – for a guy that’s soon to be 77. I love the idea of making people feel good. I love the idea of recognizing people and thanking them for a job well done. It’s going to be tough for me to leave….But it’s time to step aside and to help find someone who will pick it up and keep it going.”
The Mayor, although an extrovert-cheerleader-hugger, says he is not the kind of mayor who stands up and takes credit for everything that happens. “That’s not my style,” he says, explaining that he opts instead to get other people involved and excited about progress and projects.
He says many of the best things that have happened in Peoria during his terms of office have been initiated, not on the Council floor or in public, but one-on-one, behind the scenes with individual community leaders. “My style is to let them have the credit,” he says, saying his leadership is the “leadership of inclusion.”
“Mine is a people style,” he says. “Mine is a style that can motivate people.” Of the next mayo of Peoria, whoever that will be, Maloof says, “People skills, following a person like myself, are going to be rather important….I’ve had a lot of people say ‘You’re going to be a tough act to follow.’”
Maloof bristles at the idea that the area lacks leaders, present and future. “It’s false. It’s wrong. It’s wrong.” He retorts before launching into a monologue about the nearly 300 volunteer citizens serving on community-related committees in Peoria, and praising the business community. “There is all kinds of leadership,” he says. “And guess what? There’s going to be more.”
Maloof says he recognizes the problems faced by Peoria are similar to those faced by any city – crime, teenage pregnancy, and poverty – but he believes the positive changes over the past decade have outweighed the negative. He credits the hard work and commitment of Peoria’s citizens.
If anyone wants to thank Peoria’s mayor for his part in it, he echoes the words of Ronald Reagan when asked why his two terms as president were successful: “We followed the lead of the people.”
4. Diane Cullinan: Progressive Leader in the Heartland
If there is a booster club for the Peoria area, Diane Cullinan certainly serves on the executive committee. Her enthusiasm for living and working in Central Illinois seems endless, and her company is working hard to develop the amenities which will add to the area’s quality of life for years to come.
Since the late 1980s, the Peoria developed has quickly risen to prominence, developing some of the most elaborate and innovative projects in Peoria history. Three major projects top the agenda for Cullinan, owner and CEO of The Prudential Cullinan Properties Ltd.: the Harbor Pointe and East Port Plaza developments at the Eastport Marina in East Peoria, the Weaver Ridge championship golf course and residential development, and the River City Galleria regional mall development. Other area real estate developments Cullinan has spearheaded include: Morton Commerce Park, Spring Grove, Hamilton Square, City Center Plaza, Germantown Crossing, Hunter’s Run, Huntington Pointe, Lake of the Woods Plaza, and Glen Avenue Corporate Park (her firs commercial real estate development).
Cullinan has never been satisfied with settling into a comfort zone and doing business the way it has always been done in the past. Her trademark has always been doing new and different things, trying to anticipate changing trends, and positioning her company to meet the needs of consumers almost before the customers themselves recognize their own desires.
“Change – and rapid change I might add – is an inevitable fact of doing business today,” she once stated. “Nothing will remain the same. We must always remain open to new ideas and better ways of providing services so that the customers can be the ultimate winners.” Customer service is a theme that runs through everything Cullinan says. I self-described “people person,” she says her background in residential real estate (she once worked for Peoria Mayor Jim Maloof’s realty company) helps her to concentrate on customers’ needs, and she believes that a development will be successful if the developer concentrates on customer needs. She has built her company, now employing almost a hundred people, on that philosophy. “We have the unique ability to make that our number one priority,” she says.
While enjoying a great deal of personal attention and acclaim (she recently was recipient of the 1996 Illinois Chamber of Commerce Athena Award for business excellence and providing leadership opportunities for women), Cullinan seems almost reticent about talking about “her” accomplishments which she sees as a team effort. Her language is the language of “we,” not “I.”
Cullinan believe the key to good leadership is understanding the issues, whether business or community issues, and being willing to take a stand for the right cause. “Many times taking the right stand isn’t the most popular thing,” she says. “The most important mark of a strong leader is being willing to take a stand and stick to it and try to assist and help lead other people in that direction.”
When asked what people have influenced her perspective on leadership most, she mentions her father and Caterpillar CEO Donald V. Fites, both of whom she says taught her that doing the right thing is paramount, no matter how tough a particular stand might be. “Many times doing the right thing isn’t doing the popular thing or the general consensus, at the beginning at least,” she states. “It’s very important not to try to please everyone or else you end up pleasing no one in the long run. You certainly cannot run a successful company trying to do that.”
Cullinan’s reputation for aggressiveness, toughness and a positive attitude were revealed in a new way several months ago as the news that she was suffering from life-threatening breast cancer shocked the community. “I think I felt the way most people do when they first hear that they have cancer,” she says. “You certainly feel shocked and somewhat discouraged. It was not only a ‘why me?’ For me it was ‘why now?’ It was a very busy time. I felt I couldn’t afford to have this going on right now. As a matter of fact, I delayed surgery to get through our Weaver Ridge drawing for lots….I didn’t tell people until after the Weaver Ridge drawing. I didn’t want that to dampen the festivities, or have people feel sorry for me.”
She tackled the cancer the same way she tackles everything – aggressively and straight-on. She did everything possible in her successful fight to rid herself of the disease, including the latest in cancer-fighting technology. “It’s the worst experience I’ve ever been through, but I think it’s made me a lot tougher,” she says. “It’ll take a lot more than this to get me down.” Through the entire ordeal, the developer says she never doubted that she would return to where she is today, working hard and long to fulfill her business challenges while simultaneously giving her time and energy to family and friends. She says her bout with cancer has given her a better perspective on life in general, and has helped her have more empathy for people who are going through difficult times – in business matters, for example. “I really think it will help me to give other people a positive perspective,” she summarizes.
Her biggest leadership challenge to date, says Cullinan, is the current controversy surrounding the development of the River City Galleria mall and the relocation of Peoria’s Sears store as an anchor for what will be an upscale regional mall, something she says will greatly improve Peoria’s attractiveness as a regional drawing destination. Although she had a letter of intent from Sears and has signed a new joint venture agreement with an industry heavyweight mall developer, General Growth Properties Inc., Simon Properties is trying to convince Sears to locate at an expanded Northwoods Mall – something the City of Peoria would have to give special approval for, since the Northwoods plan doesn’t meet zoning requirements and would compound traffic and crowding problems at the mall. Of the mall controversy, Cullinan says, “We certainly want to take the high road in this whole situation with Sears, and also do what is right.”
“Most people who understand retail, which is very complex, and understand some of the politics that go along with that, understand that what we’re standing for is the right thing for the community and can really catapult Peoria into being a truly significant regional player,” she continues. “It’s not always easy getting there.”
As is the case with the East Pointe Marina and the Weaver Ridge golf course, the River City Galleria is an example of Cullinan’s leadership in bringing “cutting edge” attractions to Peoria. “People in many Midwestern communities are really hungry for cutting edge things,” she says. “They really want things that are different. In the mall situation, they are very hungry for new forms of entertainment and for new things to come to the area.”
Cullinan’s golf course and marina developments have generated interest beyond her best hopes for the projects at their present stage of development, something she describes as “incredible.”
Due to Cullinan’s personal and business management ideals, The Prudential Cullinan Properties, Ltd., in a few short years, has become known regionally for its progressiveness. Cullinan says she makes a continual, serious effort to place people in the positions within her company where they can perform optimally. She says her high standards of performance and the innovation so characteristic of her company are facilitate by the open exchange of information and interaction that characterizes her working environment.
New and different projects are obviously the things that most motivate her and her staff. She once referred to a “boundaryless” attitude expounded by Jack Welch, chairman of General Electric. “You have to keep thinking, ‘There are no boundaries,’” she summarizes.
“Development is a very difficult business. It’s constantly changing,” says Cullinan. “Just when you think you have something on course, something happens to either stop or delay it….It’s an extremely challenging business.” It’s clear this is one leader who is up to the challenge.
3. Edward Rust, Jr.: Corporate Leader in Touch with the Community
Anyone talking with Edward B. Rust, Jr., might think he was the local insurance agent with a small office just around the corner from the friendly village coffee shop. Yet, a personable and down-to-earth man, Rust is chairman, president and CEO of one of the nation’s largest and best-known corporations – State Farm Insurance Companies, number 12 on the Fortune list. His decisions impact the lives of thousands of Central Illinois workers and employees around the country, and millions of consumers.
Rust grew up on a farm. Even though he today heads a huge company, travels extensively, and meets prominent business leaders routinely, he says the days he spent working side by side with his father have been the greatest single influence on his life.
As a matter of fact, when the pressures of his job build – whether word of some new government regulation, or the threat of a hurricane making its way inland to wreak havoc on coastal properties insured by State Farm – is he suddenly feels the need to “get away from it all,” you may find that he has retreated to the tree groves or crop rows of an agricultural haven.
The concerns that demand Rust’s attention are billion-dollar matters – things like the Northridge earthquake which cost the company $3.2 billion, or Hurricane Andrew which cost the company $4 billion. “I help people when they ask ‘How much is a billion dollars?’” he says with a smile. “I tell them, ‘about nine seconds’” – referring to the catastrophic losses inflicted by the earthquake.
Of last year’s destructive hurricane, Rust remembers, “What we found after Hurricane Andrew was that the net profits of our fire and casualty company from day one – from the day it was organized in 1935 until Andrew – was not enough to pay for Andrew.” Rust says the company worked through the disasters while remaining financially strong, but they resulted in a “renewed awareness of the need to look at a much broader picture.”
The bottom line, in the property and casualty insurance business, is that all the management savvy and experience in the world can’t stop the threats of natural elements, a fact that may result in a restless night or two for the State Farm chief executive. During hurricane season, in fact, the television’s Weather Channel (with the sound turned down) is a fixture in his office. “I now have a love-hate relationship with the Weather Channel” he laughs.
The weather provides only one of many challenges for the leadership skills of Ed Rust, Jr., however. The need to keep State Far competitive while providing solid service to customers is an ever-present concern. Rust says the company is closing in on taking $2 billion out of its cost of doing business through structural changes. “We have approached most of that right now without touching jobs significantly,” he states, while noting that the company is currently operating from a “no hire” mode.
“The last thing I want to do is go through the trauma of having too many people and not enough opportunities,” Rust admits. “We may hit a point where we find ourselves in that position, but we’re working hard today to try to minimize that.”
New opportunities opening in the marketplace due to rapidly advancing technology are also a major concern for State Farm. Rust believes the company must position itself to meet increased expectations from its customers, some of whom have opportunities today to buy their insurance over the telephone at discount rates.
Will technology, specifically the Internet, ever make the friendly, local State Farm insurance agent obsolete? Rust is confident that won’t happen. People are more willing today to interface through technology, he says, but local agents are an added value consumers can’t get anywhere else, and insurance is still about a one-to-one relationship.
Says Rust, “The heart of things comes down to this: People still, in given circumstances, want to have someone they know and trust to deal with.”
Rust says one of the greatest challenges he faces as the leader of the States Farm organization is to try to anticipate future trends, and enact plans to successfully negotiate the twists and turns his industry and the business world in general is sure to take in the coming years. He says he doesn’t own a crystal ball, but it’s clear customers will continue to demand more service for less cost.
“In dealing with an organization of this size, it’s kind of like the blind man trying to explain or picture an elephant; it is so big and there is so much going on,” remarks Rust. “There are so many external things that can influence how we operate. It’s a matter of trying to be aware of what’s happening and trying to put in place programs, directives or whatever to address what those changes are. It’s not so much what I know that concerns me; it’s what I don’t know.”
While State Farm is a leader in its industry, Rust also believes its employees should be leaders in their communities. Good corporate citizenship should mean being involved in the community, whether it’s doing volunteer work or even seeking elective office.
Rust says he feels fortunate to have had a number of mentors from within the State Farm organization, individuals who have taken the time to share their experience in the business. He still seeks the advice of retired company leaders from time to time, and says many times they help him to put things in perspective.
When asked about his philosophy of leadership, Rust concludes, “In leadership, what I have found most beneficial is to identify great people to work with, and give them the latitude they need to run with the ball.”
2. Ray LaHood: Leadership on the Run
Trying to follow a typical week of U.S. Rep. Ray LaHood of Illinois’ 18th Congressional District can be a scheduling nightmare. Time is a precious commodity for the Congressman as he strives to balance the concerns of his district with the pressures of the nation’s capital city – fielding phone calls form home, meeting with his staff about the latest legislative developments, dashing to a committee meeting, or hurrying to the House floor in time to cast his vote.
A freshman congressman, LaHood is anything but a newcomer to Washington, D.C., having served for 12 years as chief of staff for former U.S. House Minority Leader Robert Michel. “It’s not as if I came here not knowing what the process was,” he says.
Few freshman congressmen have had the opportunity to earn the respect of other congressmen, senators, and staffers the way LaHood has, having spent over a decade learning the ins and outs of the nation’s capital as a lieutenant to one of Washington’s most powerful and respected leaders. And if his first 17 months in D.C. are any indication, LaHood is quietly assimilating all of the respect and confidence that was Bob Michel’s. In fact, he has been privileged to do some things in the U.S. House that his noted predecessor never got to do in over three decades – like wield the speaker’s gavel while serving as speaker pro tem.
LaHood believes good things can be accomplished through the imperfect system that is a democratic republic. He is tough in his criticism of its abuses and shortcomings, but things – unlike many members of his freshman class – that the answer is reformation, not revolution. “I came here with the idea that you can make the institution work for the people back home,” he says. “That you don’t just come here and try and tear it down. You come here with the idea that some things are wrong and you reform them, but some things are right about the system, too. This institution has been here for over 200 years. You don’t change it overnight. You have to use some common sense, and you have to use the system to do it.”
LaHood is determined to combine the best aspects of the Washington leadership scene with a dogged dedication to his home district. He faithfully board a jet each week to return to his family and the constituents of the 18th Congressional District. Despite the hectic schedule, since his term began LaHood has only missed two voting opportunities out of over one thousand scheduled votes – in order to attend his daughter’s graduation.
After a hard week in Washington, an average weekend finds him making numerous appearances in the district, from radio shows to neighborhood coffee shops to community fund-raisers. Although one of the most recognizable faces to Central Illinois, when meeting a constituent for the first time, LaHood will extend his hand with a “Hello, I’m Ray LaHood,” as if introducing himself as the new neighbor just down the block.
Central Illinois’ new representative says his constituents want to be represented by a congressman with an “independent streak.” If that is true, LaHood has done a good job. While quite vocal in his criticism of the Clinton Administration, for which his favorite descriptive adjective is “phony,” LaHood has not hesitated from day one to go against the wishes of his own leadership, most notably refusing to jump on the tax cut bandwagon headed early on by House Speaker Newt Gingrich and House Majority Leader Dick Army. Disagreeing with many conservatives in his district, he has insisted in the implementation of a balanced budget prior to the implementation of tax cuts.
“We look a little silly trying to balance the budget while handing out tax cuts,” he comments. “People know that doesn’t make sense.” LaHood says he’s all for tax cuts (and admits they will stimulate the economy), but believe they should be enacted only after the federal budget is balanced. And he says he has shown he is willing to make the “tough votes” necessary to balance the budget.
LaHood has successfully found his way onto two committees he believes are of key interest to Central Illinoisans – the Transportation and Agriculture Committees. He calls them “civil committees,” where the members tend to the work at hand with a minimum of partisan bickering. He is proud of the work accomplished by the Ag Committee in the new Farm Bill, something he knows is important to Central Illinois’ farmers. The Ag Committee also affords him the opportunity to deal with ethanol and the siltation problems faced by the Illinois River.
LaHood believes the thrust toward a balanced budget has changed things in Washington, influencing the way business is done, for example, on the Transportation Committee, where the issues run deeper than individual members bringing a road or a bridge back to their district.
“The debate about a balanced budget is over,” affirms LaHood. “The concern here in Washington is we need to balance the budget. It permeates everything we do.”
So how can a congressman do his best for his district (always translated “bringing federal dollars back home”) and still be sincere about cutting pork barrel spending and balancing the budget? LaHood believes he can be a “deficit hawk” while still recognizing that opportunities exist in the course of a budget to benefit the people back home. “The idea of balancing the budget is my number one priority,” states LaHood. “I want to balance the budget, but I also know there are going to be funds allocated to certain projects.”
While believing in the power of government to do good things, LaHood still thinks that government can only do so much, noting the importance of local community groups and churches. “It has to be done by local communities and local leaders coming together and working together,” he says of social ills facing the district.
LaHood has faced his share of criticism, not so much from individual constituents in his district, as from organized campaigns by liberal, special interest groups targeting his House seat. Week after week, radio, television and newspaper ads have accused him of voting to “cut” Medicare. “I’ve been pulverized in Peoria with the ads being run by the unions saying that Ray LaHood wants to cut Medicare. It’s simply not true,” he says, adding that the Republican budget plan he favors wants to simply slow the growth of Medicare spending from its current 10 percent annual level to 7 percent. “I have not voted to cut Medicare,” he elaborates. “The recent flurry of negative Medicare advertisements aimed against me are lies. They are scare tactics.”
LaHood believes time is fast running out on the nation’s entitlement programs as they currently stand, and unless reforms are initiated to reduce their rate of growth, Medicare and Social Security will fail. “It’s eating up our government,” he says of federal entitlements. “We just have to keep at it and make the hard decisions to preserve the programs.”
The Congressman says Republicans have indeed offered viable alternatives to balance the budget and shore up Medicare, but have been falsely printed as radicals by Democrats and the White House. He says the outright lies, designed to scare senior citizens and others in order to score some political points, affect the willingness of many elected officials to tackle the hard issues. “Why don’t politicians want to deal with it?” LaHood muses. “Because we know that on the other side there’ll be somebody waiting there to strike a 30-second commercial to nail some politicians – lying about what our record really is.”
The November election will be key, says LaHood, because it will basically reveal whether the tactics of lies work. If Republicans stay in the majority, it will show that the majority of Americans see through the deception. The Congressman plans to work hard for the election of Bob Dole to the presidency, saying his election is essential since the Clinton administration, with the power of the veto, currently frustrates many of the needed changes passed into law by Congress.
It’s plain to see that LaHood has a solid understanding of the issues and politics that make up the Washington scene, but he says he never intends to get lost in the Beltway. Although his schedule commuting between Peoria and D.C. runs him ragged at times, he obviously enjoys the hard work that makes up his efforts to represent the 600,000 people in his 14-county district. And he is proud of Central Illinois. “Our district has a very long history of producing leaders,” he says, remembering the leadership roles filled by Bob Michel and Everett Dirksen. A part of what is now the 18th Congressional District (near Springfield) was once represented by Abraham Lincoln himself.
While a top leaders in his home district, LaHood believes he has the opportunity to become an influential leader on the Hill in Washington as well. And he clearly believes he can do so by a careful combination of independent thinking, party cooperation, and service to his district and country.
1. Donald V. Fites: Global Competitor & Local Leader
A visit to the offices of the chairman and CEO of Caterpillar, Inc., Donald V. Fites, will quickly reveal unmistakable signs of a CEO that knows how to take off his suit coat and get to work. An open briefcase, stacks of papers and books, and a nearby computer screen will typically surround the desk in a corner of the large but unprecedented office of the man viewed today as Central Illinois’ most powerful leader.
Few Central Illinoisans are called upon to make decisions as far-reaching and influential as Don Fites. Fortunately for Peoria, the decisions made from the chairman’s office have been major contributors to the area’s current vibrant economy. When Caterpillar announces a $3 million gift for Peoria riverfront development, the community benefits directly, as the money goes toward visible structures and projects. When Cat announces a multi-million dollar sale or a new joint venture with a foreign business, the community benefits indirectly, in terms of jobs create at the company and its local suppliers.
The Caterpillar chairman seems equally comfortable talking about a community issues or a matter concerning global markets and free trade. Well versed in economics, he can readily cite from memory statistics about the anticipated gross domestic product of China in the year 2010, commenting on the potential impact of such numbers on Caterpillar sales. Minutes later, he can speak just as meaningfully and enthusiastically about Peoria development issues.
From Caterpillar management positions in Europe, Africa, South America, and Asia to the company’s chairmanship, to which he was elected in 1990, Fites’ 40-year career with Caterpillar has culminated in his leading the company to world prominence as a model manufacturing corporation in terms of productivity, competitiveness, technology , distribution, and customer support. And Fites’ leadership skills have extended far beyond just Caterpillar, including serving as chairman of the U.S-Japan Business Council; past-chairman of the Equipment Manufacturers’ Institute and National Foreign Trade Council; director of the National Association of Manufacturers; and member of the Business Council, the Policy Committee of the Business Roundtable, the Competitiveness Policy Council, and the President’s Advisory Committee on Trade Policy and Negotiations. Names CEO of the Year for 1994 by Financial World magazine and featured on the cover of Chief Executive magazine in September 1995, Fites is known internationally for his management savvy and knowledge of global trade.
Fites’ tenure as Caterpillar’s top manager was not always marked by the success the company enjoys today, however. A year after he stepped into the chairman’s post in 1990, the company suffered a $404 million loss due to declining sales and a global recession. Company management, including Fites, had already addressed issues of technology and production methods, initiating a seven-year, $1.85 billion factory modernization program in 1987. But other issues remained.
Despite being told by people inside and outside the company that it couldn’t be done, the chairman launched a total reorganization of Caterpillar’s centralized, hierarchical structure into 13 profit center divisions, each with its own return on assets target. The corporate culture of Big Yellow would soon change 180 degrees.
The restructuring of the company pushed accountability down into the organization. As a result, Fites says decisions today are being made at a lower level but are of a higher quality. Upper management is “less bogged down in detail” and more able to concentrate on overall company strategy. There are fewer memos, fewer meetings, and more customer contact.
Caterpillar leaders had been forces to recognize the need for changes in the early 1980s when foreign competition and changing world markets caused some analysts to write the company off as a rust-belt relic. It was Fites, however, who made certain the company did not stop short of an internal revolution which would propel it to become the envy of the manufacturing world – risking his career on what proved to be a massive and successful reorganization plan.
“Business is about taking risks,” says Fites. “Is this risk worth what it’s going to cost us? What’s the potential return? We’re not always right, but we better be right more than 50 percent of the time or the shareholders will find somebody else to run the company.”
Fites believes it sometimes takes a crisis to make needed change happen. “It’s very difficult to change a large organization absent any crisis,” he reflects. “There’s a great inertia. We certainly had a crisis – some would say near fatal crisis – in the 1982-1983-1984 time period. That started us on the road to change. The question, then, is not ‘are you going to change?’ but ‘are you going to make the right changes?’ Many companies changed and still didn’t survive. I think we made the right changes and I think that’s being reflected now in the company that you see.”
The Cat chairman says his background in marketing (where he spent the first 20 year at Caterpillar) taught him a couple of important things. First, he says, you learned that the customer is king. Caterpillar today Is famous for its customer service which includes a top-notch dealer network (any Caterpillar dealer is free to call or visit the Caterpillar chairman personally) and efficient worldwide distributing system. Second, says Fites, marketing experience teaches you how to make a good sales pitch, to communicate your message effectively.
“Globally competitive from a U.S. manufacturing base” has been the message of Fites and Caterpillar in the 1990s. The chairman says it would have been easier for Caterpillar to take the route of many other U.S. corporations – manufacturing outside the U.S. in order to sell outside the U.S. Instead, Cat invested $1.85 billion in its domestic facilities (almost $1 billion in Peoria-area factories alone), streamlined company structure, and addressed crucial labor issues head-on. While some have suggested the changes at Caterpillar would eventually see the company leaving the area, Fites emphasizes just the opposite, saying the hard-fought victories Caterpillar has won mean it will be able to say in Peoria.
“I think the best guarantee we can make that we’ll be here is to remain successful,” says Fites. “This is our world headquarters. As I’ve told the community over and over, we have no intention of leaving this community.” He points out that the percentage of total Caterpillar employees working in the Peoria area today is approximately the same as it was 10 or 20 years ago – about 33-35 percent.
Fites says both efficiency and workers’ attitudes inside area Caterpillar plants today are very good. While much of the news concerning Caterpillar in recent years he focused on its labor struggle with the United Auto Workers union, he emphasizes, “In the Peoria area it’s very easy for the general public to forget that the vast majority of our employees are not affiliated with the UAW.”
Fites is proud Caterpillar’s world headquarters is in Peoria, and believes the company has been an excellent corporate citizen. “Our people are very much involved in community activities,” he says. “I’m personally involved in community activities, not so much because that’s part of my job description, but because…the leadership of the company needs to set an example for others in the company and for the community as a whole.
“We are involved in the leadership of the community; we want to stay involved; this is where we live. This is where we attract people from around the world. We want this to be the best community it can be.”
The idea that Peoria somehow currently lacks leadership admittedly upsets the chairman of the city’s largest employer. “I think that’s a bunch of baloney, quite frankly,” he says. “I’ve been living in this community for 40 years now….I think we have the broadest, most responsible leadership in the community today that we have ever had. There are more people involved in it, as there should be. It’s not just a handful of people in a certain clique making all the decisions for the community.”
Fites has made is a priority to become personally involved in community projects. He has put in countless hours and made personal fund-raising appeals in chairing Bradley University’s $100 million capital campaign. When the local Salvation Army’s Tree of Lights campaign fell short of it goal the past two years, he personally initiated a challenge gift, resulting in tens of thousands of additional dollars for the local charity. (He was honored with the Salvation Army’s William Booth Award just last month.)
Asked why, as the top executive of a Fortune 50 company, he takes time out of a busy schedule to volunteer on behalf of the Salvation Army (he serves as vice chairman of The Salvation Army National Advisory Board), Fites responds, “That’s the Lord’s work. If we don’t have any time in our lives for the Lord, there’s something wrong with our lives. I try to stay active in The Salvation Army and also church work. That should be a part, in my opinion, of everyone’s life. That’s just doing what I think we need to be responsible for.”
Fites obviously believes his primary job is to ensure the long-term survival and competitiveness of Caterpillar as a global competitor. Fortunately for the residents of Central Illinois, however, the Caterpillar chairman doesn’t feel such a giant task precludes him from taking an active leadership role in local concerns – and that can only be good news for the future of Central Illinois. IBI
