New-Wave Managers: Art Levinson of Genentech

Last week, Fortune magazine featured five prominent CEOs and their views on new-millennium leadership. The five leaders all offer very different insights and are all quite Foolish.

So I'm running through the Fortune piece, one CEO at a time, and showing you how the finest minds in today's corporate leadership can help you find great investments. Today we're looking at Art Levinson, CEO of Genentech (NYSE: DNA  ) , who offers this pearl of wisdom:

"I think most drug companies would have cut the project because it wouldn't get them to number one or number two. We have a different approach. We will follow the science and do what's right for patients. [...] We didn't rule Herceptin out because it would be number three or number seven."

Art's particular motivation for pursuing Herceptin even though it would never be a market leader is rather altruistic, which I applaud as a human being, though not necessarily as an investor. But there are some solid business reasons for occasionally settling for second place, or even seventh.

Take for example Hidden Gems recommendation Otter Tail Power (Nasdaq: OTTR  ) . As a small regional utility company, it will never be an electricity giant like PG&E (NYSE: PCG  ) , but then it's not trying to be. Instead, Otter Tail is has branched out into lots of business ventures besides providing power to its service region, including heavy industrial manufacturing, medical imaging, and dehydrated potato products.

The company probably won't ever make it to No. 1 in all of these fields, or in any of them, but that's beside the point. Otter Tail isn't dependent on blockbuster performances from any of its operational units, and it's largely immune to downturns in any particular market. It's a philosophy of "slow and steady wins the race," and a decent impersonation of Warren Buffett's Berkshire Hathaway (NYSE: BRK.A  ) (NYSE: BRK.B  ) on a smaller scale.

Some markets are simply so big that you'd be overjoyed to make it to third place, or even the top 10. You won't see Honda (NYSE: HMC  ) pulling out of the American car market just because Toyota (NYSE: TM  ) or Ford (NYSE: F  ) are selling more cars, for example. If you're the fifth-largest toilet paper maker in the world, you're doing fine. Fizzy drinks, jewelry, fast food -- the list goes on and on. If the pond is big enough, even a small fish can live a happy life there.

You don't always have to go for the big win to give great returns to your investors. Tune in tomorrow for another new-school management approach, courtesy of Coca-Cola's (NYSE: KO  ) Neville Isdell.

Further Foolish reading:

• Other new-wave managers include John Chambers of Cisco ...
• ... and Anne Mulcahy of Xerox.
• There's room for a couple of satellite radio outfits, right?
• And Otter Tail is far from the only diversity play out there.

If you're not going for the gold every time, chances are that the market will ignore your company. Tom Gardner's motley gang at theMotley Fool Hidden Gemsnewsletter service is standing by to help you dig these undercover greats before they break on through to the other side. Try a30-day trial subscriptionto see whether their approach is right for you.

Coca-Cola is aMotley Fool Inside Value recommendation.

Fool contributorAnders Bylundhas never seen a live otter outside of the zoo, and has never been to Otter Tail County, Minne.He does own stock in Coca-Cola; ourFool ruleshave a prescription for full disclosure, you see. For the full scoop, check out Anders' holdingshere.