Are leaders born or self-made?
It's not an easy query. It might even be a trick question. You ask yourself, is it pedigree, pure and simple, that makes a great chief executive, or can it be learned from experience?
There's often negative sentiment toward executives who hand over the reins of leadership to a family member, yet there are many family-run businesses, most of them privately held, where superiority is actually enhanced with every passing generation. It's a wide divide, but for every spoiled slacker, you have a child who flourishes under the spotlight of destiny. In Ayn Rand's world, for every inept Jim Taggart there's a competent Dagny Taggart.
The Johnson brothers who founded Johnson & Johnson (NYSE: JNJ) to create surgical dressings in a former wallpaper factory in the mid-1880s were special, but so were their descendents who went on to run the show for nearly another 80 years. Cousins Charles Pfizer and Charles Erhart had it all in Germany, but proved themselves stateside when they created the beginnings of Pfizer (NYSE: PFE) in 1849.
History tells us plenty. It reveals that great thinkers aren't always great doers. It also shows us that great companies aren't always the result of one great visionary but rather a series of timely relays to keep a concept clawing for higher ground. The baton will pass through hands of different shapes and sizes, powered by feet with entirely different running styles.
The baton itself will change along the course of the race, too. American Express (NYSE: AXP) was started just over 150 years ago not as a financial services upstart but as a freight transporter. By the same token, Nokia's (NYSE: NOK) CEO Jorma Ollila didn't come to join the wireless leader through an extensive tenure in the field of telecommunications. His career path started out with Citigroup (NYSE: C) as an account manager for Citibank. Yes, unlike American Express itself, Nokia's chief started out in financial services.
Then there's the story of pharmacist John Pemberton, who in 1886 concocted what he hoped would be a cure for headaches. He added carbonated water at a nearby Atlanta drugstore and Coca-Cola (NYSE: KO) was born. The soft drink's name and its signature logo script weren't the work of Madison Avenue. That handiwork actually came from Pemberton's bookkeeper.
But even Pemberton couldn't fathom what he had created. He sold out to local businessman Asa Griggs Candler while the phenomenon was still relatively contained. Candler was a skilled marketer, building the brand and growing its reach. However, he actually scoffed at the idea of moving the drink beyond the realm of soda jerks and into portable bottles. He sold off those exclusive rights a few years later, for a buck.
Like Pemberton, Candler cashed out way too soon. Ernest Woodruff bought the company in 1918 and it was his son Robert who would eventually embark on the globalization of the Coke brand. Yes, his son, proving once again that not everyone uses birthright as a crutch.
But while the company might be able to guard the namesake beverage's formula, it has never been able to consistently bottle the secret ingredients of exemplary leadership. While the pop titan was taken to greatness by the likes of Cuban immigrant Roberto Goizueta, it went flat under what seemed to be more-than-capable successors.
Maybe the secret to success isn't in the fizz at all. Maybe it's primed daily from the water fountains at Stanford University. It was there, after all, that computer scientists founded Cisco (Nasdaq: CSCO) in 1984. Ten years later, a pair of electrical engineering doctoral candidates at Stanford launched Yahoo! (Nasdaq: YHOO).
These were all bright scholars, sure. But the business sense to grow these mindful inventions was imported. In Yahoo!'s case it was actually another member of Stanford's alumni, Tim Koogle, who helped the company take its first steps toward ubiquity.
So it's not necessarily important to wonder what made Thomas Rowe Price, Jr. start his own asset-management company in Baltimore back in 1937. The real meat of the matter is who made it great -- and how.
It's an answer that often transcends war and peace and knows no geographical boundaries. Schering-Plough (NYSE: SGP) thrived for decades in Germany before being seized by the U.S. government at the start of World War II.
Then again, it doesn't take war to launch a company in a new direction. Sometimes, the implosion comes from within. Intel (Nasdaq: INTC) was founded by disgruntled engineers at Fairchild Semiconductor. The upstart received financing off a simple one-page business plan. The name Intel? The company had to buy it from a motel chain!
Intel's launch into tech greatness is an even more amazing story of a company taking on a chip project for a Japanese calculator company, Busicom. The end result was the microprocessor. Realizing the revolutionary product they had just created, the engineers went to Busicom to buy back the design and marketing rights. They succeeded. Intel became history. Busicom was history, bankrupt a short time later.
Crossing the same timeline, Microsoft (Nasdaq: MSFT) was founded when friends Bill Gates and Paul Allen were thumbing through Popular Electronics in a college dorm room. The Intel-fueled MITS Altair 8800 was starting the personal computer revolution, and Gates and Allen realized that someone had to design the operating system that would kick off the industry. You do know the rest of that story, right?
So, Atlas, take a breather. You just never know where your replacement is going to come from next.