A Rough Year For Superstar Ce Os

When Michael H. Jordan moved to the corner office at struggling Westinghouse Inc. last June, the task facing the former PepsiCo executive seemed straightforward enough: Cut the bloat and focus on core businesses. But as he toured Westinghouse's far-flung operations, the complexity grew. Litigation costs were piling up, and the environmental division, he says, was "a disaster." He trimmed 6,000 jobs in January, and may have to cut more. "This is not the easy pickings that a lot of people expected, including myself," says Jordan.

So it goes for the outsider CEO. A year ago, in a season of unprecedented corner-office turnover, blue-chip companies rushed to find headhunters who could get them the best executive talent available. Perhaps they were encouraged by the turnarounds enacted by Stanley Gault, an outsider who took charge at Goodyear in 1992, or Lawrence Bossidy, who left General Electric for AlliedSignal in 1991.

These days, though, the new chiefs at companies ranging from Kodak to Borden to Eli Lilly are making a remarkably common discovery: Even for richly paid superstars, success doesn't come easy. Look at the early results of their works in progress. Most have turned first to obvious moves, cutting staff and retreating to core markets. But in trying to implement sweeping strategic changes, the new CEOs have found that their fresh faces aren't enough to incite sweeping change.

There have been a few early winners. Mike Harper took charge of RJR Nabisco Inc. last June and immediately dumped a plan to split RJR's stock into separate shares tied to food and tobacco units. Instead, he's focusing on expanding and acquiring businesses that can help lift RJR's return on equity to 20%.

INSTANT REPLAY. Eli Lilly & Co.'s Randall L. Tobias, also hired in June, instituted the drugmaker's first job cuts ever--despite criticizing such actions earlier as "a sign of failed leadership." He later emerged from a strategic overview with a plan to unload Lilly's nonpharmaceutical units. "The problem here was one of leadership, focus, and vision," Tobias says.

Elsewhere, though, the results are decidedly mixed. Lou Gerstner, on the job for a year, has cut costs dramatically at IBM, but the former RJR-Nabisco chief has stuck with Big Blue's vertical structure and drawn yawns from investors. George M.C. Fisher hasn't fared much better. Kodak's board ousted his predecessor, Kay R. Whitmore, for failing to prepare for the strategic transformation the company needed. Fisher arrived in December and surprised Wall Street by announcing he would pursue Whitmore's original plan to move into digital imaging. Since then, he has been vague about his actual plans, and Kodak shares have dropped about 16%.

One problem: Outsiders often fall back on tactics that mimic their ousted predecessors'. As a newcomer, Jordan tried to reduce Westinghouse's legal bills by pushing for settlements in a slew of suits. But in the biggest dispute, involving a $2.2 billion nuclear power plant in the Philippines, Westinghouse last month renewed its court battle, this time in Switzerland. At Borden Inc., new chief Ervin R. Shames's strategy calls for cost-cut-

ting and the sale of the company's snack-food unit. Borden's board asked former CEO Anthony S. D'Amato to resign in December, shortly after he proposed a similar plan.

It's too early to judge such actions harshly. But investors and management experts alike are wondering whether new blood is always such a great idea. Indeed, the success of such homegrown superstars as Jack Welch at General Electric and Roberto Goizueta at Coca-Cola has shown that companies can recharge and refocus without going outside. "Where there's continuity of command, that's where we're seeing bold moves," says Jeffrey Sonnenfeld, professor of organization and management at Emory University. Where there's a new chief on board, small steps are proving to be the norm.

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