5 Companies That Lost Iconic Leaders

BOSTON ( MainStreet) -- When Steve Jobs stepped down as CEO of Apple ( AAPL) in August, his decision to remain as chairman of the company's board cushioned the blow for investors and consumers.

Though he was in failing health, the idea that Jobs would still be active in the company's affairs pushed aside the larger question of what would happen when he was no longer the heart, brains and soul of the company. Tim Cook may have been named as his replacement, a succession long since planned, but what would become of Apple if its true leader, spiritually and practically, was no longer in the house?

With his death Wednesday, that question is no longer avoidable. Jobs, as many an obituary has made clear, was an iconic business leader and a true visionary. Even a harsh critic of Apple and its products would be hard pressed not to acknowledge the masterful way Jobs tapped into the zeitgeist to revolutionize consumer electronics. Apple's phenomenal growth -- surviving near bankruptcy to run neck-and-neck with ExxonMobil ( XOM) in competition for the biggest market cap in the world -- can be traced, in a way rare for any company, directly to one man. Steve Jobs was Apple.

The road map ahead for Apple without its human embodiment is a challenge other companies have faced over the years -- a handful, anyway, where leaders whose vision transcended day-to-day operations have become synonymous with their companies.

How have businesses fared when losing their legends? The following are five iconic leaders and how their companies evolved once they left.

Walt Disney
Walt Disney created a blue-chip entertainment company, and an indelible part of Americana, with a simple sketch of a cartoon mouse.

But guiding that company to enduring success took a little more sweat, and a good dose of will. An anecdote that illustrates the mentality Disney brought to his company was the challenges behind Snow White and the Seven Dwarfs.

Production started in 1934 and, three years later was in jeopardy when the studio ran out of money. It became known (at least in whispers) as "Disney's folly." Undaunted, and driven by a vision of producing a work of mainstream art, Disney cajoled officials at Bank of America to loan him the money needed to finish the project. From the day it was released in 1938, the film was hailed a as a cinematic classic and the company's fortunes changed for the better, and forever.

When Disney succumbed to lung cancer, there were plenty of questions about how a company so fueled by his vision would survive.

"The financial fellows think we're going to fall on our faces without Walt," Time quoted his brother Roy O. Disney saying a few months after Walt died Dec. 15, 1966, from lung cancer in Burbank, Calif. "Well, we're going to fool them."

Fool them they did. Within eight years Walt Disney Productions had soaring revenues -- jumping to $329 million from $116.6 million, and that growth has continued in the ensuing decades. Last year, Disney ( DIS) had annual revenues of more than $38 billion.

What eased the leadership transition was that the always forward-thinking founder had numerous plans in motion for the future of his company. He left behind a small library of notes, designs and greenlit scripts. "Would Walt have liked this?" was a guiding principle executives held onto as they sought to continue his legacy as a futurist and visionary.

Among the efforts that came after Disney's death but still bore his detailed input were Orlando's Disney World (construction began a year after his death, and Roy Disney inaugurated the Magic Kingdom on Oct. 1, 1971) and Epcot Center ( a lifelong dream of his). The technology pioneered by his "imagineers," the continual evolution of the movie studio, a chain of resorts and hotels, merchandising and toys and a music division all thrived in the decades that followed, tracking to a blueprint laid out by the founder and the standards he set.

It wasn't all smooth sailing (there would be plenty of box office flops and corporate politics to contend with), but Disney has only broadened its reach over the years with ownership of such diverse properties as the cable sports network ESPN and Marvel Comics.

Bill Gates
It has been about 11 years since Bill Gates stepped down as CEO of Microsoft ( MSFT) -- the groundbreaking company he founded with Paul Allen -- and four years since he moved on from his duties as chairman, in effect giving up final authority over decisions and strategy. And yet, no matter who takes the reins, from current CEO Steve Ballmer and on into the future, the face of the company will always be Gates.

Gates nearly singlehandedly ushered in the era of PC software. While Apple pioneered the concept of home computers (a notion once scoffed at by IBM ( IBM) and others), Microsoft was the driving force in making them a usable, productive part of everyday life with the ubiquitous operating system Windows.

The considerable shadow of the bespectacled tech giant has proved a challenge for Ballmer and the company itself. Microsoft shares have fallen more than 30% over the past decade under Ballmer's watch.

Tellingly, Ballmer is still often thought of as Microsoft's "new" CEO, despite his years in charge and before that serving under Gates for two decades. But the transfer of power, according to numerous reports, was rather contentious. It's perhaps not surprising a micromanager such as Gates had to detox from his power.

While Gates is hailed as a visionary, Ballmer's Microsoft has been criticized as lacking the sort of quantum leap creativity that was once its defining trait. Missed opportunities have chipped away at its reputation. The company watched Apple -- once left for dead and bailed out by Microsoft with a cash infusion -- surpass it in market cap, revenue and consumer loyalty.

The Zune MP3 player and Windows phones were Johnny-come-lately product, and the Vista OS was less greeted with open arms than extended middle digits. Tablets? Well, Microsoft had designs for the Courier, but it remained solely on paper as the iPad become revolutionary. Mobile? Microsoft was too late with too little and lost the game to Apple and Google ( GOOG).

Potentially game-changing efforts to buy Yahoo ( YHOO) and Facebook were notable failures. By contrast, dipping into its $50 billion reserves to buy Skype for $8 billion raised eyebrows among the public and infuriated investors.

To Ballmer's credit, he was in charge as the Xbox video game system and the Windows 7 OS became hits. But that wasn't enough for hedge fund manager David Einhorn, who told a group of investors recently that, "Ballmer's continued presence is ruining your stock."

Ray Kroc
Chicago area businessman Ray Kroc was a jack of all trades -- everything from a jazz musician and radio host to paper cup salesman.

It was while selling for a company that made milkshake mixers that Kroc had the inspiration to start what would become the global fast food empire McDonald's ( MCD).

Kroc had a business partnership with California restaurateurs Richard and Maurice McDonald (it was they who created the iconic golden arches). The deal was simple: As they franchised restaurants, Kroc supplied his mixers. Over time, however, Kroc felt the brothers were too conservative with the pace of their expansion, so he bought them out for $2.7 million (plus an ongoing royalty) in 1961.

Unlike the brothers, Kroc had a vision of a national network of fast food restaurants, each standardized in look and menu so the experience was the same no matter where you ate. Advertising would similarly be national and focus on the chain, rather than specific locations.

Location by location, no matter how large and spread out the chain became, Kroc was as much of a micromanager as possible -- in the good sense. Food quality and cleanliness were edicts from on high that all had to either adhere to or suffer the consequences. At many locations, Kroc owned the land upon which franchises were built, further exerting his control over an increasingly sprawling empire. His franchising model remains the template for countless other restaurant chains.

In an interesting aside, Kroc and fellow business icon Walt Disney almost had a partnership that would have brought McDonald's into Disneyland. The deal fell apart after a squabble over Disney's desire to add an extra nickel to the cost of French fries to maximize profit.

Kroc died in 1984 (he remained senior chairman of its board until his passing) and since that time, the company has continued to grow, even as it moved away from some of Kroc's initial ideas. The chain still strives for uniformity, but its global presence, and evolving diets, has meant products are constantly added -- from chicken sandwiches to smoothies and coffees -- a change of pace from the streamlined menus Kroc felt were necessary to speed orders, maintain quality control and maximize profit.

Maintaining Kroc's vision has been accomplished by a relatively stable management structure. From Kroc's retirement in 1977 through 1990, top leadership changed just three times (changes became more frequent in more recent years, mainly due to the unexpected deaths of CEOs Jim Cantalupo and Charlie Bell).

There has also been a "keep it in the family" tradition, a system of hiring from within that Kroc favored as his empire grew.

Fred Turner, the second CEO, began working for McDonald's in 1963 as a part-time mail clerk. Current CEO Jim Skinner, who has held that position since 2004, started his career with McDonald's as a restaurant manager trainee in 1971.

Under Kroc's leadership, the company was an economic powerhouse -- it's the only company in the Standard & Poor's 500 to have reported 100 consecutive quarters of year-to-year combined increases in revenues, income and earnings per share since 1965. That growth continues today with more than 33,000 restaurants serving more than 64 million people a day in 118 countries. More than 80% of McDonald's restaurants are operated by independent franchisees, a continuation of the system Kroc established decades ago.

Sam Walton
After serving in the Army during World War II, Sam Walton, in 1945, bought a small variety store in Arkansas.

Even in these early years, the man who would create Wal-Mart ( WMT) was showing signs of the strategies that would make that company such a part of American life. Success in the one store led him to open another just a short distance away, conveniently located next to his main competitor (and even more conveniently blocking that competitor from any chance of expansion).

Despite the ultimate closing of his first store due to a squabble with his landlord, Walton went on to build a growing chain of his Ben Franklin Stores. His belief, store by store, was that selling discount merchandise in small markets -- rather than a traditional focus on pricier goods in urban markets -- had the potential to be very profitable. In essence, he foresaw a national network of hometown general stores.

The first iteration of Wal-Mart opened in Arkansas in 1962, and the chain has expanded unceasingly -- domestically and internationally -- since.

In 1988, Walton retired as CEO but remained chairman of the board. He died in 1992.

There have been more than just a few bumps in the road. Even as upward of 100 million Americans shopped at a Wal-Mart at least once a week, retail analysts have been critical of the company's lack of innovation and tendency to rest on its laurels. One analyst, in 1986, described remodeling efforts as mere "botox" that seemed more a move to "arrest decline" that spur real growth.

Other controversies have been more headline grabbing, such as the company's anti-union stance, reliance on Chinese imports, alleged gender discrimination and claims that its big box stores are intentionally squeezing out small and independent businesses by undercutting them on prices, even if it means making some specialized products a loss leader.

Whatever the merits of that last complaint, recalling how Walton tried to put the squeeze on his very first competitor it seems very much in the family tradition.

There is no doubt the company has prospered for decades because of the philosophies and innovations of Walton. For every eyebrow-raising tactic such as his leading employees in a daily pledge of allegiance to the company, Walton had shrewd ideas about how companies were underserving middle America.

Walton was also an innovator when it came to technology. Even in the 1970s, Wal-Marts were using computers to track inventory, streamline procurement and bridge the gap between stores and centralized warehouses. That level of technological sophistication remains a hallmark of the company. Even as the company's profit margins shrank in the 1990s, and its stock price was battered, investing in technology and infrastructure remained on the corporate "must have" list, moves that echoed Walton's forward-thinking philosophy and set the state for rebounding growth.

Today the Wal-Mart empire has 9,600 retail units in 28 countries. It posted sales of $419 billion this fiscal year.

Henry Ford
Henry Ford pioneered the use of assembly line manufacturing and made his name synonymous with the automobile. Making it cheap, fast, efficient and uniform was the underlying philosophy and key to his success.

With the encouragement of famed inventor Thomas Edison, and external funding, Ford designed a successful prototype for the automobile in 1901 -- his second stab at such a creation. With machinists John and Horace Dodge, the Ford Motor Co. ( F) was incorporated in 1903. Five years later, the Model T was introduced. In 1918 Ford stepped aside from his role at the company, handing control to his son, Edsel, so that he could pursue other business ventures.

His tenure may seem like ancient history, but Henry Ford has spiritually exerted his will on the company decades after his passing. His assembly-line approach is still the cornerstone of automobile manufacturing, after all, and the company has stayed under the control of the Ford family -- William Clay Ford Jr. is executive chairman -- with the famous surname always populating key managerial positions.

Yet in other ways the company has strayed from its origins.

Ford was once reluctant to expand car lines much beyond the basic design, features and color of the Model T. In the founder's case, that was seen as a weakness, something that lost sales by failing to meet customer demand and fancy. But in 2005, amid faltering revenues, a new corporate strategy called "The Way Forward" offered a return to roots of sorts, a call to streamline the company. Key points included reducing workforce and the number of models, eliminating those that lacked profitability and production efficiencies.

-- Written by Joe Mont in Boston.

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