Mary Barra, General Motors
Why: GM’s turnaround continues, with investments in Cadillac, China, mobility solutions, and driverless cars.
“Time is not our friend,” Barra says, referring to the rush of technology thrusting her industry toward a future of self-driving electric vehicles.
In her four years at General Motors’ (GM) helm, she has sought to pay for that future by reducing low-profit sales to rental fleets, shedding flagging operations abroad, and squeezing costs. GM also has stepped on the gas in technology, launching the Chevrolet Bolt—the first of 20 electric-vehicle models it plans to offer globally by 2023—and introducing Super Cruise, an advanced semiautonomous driving system. It has also invested in Lyft, Cruise Automation, and other mobility operations.
Crucially, Barra, 56, has accelerated decision-making at once-sclerotic GM. She has been helped by the popularity of SUVs and pickups—GM’s strong suits—and an improved economy, low interest rates, and the company’s boom in China, now its top market. But success in China could be at risk if trade tensions between Washington and Beijing boil over. And GM faces uncertainty as the Trump administration seeks to rewrite the North American Free Trade Agreement.
On the positive side, GM will launch more-fuel-efficient pickups this fall, and Cadillac, now hamstrung by a sedan-heavy U.S. lineup, will introduce a small crossover—and then one new model every six months through 2020. Says Barra: “We need to move fast on all fronts, guided by safety, quality, integrity, and a focus on our customers.”
Satya Nadella, Microsoft
Why: He captained Microsoft’s turnaround and found a gold mine in cloud computing.
Nadella, a native of the southern Indian city of Hyderabad, draws many lessons from cricket, a game he dreamed of playing professionally when growing up, and one with which he says he’s still obsessed. What are the lessons when applied to a software giant? Among them is to strive to be the captain who gives team members confidence.
Eventually, computers overtook cricket as Nadella’s passion. As CEO, he has been credited with keeping Microsoft’s long-established business of computer operating systems on a solid track, while finding new growth in cloud computing and artificial-intelligence systems. The company’s Azure cloud service continues to nearly double sales every quarter, and Microsoft’s once-dormant stock is up 169% since Nadella, 50, took the helm in early 2014.
Nadella will have to draw even more deeply on his captain’s skills as he leads Microsoft on a major reorganization. In March, he announced that he would consolidate many parts of its sprawling product portfolio into just two businesses, one focused on cloud computing and artificial intelligence, and the other on personal-computing technology and products, such as the Surface laptops.
Given his promising start as only the third CEO in Microsoft’s 43-year history, after Bill Gates and Steve Ballmer, Nadella has the chance to shape the company’s culture and priorities for years to come.
—Tiernan Ray
Hubert Joly, Best Buy
Why: His Renew Blue makeover put the chain in the black. Now he has made rival Amazon a partner.
PHOTO: ALEKSANDER SAVIC
A funny thing happened to Best Buy on the way to chain-store extinction. In 2012, with sales and profit slipping and the shares slumping, the company named a French restaurateur and hotelier as chief executive. The stock fell from $18 to about $10 by year’s end. Today, it trades at $70.
Joly, 58, had led a successful transformation at Carlson, owner of Radisson and other hotels and, back then, more than 900 TGI Friday’s restaurants. Before that, he had done the same at the videogame unit of Vivendi (VIV.France), where he developed his Best Buy connection, supplying the chain with games. At Best Buy, he launched Renew Blue, a plan to fix the stores, rather than institute widespread closings and layoffs. The plan called for remodeling stores to emphasize key products, such as smartphones; reducing costs by, for example, addressing common causes of product returns; building out e-commerce capabilities and Geek Squad services; and finding new areas of growth, such as smart-home devices.
Same-store sales eventually turned positive, and profits and free cash flow grew. Last week, the company posted better-than-expected results for its fiscal first quarter, and a 7% same-store sales gain, but the shares fell 7%, on concerns about tougher comparisons ahead.
Last September, Joly outlined a new plan called Best Buy 2020: Building the New Blue. It includes an expanded range of tech-support services. “You move to strategy after you improve things operationally, because by then, you’ve created degrees of freedom,” he says.
More recently, he partnered with Amazon.com, to sell smart TVs with Alexa voice technology.
Phebe Novakovic, General Dynamics
Why: She battled to right-size the aerospace and defense contractor and won, sending its financials and stock price skyward.
When Novakovic, 60, became CEO of general dynamics in 2013, the aerospace and defense contractor was languishing amid a bear market in military spending and a tailspin in business-jet sales. Novakovic reduced costs, wrung efficiencies from the business, and boosted operating profit margins, which expanded to 13.5% last year from 11.7% in 2011. The moves have paid off for shareholders; the stock has returned nearly twice as much as the S&P 500 since she became CEO.
In this year’s first quarter, Novakovic said she expects “strong growth in our defense business across the board.” Although results from aerospace disappointed due to delivery delays, “demand in Gulfstream [business jets] is quite nice…and tax reform has certainly helped,” she added. The daughter of a Serbian immigrant who served in the U.S. Air Force, Novakovic grew up in Germany and Italy during the Cold War. She later worked for the CIA. At General Dynamics (GD), she rose through the ranks to run the ship and submarine business before becoming CEO. Recently, she has been expanding the company’s information-technology operation, in part through acquisitions, such as that of CSRA, a cybersecurity outfit and defense contractor. General Dynamics “emphasizes empowerment of its business units, while holding them accountable to financial targets,” Morningstar wrote recently, an implicit nod to her business judgment. Novakovic likes to fly under the radar. In an interview at the Economic Club of Washington, D.C., in 2016, she explained why: “Performance speaks for itself.…Results matter and, at the end of the day, are all that matters.”
Carlos Tavares, PSA Groupe
Why: Tavares took the European car maker from red ink to record profits in under five years, and aims to do the same with recently acquired Opel/Vauxhall.
After taking French auto manufacturer PSA Groupe from billions of dollars in losses in 2013 to record profits last year, Tavares has investors wanting more. That is reflected in the premium valuation accorded PSA shares, compared with its European rivals.
The second act in the Tavares turnaround story—wresting profits from the recently purchased Opel and Vauxhall brands, perennial loss makers—won’t be easy. Nevertheless, given what the Portugal-born CEO already has accomplished with PSA’s main brands, Peugeot and Citroën, in fewer than five years, the expectations seem realistic. PSA Groupe’s shares have sharply outperformed the market and the auto sector since 2013.
Last year’s €2.2 billion purchase of Opel/Vauxhall from General Motors turned PSA into a European giant. Tavares has his work cut out for him: wringing cost concessions from Opel’s unions in Germany, for example, while improving the image and quality of two brands that have lost their way.
Tavares has promised a 2% operating margin for Opel/Vauxhall by 2020. If that weren’t enough, the CEO must shepherd the company through diplomatic issues in Iran, a sizable PSA market, and navigate the challenge of producing electric-powered vehicles.
Then there’s the planned return to the ultracompetitive U.S. market by 2026. PSA left the U.S. in 1991.
The challenges sound daunting, but Tavares, who spends weekends racing—and winning—in classic-car rallies, seems to have the mettle for the task. Investors certainly think so.
