Who is the best CEO ever?

William Thorndike spent eight years writing about the eight best chief executives (CEOs). It is unsurprising that The Outsiders came top on Warren Buffett’s 2012 recommended reading list: he is one of them. But many of Thorndike’s chosen CEOs are lesser-known heroes, whose stories offer some refreshing lessons.

In his introduction Thorndike likens CEOs to professional athletes on the grounds that they compete in a highly quantitative field. From this, he establishes the problem: there is no single, accepted metric for measuring their performance. The book resolves this by acknowledging, “what matters isn’t the absolute rate of return but the return relative to one’s peers and the market”. The common view that Jack Welch of General Electric is the greatest CEO ever is therefore identified as short-sighted because Welch’s tenure coincided with the largely uninterrupted bull market of 1982-2000.

The genius of Thorndike’s eight CEOs came from a specific set of traits. They recognised that what counts in the long run is not overall growth or reported earnings, but the increase in per share value. In order to think independently they removed themselves from external distractions. Their operations were located in cities removed from the conventional wisdom of Wall Street; they rarely appeared on covers of business publications or wrote books on management advice, and they avoided the press. Slightly more grounded than the space-traveling CEOs of today.

Thorndike points out that they were not the Isaac Newtons of business, struck apple-like by enormously powerful ideas that they proceeded to execute with maniacal focus and determination (see Bezos or Musk for further clarity on this). They rather had a flair for simplicity, cutting through the clutter of peer and press chatter in order to focus on the core economic characteristics of their businesses. While Thorndike doesn’t offer a definitive gold medalist of the group, there’s one character who would have won the CEO Personality of the Year between 1972 and 1991.

Katharine the Great

Katharine Graham was chairman and CEO of The Washington Post Company. She was the daughter of the company’s owner, Eugene Meyer, who passed on the role to her husband Philip. After Philip tragically committed suicide, the 46-year-old mother of four – who hadn’t been regularly employed since the birth of her first child – was tasked with running the company. It is a widely known story, thanks to her Pulitzer Prize-winning autobiography and Meryl Streep film. But Thorndike points out what is less appreciated is what Graham did for her shareholders.

In 1971, Graham filed to take the company public in order to raise capital for acquisitions, and within a week became embroiled in the Pentagon Papers crisis. This was when The Washington Post had the opportunity to publish a controversial and negative assessment of America’s handling of the Vietnam War. The Nixon administration threatened to challenge the company’s broadcast licences if the report was published, which would have seriously impacted the stock offering. Following unclear legal advice, Graham made the decision to publish on her own. The story was a great success and the IPO raised $16m.

Graham made another bold decision, replacing the paper’s long-time editor with Ben Bradlee. Bradlee (Tom Hanks for anyone going by the film version) would go on to investigate the infamous Watergate Scandal, which led to Nixon’s resignation in 1974 and secured a Pulitzer Prize – one of 18 during Bradlee’s editorship.

In 1974 she ignored board advice by going to meet a new and unknown investor who had begun to accumulate stock in the company. Graham’s son Donald maintains, “figuring out this relatively unknown guy was a genius was one of the less celebrated, best moves she ever made”. Indeed, few can dispute the benefits of having Warren Buffett as a business mentor. In 1975 Buffett advised her to fight a strike. She, Bradlee and her then 27-year-old son Donald successfully assembled a skeleton crew to get the paper out for 139 days, only missing one day of publication throughout the period.

Throughout her time at The Washington Post, Graham made a number of unconventional decisions. She aggressively bought her own stock, repurchasing 40 per cent of shares at rock-bottom prices. She approached acquisitions with restraint, until the recession of the early 1990s when she took advantage of lower prices. She was reticent about using debt and oversaw the most conservative balance sheet among her peers. Plus, unlike the rest of the newspaper industry, she maintained minimal levels of dividends, believing them tax-inefficient. In distancing the Post from mainstream tactics, Graham distanced the company from average results. During her time as CEO, the company outperformed the S&P 18-fold and its peers by over sixfold. 

Graham’s story is a great example of how to spot a CEO with the independent vision to lead their company to success. If you fancy reading seven more like it, pick up a copy of Eight Unconventional CEOs and Their Radically Rational Blueprint for Success.