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Archie McCardell

Archie McCardell is the worst CEO in history.

Sure, there are CEO’s who committed crimes, CEO’s who bankrupt their businesses, and CEO’s who looted their businesses. There are crooks, those who hire cronies, people who paid bribes, plenty who demanded sex or servitude, and countless sociopaths.

In fairness to him, Archie did none of these things. Which makes winning his place as the worst CEO of all time all the more remarkable.

Background

McCardell is a University of Michigan MBA who started his career at Ford focused on finance. At Ford, Archie trained under Robert McNamara, the future US Secretary of Defense. McNamara is a key person who fabricated the Gulf of Tonkin invasion by North Vietnam to justify a massive escalation in the Vietnam War. Eventually, by the time the US effectively surrendered on March 29, 1973, 57,939 Americans and about a quarter-million South Vietnamese died in the conflict. Vietnam remained communist for about a decade then eventually transformed to capitalism, proving the entire war pointless in hindsight. McNamara trained his prodigy, McCardell, well.

Xerox

After Ford, Archie started at Xerox in 1966. They promoted him to president in 1971. For three years, Xerox continued to announce record profits, just as they had for the prior two decades. Xerox had two research centers, one in New York and the then-new Xerox Palo Alto Research Center, Xerox PARC, in California. Significantly, McCardell pushed the Rochester center for profits but largely ignored the quirkier California group. Later, Archie’s executives were ready to cancel a New York-based project led by Gary Starkweather to image a copier drum by lasers, the laser printer. However, Starkweather negotiated a last-minute relocation to Palo Alto and saved his project.

Other interesting projects happening in Palo Alto, a center set up before McCardell’s time, included computer work building on Douglas Engelbart’s work at the Stanford Research Institute (SRI). Engelbart demonstrated video teleconferencing, intuitive interactive interfaces for computers, editable lists on computers, windows, dynamic file linking, and a new input device, the mouse. Subsequently, Xerox PARC hired many of Engelbart’s researchers and supplemented them with others led by the legendary Robert Taylor.

Archie Blows the Future

During McCardell’s reign, Xerox PARC created the modern computer interface, building on and perfecting windows, the mouse, icons, visual files, and intuitive interactive computing. Eventually, they created the idea of the personal computer, internally called the “Dynabook.” Object-oriented programming, the building block of all modern computer systems, came from Xerox PARC. Ethernet networking, which is how virtually all computers connect (WiFi is wireless Ethernet) is from there and so are spline fonts and What You See is What You Get on-screen displays and printing. And, of course, Starkweather perfected his laser printer that also came from PARC.

McCardell purposefully threw it all away. The Xerox Alto, developed at Xerox PARC, was the first modern personal computer. The Alto is the Mac before the Mac. “At Xerox, McCardell and [Ford alum head of engineering Jim] O’Neill created a numbers culture where decisions were put through the NPV test. Not surprisingly, the Alto failed,” reads an analysis.

After he left Xerox, they’d eventually commercialize an enterprise laser printer but the executive team he put in place – and the toxic environment Archie left behind – ignored the most valuable technology since the invention of the internal combustion engine and the car.

Simultaneously, while ignoring all the PARC technology, McCardell also ceded Xerox’s core copier business to the Japanese.

Blowing the third industrial revolution should be enough to secure McCardell’s position as the worst CEO ever. However, most historical records barely mention Archie’s disastrous Reign of Error at Xerox. He was just getting started.

International Harvester

In 1977, Archie took over as CEO of International Harvester. At this time, International Harvester was the third most valuable American business. McCardell’s starting salary was $460,000, making him one of the highest-paid CEO’s in the world. He also accepted a $1.5 million signing bonus and a $1.8 million loan at 8 percent (an interest rate which, at that time, was considered low).

Quoting the Washington Post: “The company had been directed primarily by family members since its founding by American inventor Cyrus McCormick in 1831, but the board decided it was getting stodgy and turned to a high-powered executive from the outside.” Management consulting firm Booz Allen Hamilton advanced the perception an outsider was needed and recruited McCardell.

Archie cut spending by $640 million and invested $879 million, over three years, into modernization. The latter figure seems impressive except it was essentially just copying International Harvester’s competitors.

Eventually, in the fall of 1979, Archie tired of trying to grow the business or cut costs traditionally and opted for a different approach. He purposefully picked a fight with the United Auto Workers, the trade union virtually all plant workers belonged to. McCardell insisted on pay cuts and increasing the use of non-union labor.

An American Icon, Destroyed

Archie singlehanded caused a 172-day strike that began November 1, 1979, the longest-ever strike at International Harvester.

By the time the strike ended, International Harvester lost $479.4 million then lost an additional $397.3 million in the next fiscal year directly due to fallout. In the end, the union conceded virtually nothing. International Harvester’s suppliers were devasted; the strike bankrupted Chicago’s Wisconsin Steel.

Besides the losses, International Harvester’s inability to deliver caused a loss of customer confidence. Sales slid by almost half. The business took on debt to keep the company afloat, eventually reaching a staggering $4.5 billion of early 1980s high-interest debt.

McCardell restructured the debt to $4.15 billion, cut $200 million, and demanded union concessions. At the same time, Archie paid out $6 million in executive bonuses. Seeing the dismal condition of the firm, the union agreed to $200 million in wage and benefit cuts.

The union agreed to contract concessions on May 2, 1982. Archie was fired the next day.

The firm’s stock, trading in the mid $40s when McCardell was hired, traded at $2 by the time he left. International Harvester was forced to sell off many business units, including the venerable farm machinery division. Eventually, 6,400 jobs were lost. What remained was renamed Navistar.

Epilogue

“I don’t think we made any one major mistake,” McCardell said in a 1986 UPI interview. “I feel very good about my years at Harvester.” Later, he adds, “I think I was underpaid.” In a different interview with the New York Times he said: “I think I rate myself superb.”

Pundits aren’t as enthusiastic. One speculated he might have been carrying out “an industrial sabotage operation.”

Archie didn’t do much after International Harvester. There was a land development project he labeled “a disaster.” He launched a turnaround business but refused to name his clients noting that knowledge of his involvement could “add to their problems.”

McCardell did have one insight that resonates: “I don’t know many CEOs who didn’t reach their positions without some good luck along the way. I had incredibly good luck as a young man. I also had ability, but luck plays a very important part,” he told UPI.

Archie McCardell died July 10, 2008, as the US was heading into the worst financial crisis since the Great Depression.

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Archie McCardell

Archie McCardell Award

We realized Archie’s management talents aren’t unique. Granted, nobody is likely to replicate his success decimating two businesses in entirely separate industries. Archie’s ability to destroy was positively Romanesque in scope, unlikely to be repeated anytime soon.

However, their failure to fail, and to flame-out spectacularly, won’t be for lack of ambition. In this spirit, we’ve decided to create an award, the Archie McCardell Award, for absolutely horrendous management.

We originally put Archie Award winners here but decided they needed their own category. To view the Archie Award Winners, click here.

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