The New Breed

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When U.S. Investment Group, led by U.S.-based Ripplewood Holdings, bought the bankrupt Long Term Credit Bank in 2000 and tapped Masamoto Yashiro to run it, he set out to revolutionize the industry. Since taking the helm of the bank — renamed Shinsei, or Rebirth — Yashiro, 75, has presided over one of the most successful turnarounds in Japanese corporate history. With 30 years experience at Exxon and nine more at Citibank, Yashiro has never been a member of Japan's insular financial community. "I don't follow the Japanese way of doing things," he says. Yashiro talks about competition, profitability and performance — words rarely heard until recently among Japanese bankers. At Shinsei, Yashiro abolished promotions and raises based on seniority, the rigid classification of employees according to education and the hierarchical wearing of uniforms by the assistant-level "office ladies" at company headquarters. Then he really took on Japan's business practices. Employing un-Japanese ruthlessness, he slashed the bad-loan ratio to 5.7%, down from 20%, and then launched service-oriented new products. "We had to change our mind-set," he says. "You have to look for solutions to [customers'] problems." Oh, yeah, Yashiro makes money too. The bank's profits jumped 25% last year, to $637 million. "Things are changing in Japan," he says. "A little too slowly for my liking, but they are changing." By Jim Frederick/Tokyo

--By Jim Frederick/Tokyo

Gunther Thielen
BERTELSMANN

Gunter Thielen didn't expect to play peacemaker when he took over as chief executive of Germany's Bertelsmann in August 2002. The company was laden with $3.5 billion in debt and a slew of dubious new assets, including the controversial online file-sharing site Napster and the now defunct Rosie magazine in the U.S. Still, Thielen's biggest challenge was an internal one: Thomas Middelhoff, the flamboyant CEO Thielen replaced, left behind a simmering crisis between the $22 billion firm and its key owners, the Mohn family. Reinhard Mohn, the 82-year-old patriarch, was so upset by Middelhoff's tenure that he rewrote his own governance rules to give the family a bigger role, sparking open criticism.

Thielen, 61, is both diplomatic and entrepreneurial (he also owns his own sausage factory), and he moved quickly to calm the situation, smoothing relations with Mohn and his wife Liz and reversing many of Middelhoff's most controversial moves. He abolished the post of chief operating officer and returned to the highly decentralized structure that had long been a Bertelsmann tradition, cutting 1 in 6 jobs at corporate headquarters. "The businesses are all so different and require such different management skills that one person can't run them all," Thielen says. To shore up profitability, he has sold the firm's German specialist magazine group BertelsmannSpringer for $1.35 billion and merged its troubled music division with Sony's. Debt has dropped to below $700 million, and Thielen says the firm is again on an expansion course. Don't expect Middelhoff-style grandiose plans, however: probable targets for acquisition are small to midsize TV stations in Eastern Europe. "It wasn't so much a clean-up as a change of philosophy," says Klaus Goldhammer, a German media consultant. "Thielen is taking Bertelsmann back to its roots." --By Peter Gumbel

Wolfgang Bernhard
VOLKSWAGEN

Wolfgang Bernhard says he "wanted to learn the business hands on, rather than be a remote-control, distant manager." So when he was sent by Daimler-Chrysler executives in Germany to help steer their struggling Chrysler unit in Detroit, Bernhard worked three days a month on the company's factory floor. Bernhard's innovations paid off: the company was the only U.S. carmaker to pick up market share this year. But when Bernhard opposed giving the troubled Mitsubishi unit an injection of $2 billion, he found himself without a job. Volkswagen quickly offered Bernhard a high-powered encore: as chairman of the company's VW brand. That will effectively make him No. 2 at Europe's biggest automaker when he settles into the new job over the next 12 months. Volkswagen, which is projected to lose $1.2 billion in the U.S. this year because of a falling dollar and a lack of exciting new models, badly needs a boost. For the outspoken Bernhard, 44, cutting costs won't be easy. VW last month agreed to guarantee jobs for 103,000 German employees. But Bernhard is not afraid to make a splash. Executives in Detroit still talk about his dramatic entrance at an auto show last year riding a Tomahawk, a one-of-a-kind four-wheeled motorcycle. Now all eyes are on his moves at VW, where he will officially join the management board in February. By Charles P. Wallace/Berlin. With reporting by Joseph Szczesny/Detroit