Radial Changes

French CEO Edouard Michelin is no revolutionary, but he is fomenting unprecedented change at his family's eponymous tire company. Long known for its paternalistic, authoritarian and secretive management style, the 113-year-old firm has become much more open since the 39-year-old scion's ascension to the top job in 1999. Even the Guide Rouge, which awards the coveted Michelin stars, held its first-ever press conference earlier this year under the leadership of its new English (!) boss. Edouard has also broken with tradition to ease relations with media, markets and shareholders, and this week he will preside over two historic occasions.

During the company's annual meeting, Michelin will reveal the results of an inaugural flotation of 1.3 million shares to employees. Due partly to incentives like discounts and 0% loans, the offering is expected to be massively oversubscribed. The meeting also marks the retirement of Edouard's father, 75-year-old patriarch François Michelin, who took the helm in 1957. With his focus on technological innovation — the company invented the radial tire — and almost cultish devotion to the customer, he transformed Michelin from the world's 10th-ranked tiremaker into the second-largest producer, after Goodyear. Edouard realizes that some of Michelin's practices must be updated, but says he remains dedicated to the business priorities and company culture for which both his father and the firm are famous.

Edouard trained as an engineer and served for two years as an officer aboard a nuclear submarine before he joined Michelin in 1989. Like all company executives, he spent six months on an assembly line before becoming part of the management team. In 1991, following Michelin's acquisition of the American tire company Uniroyal-Goodrich, he was named ceo of Michelin's U.S. unit. He returned to the company's Clermont-Ferrand headquarters in 1993 to prepare for the succession. Just months later Edouard faced media and political ire when, on the same day Michelin revealed a quarterly profit increase of 20%, it announced restructuring plans that would eliminate 7,500 European jobs. "Those painful moves anticipated changes that have occurred and reflected our refusal to wait until things get bad to react," Edouard says. "But the reaction indicated we needed to communicate better what this company is about."

Edouard's willingness to communicate didn't stop with his opening up to press, analysts and investors clamoring for information. Against his father's advice, he also negotiated the implementation of France's 35-hour workweek with unions and employees. Between working, driving his five daughters to school and following auto racing, Edouard takes the time to explain how the 1999 restructuring plan and shift in sales strategy allowed Michelin to survive a globally grim 2001 and report earnings of ?314 million on sales of ?15.77 billion. Such collective efforts to remain profitable and attentive to quality are what inspired the share offering to staffers. "It's an opportunity," he says, "for employees to be rewarded beyond a simple paycheck."

Q&A

TIME: Why the shift to more openness?
MICHELIN: We realized we needed to do better at communicating with people. But action and success must come before speech. Some people in business have become so engrossed with the visions they promote that they try to sell what they're building before they've checked to see if they are on solid ground.

TIME: What role did the 1999 controversy over the layoff announcement play in this?
MICHELIN: It made clear we needed to communicate better what we're about. Some companies state that their only objectives are profitability and better shareholder returns. We think that's incompatible with responsible long-term management.

TIME: Why is this new for Michelin?
MICHELIN: A certain level of shareholder dissatisfaction had arisen over our communication policies.

TIME: The new approach is a complete contrast to your father's style. .
MICHELIN: It has been a very gradual transition. It's the very opposite of a rupture or revolution and in no way alters our focus on quality, research and development and the long-term management of the company dedicated to customers and workers. I inherited those qualities from my father. They're part of the genetic makeup of the company.

Read a longer version of this interview on TIMEeurope.com