Tarter: Author Shares Insights on Caterpillar

Originally posted September 22, 2013

Craig Bouchard didn’t set out to write “a wonderfully endorsing” book about Caterpillar Inc. The co-author (with James Koch) of “The Caterpillar Way,” to be released next month, said the initial challenge was to chronicle the best managed company in the United States. “We devised a checklist of characteristics and looked at companies like Apple, Microsoft, IBM, General Electric and Walmart, but Caterpillar was the only one that checked them all,” said Bouchard. “The book is the story of a company that lost $1 million a day for three years in the early 1980s that became the best managed company in the country,” he said of Caterpillar.

By Steve Tarter

Craig Bouchard didn’t set out to write “a wonderfully endorsing” book about Caterpillar Inc. The co-author (with James Koch) of “The Caterpillar Way,” to be released next month, said the initial challenge was to chronicle the best managed company in the United States.

“We devised a checklist of characteristics and looked at companies like Apple, Microsoft, IBM, General Electric and Walmart, but Caterpillar was the only one that checked them all,” said Bouchard.

“The book is the story of a company that lost $1 million a day for three years in the early 1980s that became the best managed company in the country,” he said of Caterpillar.

To write that story, Bouchard said he needed to get “inside” the company, a request that was initially denied. “They turned us down at first, but (Caterpillar chairman and CEO) Doug Oberhelman gave us a chance. We were able to go anywhere we wanted for a year,” said Bouchard, who interviewed board members, CEOs, managers and dealers.

“Over a 30-year period since 1984, Caterpillar made six strategic decisions that changed the company. Each strategic move was company-threatening, but Caterpillar went six-for-six,” said Bouchard, 59, who played baseball for Illinois State University.

It was at ISU that Bouchard met Koch, then chairman of the school’s department of economics. “He’s been my mentor my entire career,” he said of Koch, who later served as college president at the University of Montana and Old Dominion University.

Among Caterpillar’s accomplishments was its rapid adoption of the six sigma manufacturing approach. “They took what GE did to a whole new level,” said Bouchard, referring to the management technique used to achieve long-range goals.

Other distinctions for the company included success in labor negotiations and advancing globalization plans, he said. “Caterpillar derived 46 percent of its revenue from outside the United States in 1984. Today, it’s 70 percent,” said Bouchard, who’s no stranger to business success, himself, having bought a steel company for $2.4 million that later sold for $1.3 billion.

Bouchard and Koch didn’t surrender editorial control to Caterpillar in return for the access the company provided. But Caterpillar needn’t worry: The book offers a glowing review of the company’s many endeavors, glossing over the fact that Caterpillar made national news in recent years with its hard-line approach to workers on the line while enjoying record profits.

Bouchard takes the Wall Street approach that the company is beholden to its shareholders, first and foremost.

As for 2014, the authors see a bounce-back year for Caterpillar, taking up an entire chapter with reasons the company could top $70 billion in revenue, a figure that would be a new record.

Bouchard, meanwhile, has his own plans for 2014. He’s involved in an electric car business in China and hopes to parlay a bedtime story he told his three youngest daughters into a top-selling children’s book, “The Adventures of Ai,” an adventure tale set in 16th-century Japan.

Steve Tarter is Journal Star business editor. Tarter’s phone number is 686-3260, and his email address is starter@pjstar.com. Follow his blog, Minding Business, on pjstar.com and follow him on Twitter @SteveTarter.