International -- The Stars of Europe -- Turnaround Artists
Marco Tronchetti Provera (int'l edition)
Chief Executive -- Pirelli -- Italy
Marco Tronchetti Provera scored one successful restructuring at Italy's Pirelli SPA shortly after becoming managing director in 1991. At that time, he sold off money-losing businesses, cut the workforce by a quarter, and moved into high-performance tires and cables. The result was soaring profits after five years of losses.
Now, Tronchetti is at it again. This time, however, the stakes go beyond the bottom line. The 52-year-old Milanese, who became chief executive in 1996, aims to turn the Old World industrial stalwart into a pioneering technology company. He's doing it by producing a range of "intelligent" tires and introducing highly efficient robot-driven factories. Even more important, he's launching a whole new business: supplying key components to networking companies, such as Cisco Systems Inc., that are wiring the Internet.
Pirelli's technology renaissance began in the early 1990s when its researchers began dabbling in a new area: fiber-optic networks. Believing fiber optics to be the telecommunications technology of the future, R&D engineers lobbied for more money to develop a product. Tronchetti ponied up. His bet paid off: Pirelli in 1994 was the first to develop technology that boosts the strength of signals traversing optical fibers--fibers that form the backbone of the Internet.
The breakthrough brought MCI Communications Corp. and a host of others knocking on Tronchetti's door. Last November, for example, Cisco gave Pirelli's technology a thumbs up by buying its fiber-cable business for $225 million, and taking a 10% stake--for $100 million--in two divisions developing high-speed network components. The two companies are now forming a research joint venture in California. "This is just the beginning of the story," says Tronchetti. Over time, analysts predict Pirelli will become much more a telecom-equipment supplier than a manufacturer of tires and other car parts.
But Tronchetti isn't giving up on tires yet. To bolster its traditional business, Pirelli is designing so-called e-tires, which will use sensors to provide drivers with information about road conditions and tread wear. And to produce tires more efficiently, Tronchetti is investing heavily in new manufacturing technology. A new robot-driven factory to be launched in June, for example, will cut costs by 25%, and slash the lead time for production of a new tire from six days to 72 minutes.
While Tronchetti's attention is now riveted on new technologies, his entrepreneurial roots are tied to the family's energy business. Growing up in a home where the family business was a hot topic at the dinner table, he earned an MBA from Bocconi University, then spent 13 years at the family company. He became an insider at Pirelli in 1978 when he married Cecilia Pirelli, daughter of Pirelli Chairman Leopold. Though divorced from Cecilia, Tronchetti is today the company's largest shareholder, with a 25.6% stake.
These days, he's looking to the U.S. for inspiration in remaking the company. On his frequent trips across the Atlantic, he regularly finds time to rub shoulders with American technology hotshots and entrepreneurs. He also powwows with his business partner, Cisco CEO John Chambers, whom he first met 18 months ago. "The first thing I do in the U.S. is meet people. You can only feel what's going on in technology by being there," says Tronchetti.
His drive to reshape $6.7 billion Pirelli for the 21st century is all the more impressive considering Italy is a country where development of the Internet and new industries has lagged. An impatient manager who expects his teams to move at Net speed, Tronchetti has been benchmarking his own companies' internal systems against Cisco's to make sure they're up to Silicon Valley snuff. "We want to be the technology leader in every business we are in," he says.
Despite long workdays, Tronchetti manages to carve out time to indulge his passion for classical music and sports. He is a regular at Milan opera house La Scala and is friends with director Ricardo Muti. Tronchetti is also an avid sailor and keeps his yacht, Kaurus II, in Portofino, where he sponsors an annual Pirelli Cup competition. And he is a soccer fanatic, with a 13% stake in Inter Milan, one of the city's two soccer clubs. With competitive spirit to spare, Tronchetti's remake of Pirelli could very well lead the company down surprising new roads.Return to top