Generation Next

April 9, 2003 | By Julie Johnsson

Offspring of corporate chieftains chart more entrepreneurial courses than their fathers

Patrick Ryan Jr.’s first—and last—stint at a large corporation came in the early 1980s, when, at age 15, he donned a rust-colored, polyester uniform and worked the deep-fat fryer at a McDonald’s Corp. outlet near his North Shore home.

His manager: Jack Greenberg, then a senior executive at the Oak Brook-based chain, who was assigned to the store to learn the burger business from the ground up.

While Mr. Greenberg went on to run the Golden Arches’ global empire (he retired last year), Mr. Ryan hung up his paper hat to pursue the life of an entrepreneur.

“His career at McDonald’s went a lot farther than mine,” deadpans Mr. Ryan. “I was never promoted past the Quarter Pounder grill.”

But then, the unassuming Mr. Ryan, 35, has always preferred to make his own way, both in business and in philanthropy. The son of Aon Corp. founder Patrick Ryan and scion of a family worth billions, Mr. Ryan eschews junior boards, teas and balls as well as the cushy career paths trod by many of the city’s favored sons and daughters.

Instead, the self-described “pragmatic idealist” puts in 14-hour workdays running a fledgling software company, First Look, while guiding the Inner-City Teaching Corps. In the decade since Mr. Ryan dreamed up the urban education program, which is modeled after the Peace Corps, it has provided more than $750,000 in scholarships to inner-city families, while its volunteers have taught 15,000 children on the city’s South and West sides.

“Some people say I’m thinking outside the box,” Mr. Ryan says. “I figure, let’s erase the lines.”

He is one of a group of executives in their 30s and early 40s, many of them the progeny of corporate titans—with names like Alter, Blackwell, Jannotta, McKenna, O’Connor—who are emerging in their own right as business and civic leaders.

This generation is poised to break with a century-old tradition that has placed Chicago’s captains of industry in charge of the city’s charitable and civic institutions. Financially set and raised with a strong belief in individuality, this group eschews the security offered by large corporations and the prestigious civic roles traditionally filled by the city’s power elite. They’ve created an alternative power structure, centered around entities like the Young Presidents’ Organization and Leadership Greater Chicago.

Their business philosophy tends to be more Silicon Valley than Rust Belt: create, build, sell. And while they share their elders’ passion for the city, they care most about causes that meld deeply felt interests with hands-on involvement—all the more so if the charity is one they or friends have founded.

The so-called ‘tweeners are coming of age as executives in a business community in turmoil, as many of the Fortune 500 corporations once headquartered here grapple with financial crises, sell or fold (Crain’s, March 10). Chicago business giants from Arthur Andersen LLP to Zenith Electronics Corp. have vanished in recent years, taking with them a tradition of corporate stewardship and a cadre of future civic leaders.

Valuable leadership

These developments create a wrenching problem for bedrock local institutions—the Economic Club, Civic Federation, Lyric Opera of Chicago and Chicago Symphony Orchestra, to name a few. Over the coming decade, they will face a leadership vacuum, fund-raising woes and the risk of irrelevancy if they can’t find a way to engage a group that is predisposed to support grass-roots causes.”It’s very, very important,” says John McCarter, president and CEO of the Field Museum and one of the first civic leaders to address the generation shift on his own board. “With the exodus of corporations in Chicago, you don’t have that enormous number of CEO types. You have to think imaginatively about who can provide the leadership.”

Chicago has historically enjoyed unusually close ties between its commercial and civic mainstays, dating back to the 1890s when a businessman like Lyman Gage, who founded the Civic Federation, also headed First National Bank of Chicago and helped organize the World’s Columbian Exposition.

“You had 24 white-haired white guys literally on all the same boards, whether civic, cultural or business,” says Paul O’Connor, executive director of World Business Chicago, a quasi-public group that promotes global trade among local businesses.

For years, this clubby world was dominated by Yankee families with New England roots. It was only after World War II that Irish Catholics, Jews and African-Americans began to gain admittance to Chicago’s boardrooms. And it’s only in recent decades that entrepreneurs have been invited to the table, too.

“My father’s success and Gordon Segal’s (founder of Crate & Barrel) were more characteristic of this generation,” says Mr. Ryan. “The fact that they did it makes it easy for us.”

The younger Mr. Ryan’s generation doesn’t lend itself to easy characterization. Born in the 1960s, members of this generation have enjoyed great prosperity, yet seen deep flaws revealed in society’s institutions, from the presidency to the church. They watched the idealism of the baby boomers give way to cynicism, greed and myopic self-absorption during the 1970s and 1980s.

Different approaches

“Generations,” the 1991 book by William Strauss and Neil Howe, dubs this group the “13th generation” of Americans, whose members view themselves as “pragmatic, quick, sharp-eyed, able to step outside themselves to understand the game of life as it really gets played.”

As adults, they’ve experienced explosive economic growth, the recent downturn not withstanding. The Dow Jones Industrial Average has risen eightfold since 1980, while the city of Chicago has added nearly 1 million jobs. During the 1990s boom, the city’s gross regional product grew by one-third—$83.7 billion—to $340.8 billion.

“When I think of a business, I think of building an institution that will last,” says Robert Blackwell Sr., 65, CEO of Blackwell Consulting Services LLC, a Chicago-based information technology consulting firm. “The oncoming generation doesn’t have that because they don’t feel insecure or unstable.”

Mr. Blackwell, a former top regional IBM Corp. executive, and James O’Connor, former CEO of Chicago’s Commonwealth Edison Co., belong to the “silent generation,” a group that cherished stability, security and community. Their namesakes didn’t inherit these values, and the younger generation’s altruism is born of personal interest more than societal obligation (see story “Collision of style” in this issue).

“People want to be very engaged in what they get involved with,” says Jennifer Steans, 39, a venture capitalist and daughter of Harrison Steans, a prominent investor and former Chicago banking executive. “My father’s generation was very traditional: You make it in business and get involved in big boards and the local hospital.”

Mr. O’Connor, 66, was groomed for civic duty as a top executive prospect at ComEd in the 1960s. “Across our senior ranks, almost everybody was involved in some activity that (involved) the social and civic good for the community. It clearly was an expectation,” he says.

While Mr. O’Connor drew fire as the utility’s CEO during the 1990s, his civic leadership has been unquestioned. Though retired, he remains one of the city’s most visible figures, continuing to play a role at the Field Museum, Chicago Urban League, the Archdiocese of Chicago’s Big Shoulders Fund and other organizations. On the corporate side, he’s a member of four boards, including those of Chicago’s Tribune Co. and UAL Corp., the Elk Grove Township-based parent of United Airlines.

But Mr. O’Connor says that, increasingly, such service is the exception.

“It’s harder today than it was 20 or 30 years ago to capture people’s time and energies,” he notes, moments before dashing to a luncheon of the Urban League, an organization he’s supported for more than 30 years. “There’s been such an enormous amount of turnover in the senior ranks of a number of companies.”

James O’Connor Jr., 36, has chosen a career path that straddles the generations. He’s something of a throwback to his father’s era as a rising executive at Motorola Inc., working out of the company’s Schaumburg headquarters. But he’s a managing director at Motorola Ventures, the private-equity arm of the electronics giant—a less-conventional career choice.

Traditional, but forward-looking

A former White House fellow, he helped found junior boards at the Field Museum and Lyric Opera and is vice-chair of the Chicagoland Entrepreneurial Center, an offshoot of the Chicagoland Chamber of Commerce.

“It’s a big mistake for an organization not to understand that whole 25-to-40-year-old crew,” he says. “There will be competition for these resources going forward, and to cultivate them early on in their careers is very smart.”

Mr. O’Connor and two siblings were imbued by their parents with a sense of noblesse oblige. Fred, 40, an executive at Rosemont-based consultancy Kanbay Inc., co-founded Chicago Cares, an organization that matches volunteers to social needs. And 32-year-old Elizabeth O’Connor Cole was one of the first to enlist in Patrick Ryan Jr.’s Inner-City Teaching Corps. Mr. Ryan, coincidentally, drew his first grant from the senior O’Connor’s Big Shoulders Fund after being rejected by other foundations.

While the senior Mr. O’Connor and his peers may have been “company men,” they encouraged their offspring to blaze their own trails.

Andrew McKenna Jr., 45, is president of the family business, Morton Grove-based paper, packaging and printing company Schwarz, founded in 1907. Though he’s poised to one day succeed his father, CEO Andrew McKenna—a civic lion—that hasn’t stopped him from contemplating a run against U.S. Sen. Peter Fitzgerald, R-Ill., for the GOP nomination next year. “He’s encouraged me to be (myself),” says the younger Mr. McKenna of his father.

That emphasis on individualism combined with a “lead by example” philosophy has shaped the charity work chosen by the older generation’s progeny. Edgar Jannotta never pushed his children to be altruistic, but they saw how he served on civic organizations and supported their interests—as Boy Scout leader and baseball coach.

“I don’t think it’s all that successful to tell high school kids what they should be doing,” says Edgar “Ned” Jannotta Jr., 42, a principal at Chicago private-equity giant GTCR Golder Rauner LLC. The senior Mr. Jannotta, 75, was managing partner at William Blair & Co., the blue-chip Chicago investment bank, from 1977 through 1994, and still serves as chairman.

While the younger man’s peer group has been painted as selfish and blamed for the dot.com excesses of the 1990s, its members have been highly involved in social causes, either to make connections or because it’s in their blood.With J. B. Pritzker, 37, the latter is the case. As a venture capitalist and junior member of a family known for philanthropic generosity, he is frequently recruited for civic boards.

“It’s a great compliment, but I also know why they’re asking: It’s not my good looks.” He passes on most projects, devoting his spare time to building a new Holocaust museum here. “I love the excitement of overcoming these enormous obstacles and accomplishing something meaningful.”

An early-’80s Time magazine cover story that disparaged thirteeners as the “me” generation prompted Michael Alter’s Harvard University roommates to create City Year, a national service program that later became the model for President Bill Clinton’s AmeriCorps.

The 41-year-old Mr. Alter, a Skokie-based real estate developer, brought City Year to Chicago nine years ago as an urban “peace corps” working to promote literacy through a partnership with the Chicago Public Schools. The organization now has engaged 7,500 volunteers—Ms. Steans is a director—who’ve contributed more than 700,000 hours.

“When I get involved in something, I want to really get involved—much more so than writing a check or just sitting on a board,” he says.

He’s able to focus on charitable causes as a second-generation entrepreneur and president of Alter Group, a real estate company his father founded nearly 40 years ago that has 6.7 million square feet of space, worth about $750 million, under development nationwide.

“He didn’t have the luxury to spend the time that I do outside the business,” says the younger Mr. Alter, who worked briefly as an attorney at Chicago’s Mayer Brown & Platt before learning the family business.

Well-rounded individuals

Mr. Ryan, the son and grandson of entrepreneurs, says his parents “respect the non-traditional path.”

That’s a good thing. The most unconventional of the city’s emerging business leaders, Mr. Ryan spent the years after his graduation from Georgetown University on Chicago’s troubled West Side, working first as a middle-school teacher and then as a policeman. As a Chicago Police Department narcotics investigator assigned to track the Gangster Disciples street gang, he led a team that seized a cocaine stash with a street value of $1.1 million.He kept his police colleagues in the dark about his family connections (they knew only that his dad was “in insurance,”) while downplaying to his nervous parents the dangers of conducting drug busts in gang-infested neighborhoods. “Every time a cop was shot, they were beside themselves,” Mr. Ryan recalls.

Impressed by the need he saw, Mr. Ryan founded the Inner-City Teaching Corps, which brings recent college graduates to Chicago’s poverty-stricken communities. He also founded, with family backing, a charter elementary school for African-American children in the West Side’s East Garfield Park neighborhood.

Despite his regular-guy demeanor and reluctance to trade on his name, Mr. Ryan is no stranger to the city’s centers of power. He’s a trustee at Northwestern University and a director of World Business Chicago.

He was named a Henry Crown fellow—a nationwide leadership development program—in 1999, a class that included Michelle Collins, a managing director of Chicago private-equity firm Svoboda Collins LLC, and Michael Powell, the son of Secretary of State Colin Powell who’s now chairman of the Federal Communications Commission.

Mr. Ryan is also a member of Aon’s board, having been elected last year as an outside director to represent the interests of the Ryan family, Aon’s largest shareholder. But, as an entrepreneur, he’s never worked at his father’s company and harbors no ambition to ever lead it.

“My father would not have climbed a corporate ladder to do what he’s doing,” Mr. Ryan says. “That’s the family tradition.”

Connections