Chairman, Telecom Italia
Born: 1948, in Milan, Italy.
Education: Bocconi University, BA, MBA.
Family: Married Cecilia Pirelli, 1978 (divorced) children: three.
Career: Pirelli, 1986–1988, managing partner; Société Internationale Pirelli, 1988–1992, CEO and general manager; 1991–1992, general manager of finance and administration; 1992–1996, CEO and executive vice chairman; 1995–1999, chairman; Telecom Italia, 2001–, chairman.
Address: Corso d'Italia 41, 00198 Rome, Italy; http://www.telecomitalia.it.
■ After more than a decade at the Italian Pirelli company, Marco Tronchetti Provera became chairman of Telecom Italia in 2001. He had an advantage over the competition at Pirelli: he had married the chairman's daughter. Some observers assumed that he had obtained his position through family connections, but Tronchetti Provera proved to be an astute businessman who revitalized the declining Pirelli. In 2001 Pirelli was part of a group that took control of Telecom Italia, and Tronchetti Provera began to put his skills to the test once again in an attempt to restore a failing firm. He was part of a new wave of Italian executives who were more aggressive in their business dealings than their more laid-back predecessors.
Tronchetti Provera was born in 1948 in Milan, Italy. He came from a relatively wealthy family with an entrepreneurial background. Furthermore, his family had longstanding ties to the Pirelli family that had established the well-known tire and cable company of the same name. Tronchetti Provera graduated from Milan's prestigious Bocconi University. Then, in 1978, he married Cecilia Pirelli, daughter of Leopoldo Pirelli,
chairman of the Pirelli firm. He worked for a time in his family's maritime transport business and established his own holding company.
In 1986 Tronchetti Provera went to work for his father-in-law at Pirelli. He initially held the position of managing partner. In 1988 he was appointed CEO and general manager of the Société Internatioanle Pirelli, a position he held until 1992. From 1991 to 1992 he was also CEO and general manager of finance and administration at Pirelli S.p.A. Then, in 1992, moving past a number of more experienced executives at the company, Tronchetti Provera was appointed executive vice chairman and CEO of Pirelli. He also served as chairman of Pirelli from 1995 to 1999.
When Tronchetti Provera took the reins as CEO at Pirelli, the company was close to bankruptcy. The firm had attempted numerous acquisitions during the 1980s, leaving it with a heavy debt. While Pirelli did acquire Armstrong Tire in 1988, it failed in expensive attempts to take over Firestone and Continental. Furthermore, a weak car market reduced the demand for tires. Tronchetti Provera implemented a number of key changes that restored the financial health of Pirelli. He began to dramatically cut costs by closing factories, eliminating jobs, and selling a division of the company. He also moved Pirelli's headquarters to a more modest building. To improve the company's image, he hired the actress Sharon Stone to lead the company's new advertising campaign. Proving his doubters wrong, Tronchetti Provera continued at Pirelli even after divorcing his wife.
Tronchetti Provera was aware that to compete in the global economy, companies such as Pirelli would have to change or perish. Acknowledging the growing economic power of Asian countries, he told Fortune that "the power of Japan cannot be fought by doing business in Europe as usual. We have to fight as if we were starting from scratch" (September 6, 1993). Tronchetti Provera took several steps to reposition Pirelli in the global economy. Realizing that he could not compete in the mass tire market with larger manufacturers, he focused Pirelli on high-performance tires, which had higher profit margins. Pirelli also developed "intelligent" tires, with sensors that monitored road conditions and tread wear. He promoted the use of robot-driven factories that cut costs and sped up production. Tronchetti Provera also took a risk by funding company researchers who asked for more money to develop a fiber-optic network. His investment paid off, and in 1994 Pirelli developed the technology that formed the backbone of the Internet. In 2000 Tronchetti Provera sold the fiber-optics division to Corning for $3.6 billion. His changes at the company restored the financial health of Pirelli, prompting many brokers to switch their recommendations on the company to "buy." By 1996 Pirelli was once again profitable.
In 2001 Pirelli and the Benetton company bought Telecom Italia for $6.1 billion. Pirelli and Benetton shared many traits, making them good partners in the deal. Both companies and families largely shunned the political scene, while combining discretion in business with a sense of style. Tronchetti Provera told the Wall Street Journal that "it has been an easy relationship from the beginning. We understand each other. We go straight to the point and don't waste time. And we're both interested in creating value" (July 31, 2001). He went on to point out that both he and Pirelli brought expertise in industry, marketing, and information technology, all of which could be used to revitalize what had been an inefficient state-run monopoly. Telecom Italia would provide Tronchetti Provera with a chance to show his skills in turning around a declining company.
Tronchetti Provera's job was not easy at the start. Some shareholders were not happy with the takeover, because it did not pay a premium to minority investors. Also, one of Tronchetti Provera's first moves was to ask for a capital increase, leading many shareholders to assume that the new management expected them to pay for the company's debt. Furthermore, the terrorist attacks of September 11, 2001, in the United States negatively affected the industry, and share prices dropped. Tronchetti Provera said that the first several months after the takeover had been the most difficult of his career.
By late 2001 Tronchetti Provera had begun to regain investor confidence with the presentation of a detailed new industrial strategy. He told the Wall Street Journal that "my goal is to regenerate confidence in the company and regenerate self-confidence in the people who work for this company" (October 16, 2001). By the end of 2002 Telecom Italia had posted a $1.7 billion profit after losing nearly the same amount in 2001. His formula for turning around Telecom Italia including selling off assets, reducing debt, bringing in new managers, and succeeding in the mobile phone sector.
Tronchetti Provera was part of a changing of the guard in European business circles. In Italy, especially, executives had always been easygoing and collegial. Tronchetti Provera was part of a wave of young managers who were more aggressive in their business dealings, similar to the way executives in the United States operated. He was known to work long hours and have a competitive spirit. He also was at the forefront of technological changes. Outside the business world, Tronchetti Provera enjoyed music (attending performances at La Scala opera house) and sports and had a passion for sailing and soccer.
See also entry on Pirelli S.p.A. in International Directory of Company Histories .
Ball, Deborah, "A Tale of Blue Blood, Sweaters, and Tires: Stylish Telecom Deal Cut by Benetton and Pirelli Marks a Coming of Age," Wall Street Journal , July 31, 2001.
——, "Telecom Italia's Marco Tronchetti Provera Wins Some Points, Faces Big Challenges," Wall Street Journal , October 16, 2001.
Banks, Howard, "The (Almost) Perfect Son-in-Law," Forbes , May 19, 1997, pp. 106–110.
Edmondson, Gail, "The Cuts Worked, But…," BusinessWeek , December 2, 2002, p. 28.
"Getting a Grip," Economist , April 21, 2001, p. 59.
Hofheinz, Paul, "Europe's Tough New Managers," Fortune , September 6, 1993, pp. 111–114.
Jewkes, Stephen, "The Rise of Tronchetti Provera," Europe , September 2001, p. 45.
Kapner, Fred, "Hanging On in Hope of Better Times," Financial Times , July 19, 2002.
Keeler, Dan, "Italy: Keep It in the Family," Global Finance , September 2001, p. 9.
"Marco Tronchetti Provera: CEO-Pirelli-Italy," BusinessWeek , June 19, 2000, p. 184.