Quite frankly, the executives at Marquette Electronics Inc. would be a little uncomfortable with the notion that theirs is one of America's best-managed companies. Here's a manufacturer of sophisticated medical devices used by doctors around the world to make life-and-death decisions. And yet, here's a company organized around the unorthodox belief that there is productive value in fun and creative merit in a bit of disorder. By any standard, it is an odd combination -- as a group of visiting West German businessmen discovered.

As the story goes, the foreigners were taking a midshift tour of Marquette when they happened upon Hawaiian-shirted employees with boom-box hula music playing in the background.Puzzled, the visitors turned to their guide, Michael Cudahy, Marquette's president.

"Coffee break," Cudahy explained.

Passing by Le Bistro Restaurant, Marquette's tony version of a company cafeteria, the West German visitors came upon assemblers quaffing beers from a company-owned spigot and rehearsing for a fashion show in the adjoining theater.

"Coffee break," Cudahy explained.

So it went -- from the day-care center, where sales representatives were taking time off from their jobs to play with their kids, to the exercise room, where a determined bench-presser grunted through his workout. At the end of the tour, the confounded leader of the group sidled up to Cudahy.

"If you let your employees do whatever they want, whenever they want," he asked, shouting to be heard over the hubbub of a busy assembly area, "why are there any people here working?"

Cudahy smiled. "Because our people like their jobs."

The West German nodded and turned to speak to his group in their native language: "Either these guys are very good managers, or they're full of it."

Actually, a company with projected earnings of $7 million on sales of $90 million, with a debt-to-equity ratio of .73 to one, isn't full of anything but justified pride. Surely the company couldn't claim 80% of the market for centralized electrocardiograph management systems, 26% of the stress-testing market, and 20% of the market for patient-monitoring devices if something wasn't being done right. But good management?

"The truth is, we're all quite bad managers," admits engineering vice-president Carlos de la Huerga. He cheerfully acknowledges that at Marquette, job descriptions are vague, reserch and development goals are inconsistent, and interdepartmental coordination is often poor. The result sometimes can be seen in abandoned projects, eleventh-hour design changes, and rush-rush production schedules. Marquette will never be a candidate for "excellence" of the best-seller variety -- unless fun and chaos are added to the criteria.

But Marquette's is an organized sort of chaos that masks a clever sort of control, and an effective sort of leadership. "Maybe we're not managers at all," offers de la Huerga, mulling it over. "Provocateurs -- that may be closer."

Twenty years ago, Marquette Electronics consisted of Mike Cudahy and Warren Cozzens, two ambitious manufacturers' reps in Chicago who had decided that they could build the world's first machine to monitor, analyze, and store information about the heart of a hospital patient. Researchers at Northwestern University Medical School had designed an interesting system to record the electrocardiographic data on microfilm, but the estimate from one manufacturer was that it would cost $250,000 just to get the prototype built and tested. Hewlett-Packard Co. had failed to deliver on its part of the project. So when Cudahy and Cozzens said they could deliver the finished product for $12,000 within six months, the university was happy to award them the contract.

Cudahy and Cozzens installed the system on time -- but only after they had gone to the university for another $12,000. And they still lost $10,000 on the deal.

Their work, however, had won them the respect of medical academia, and soon teaching hospitals across the country were ordering more sophisticated versions off Cudahy and Cozzens's equipment. Before long, the original system's microfilm gave way to magnetic cards, and then to digital disks. Marquette's was the first electrocardiograph system to computerize, the first to employ digital disk storage, and the first to spew forth dot-array readouts instead of the pen-and-ink spikes that had traditionally plotted the human heartbeat.

Marquette began to diversify its line in 1982 as the result of a deal with General Electric's Medical Systems Group. It wasn't exactly the deal GE had had in mind. The electronics giant had approached Marquette with the idea of buying up the smaller company and marrying Marquette's healthy electrocardiograph business with GE's not-so-healthy patient-monitoring division. Cudahy flatly rejected the GE bid, but he made a counteroffer GE chose not to refuse: Marquette would trade convertible stock for GE's inventory, designs, back orders, and the opportunity to hire from among GE's employees. In effect, Cudahy had traded paper for cash and a smooth entry into a new and lucrative market.

Within its industry, Marquette Electronics is now regarded as a sensible innovator -- a company that strives to be first with the best. The company has a knack for translating its ideas into production in a matter of months instead of years. And it manages to keep its products inexpensive enough to meet the efficiency requirements of some of the nation's toughest hospital administrators.

No company accomplishes such a juggling act without maintaining a close and continuing relationship with the medical community. Marquette has been more zealous in that effort than even bigger domestic competitors, such as Hewlett-Packard; or more prestigious foreigners, such as the German behemoth Siemens. Its marketing staff includes nurses, whose experience helps the company decide what to build and how to sell it. Mrquette's success in winning opportunities to participate in major cardiovascular research programs is the envy of the industry. So, too, is its annual retreat, which awttracts about 30 electrocardiographic experts to a weeklong brain-storming session in scenic resorts.

Still, it is Marquette's unique approach to human-resources management that most sets the company apart. Mike Cudahy and Warren Cozzens are hands-on leaders who scorn policies and directives and eschew memos and meetings. Individually, each is possessed of seemingly boundless energy and enviable people skills. Together, theirs has proved to be an extraordinarily harmonious relationship in which each is content to work his own area of responsibility: marketing and sales for Cozzens, product planning and engineering for Cudahy. When disputes arise, Cudahy and Cozzens may haggle them out from the doorways of their adjoining offices, literally shouting over the head of their shared secretary.But, although vicepresident Cozzens wins his share of the skirmishes, he never mistakes his influence for power: it is Cudahy who is by far the largest stockholder (nearly 50%), Cudahy who sets the company's direction, and Cudahy whose personality is most closely reflected in Marquette's corporate personality.

The first thing to know about Cudahy is that he is something of a performer. From the pictures in the lobby reminiscent of old patent-medicine posters to the elegantly curtained proscenium stage he built adjacent to the cafeteria -- on which Cudahy has hammed it up in a variety of guises -- the man's fascination with showmanship is apparent.He's in business, in part, for the applause, the peer respect, the employee adualtion -- and he's not shy about admitting it. "If it's a choice between more money and a standing ovation when I walk into Le Bistro," he says, "I'll take the ovation every time."

In some ways, Cudahy himself is an odd combination -- the son of a diplomat, the grandson of one of Milwaukee's leading meatpackers, a high-tech entrepreneur who never went to college but learned his engineering as he went along. He feels no need to become richer or more prominent; he wants to be loved by the people who work for him. And what's more, he thinks his company's ability to innovate and made quality products depends on his ability to earn that affection.

"People want to love their job, their boss, and their company," Cudahy maintains. "They want to perform. But that happens only when you've taken the yuck, the real drudgery, out of working. You can't put people in boxes, telling them what they can do, when they can do it, and who's going to get rid of them if they don't do it. That only gets their noses bent out of shape. You've got to give people a voice in their jobs. You've got to give them a piece of the action and a chance to excel. You've got to give them the freedom to have fun."

There is nothing yucky about the company's artfully decorated production facilities, or the many "coffeebreak" amenities to be found within the building. An employee stock ownership trust sets aside at least 5% of the company's annual pretax profits for its employees.A $50,000-a-year in-house education and tuition-reimbursement program encourages workers to excel, through studies ranging from basic electronics to graduate course work in engineering or business. As for "the freedom to have fun," Cudahy not only offers it to his employees, he retains it for himself -- by adamantly refusing to merge with a larger entity, and refraining from taking the company public.

At Marquette, work begins promptly at 6 a.m. -- and 7, and 8, and 9, and everywhere in between. Marquette's flextime program allows employees on both shifts to start the day anywhere within a three-hour period. The second shift works an extra hour Monday through Thursday to allow them to knock off an hour early on Friday. (When your average employee's age is 32, dating customs are things one pays attention to, Cudahy says.) Because there are no time clocks to keep track of all of these comings and goings, it's entirely possible for employees to fib about their hours. But the personnel department's spot checks show that most don't.

It's not that the boss isn't both visible and vigilant at Marquette. Cudahy prowls the length and breadth of the building several times a day, hands dug deep into the pockets of frayed khakis, a shock of white hair falling across his typically hangdog expression. He's "snooping," he jokes, peering Kilroy-like over dividers to see who's where, doing what. And well he should: the department that was in one corner of the building one week may up and leave for an opposite corner the next, leaving Cudahy turning circles in the aisles -- as he did on one recent foray into the plant -- muttering, "Where are those guys? They were here three days ago."

Cudahy carefully cultivates the image of befuddlement and uselessness. "I come to work only to pass out," he deadpans, using his lunchtime cocktail as a prop. He takes two beats and a sip before continuing, as any practiced thespian would. "I mean, I pass out opportunities, I pass out advice, and I pass out rewards. That's it. That's all I do. And that's enough. I don't believe in being a tin god behind a mahogany desk, and I don't believe in treating people like they're dirty, greasy workers. And no, that's not socialism, either. If you want to compete in today's world, if you want to innovate and tell the overseas competition where to go, what we do here is just plain common sense."

Mike Cudahy is a wealth of ideas. But it is Warren Cozzens who is primarily responsible for finding the customers to pay for those ideas. And Cozzens is not shy about telling Cudahy, in the good-natured way that exists between them, that this time he has gone too far, that the fun has gotten out of hand, that the perks have been piled too high. "All that stuff is fine," says Cozzens, "but people around here talk like sales are always going to go up 20% a year. And I'm not so sure."

Because he spends much of his time on the road, Cozzens is also the man who takes the heat when things go wrong and customers get angry -- which, for all Marquette's reputation for quality, does happen occasionally. Sometimes it's a sales problem: the salesperson has simply overpromised features that aren't beyond the company's technical capabilities, but aren't high on its list of priorities either, and thus are undeliverable. Other snafus are less noble, like the time somebody put the wrong electronic leads in the shipping container. "Dumb, irritating stuff like that shouldn't happen, but it does," growls Cozzens. Still, as interested as he is in seeing Marquette improve its quality control, he believes there are limits to how far those improvements can go without harming Marquette's ability to innovate, and innovate quickly.

"You're going to get a few lemons," Cozzens explains. "Remember, we aren't mass-producing. We aren't making TVs here." Rather, Marquette is making specialized, almost custom-built machinery for customers who pay from $5,000 to $150,000 for a piece of equipment. Too much of a drive for perfection only pushes back delivery dates. And too much of a drive for perfection only pushes back delivery dates. And too much regimentation of the workers only hampers their imagination and judgment, which Cozzens says is nearly as necessary in manufacturing as it is in the design stage.

"You don't write manuals for work like this," Cozzens explains. His manner is deliberate, avuncular. "You couldn't -- not without writing to the lowest common denominator, and that stifles people's creativity." He is resigned to the fact that the more sophisticated the level of competition and the harder the technology is being pushed to its limit, "the less likely [it is that] you can eliminate mistakes."

He would draw a line, however, between giving employees their freedom and pampering them. Two miles from Marquette's main production facility, in a lovely wooded glen, stands the $2.1-million Cozzens and Cudahy Research Center.But nobody is more skeptical about its value than the man whose name appears first on the door. The "aura" of the two-and-a-half-year-old think tank has been an aid to recruiting, Cozzens says, but contrary to Cudahy's promises, "it hasn't done a damn thing for sales." Cozzens thinks the 18 engineers who labor within the churchlike walls of the concrete, copper, and glass center may be too free to tinker with gee-whiz technologies that may never find application in Marquette product lines. ERWOD is the lighthearted acronym he uses to describe what he fears: Early Retirement Without Detection.

There are two things to get straight about Marquette. First, not everyone thrives in such a fluid and informal atmosphere. Consider that half of the 70 people who came to Marquette in 1982 from GE's patient-monitoring division are now gone, many of them having complained that they "felt naked within our structureless structure," as engineering vice-president de la Huerga puts it. Several of those who have since returned to GE agree. One remembers his old job at Marquette as "moving target."

The other thing to know is that Marquette's lack of structure doesn't indicate a lack of control. "It's real interesting, trying to figure out how this place works," muses Julie Grabczyk, a research technician. "They say there are no time clocks, but shop people do have to log on the computer to say how long they've been working and what they've been doing. People supposedly don't get fired, but they do. Technically there isn't a pyramid, but obviously there is. What you see depends a lot on where you're standing."

Grabczyk sees quite a lot, actually.She is the only one of Cudahy's 11 children to work full-time for the company.

For Scott Kroeger, too, the notion that Marquette Electronics is a structureless free-for-all is laughable."If you define structure as requirements that make you work hard, this is the most structured place I've ever worked," declares the design engineer. By his reckoning, job performance is dictated not by traditional rules, but by a short list of dauntingly simple expectations: "make good products, give good customer service, and do it all fast." It was with precisely those expectations hanging over them that Kroeger and two colleagues set up shop about a year and a half ago in an out-of-the-way corner of the main plant with instructions to come up with an electrocardiographic computer not much bigger than a breadbox -- and to come up with it as soon as possible. On his rounds, Cudahy would visit the team, only to be shooed away unceremoniously. But by the following summer, he had his new machine in distribution.

Cudahy is not always content simply to wind up his employees and let them go, hoping they'll do the right thing. The boss's patient, generous side has a flip side that is mercurially opinionated and surprisingly quick-tempered. Still as enamored of the clutch play as he was when he built that first electrocardiograph system, Cudahy often seems energized by his ability to intervene in a project, either by mobilizing it to a frenzied pace, or bringing it abruptly to a stop. When Cudahy, for example, grew fed up with a supplier who was continually "jacking around with prices and delivery dates" for a treadmill used in a Marquette stress-testing device, he finally informed his manufacturing staff that the item would be produced inhouse, and gave the engineers a year to design both the machine and the production fixtures needed to build it. When one team of enterprising engineers decided that the displays on Marquette's computerized screens should come up green instead of orange, an angry Cudahy vetoed the change. Even in the case of Kroeger's miniature electrocardiographic computer, Cudahy pulled it out of distribution for a last-minute redesign -- after the ad campaign had hit the streets with photographs of the earlier prototype.

Beneath Cudahy's loose-as-a-goose exterior, acknowledges his daughter, there lurks a man who basically wants things done his way. "Somehow, though, he makes you think you're doing it not for him, but for yourself. He makes you think there's nothing too big for you to swallow. That's the most amazing part."

David Mortara says there is little doubt in his mind that Marquette Electronics is one of the more technologically aware, market-responsive companies in its industry, and that its work force ranks among the most talented, productive, and contented. He has just one question: "What about middle management?"

Mortara, a former Cudahy protege who left a Marquette vice-presidency to open his own medical-electronics company across the street, says that aside from Warren Cozzens, there is no such thing as middle management at Marquette. "Sure, there are vice-presidents, and Mike always talks about his horizontal management, but does anybody really report to these guys? Has anybody seen a management meeting take place in the past three years? No. That's because Mike makes sure everybody reports directly to him;" says Mortara. He says he left Marquette for what he perceived as his lack of responsibility and recognition.

Middle managers don't completely agree with Mortara, whose departure was not amicable. But they don't totally disagree, either. One vice-president confided that he thinks Cudahy's version of management works beautifully in keeping the rank and file happy, but as a manager, he'd be happier if he could call more turf his own. Thomas Divers, general manager of the patient-monitoring division, disagrees. "I think we have all the turf we're entitled to. . . . We call our own shots." David Ivers, the vice-president for technical services, says that Cudahy "gives you all the rope you need -- including the rope to hang yourself. I guess I'm more structured than he is. I know that I don't want to be as loose with my people." Board member Fred Luber, chairman of nearby Super Steel Products Corp., perhaps comes closest to the truth of it. "Mike likes to be the maypole," he says.

"What Mike has done most brilliantly at Marquette is turn his faults into features," explains Mortara. "He knows he's better one-on-one than in groups, so he abolishes meetings and says he's cutting red tape. He knows he doesn't trust others to help him manage, so he either promotes people he knows can't do the job, or he doesn't appoint anybody -- saying titles and organizational charts don't mean anything."

Frustrating? Invariably. Effective? Irritatingly so. "Mike gets by so well on his charm and his business insight," says his former employee, "that he's never really had to learn any of the usual ways of doing things. Whawt he does isn't management, and it certainly isn't as loose as a lot of the lower-level employees think it is. But, boy, does it work."



In "Will the Company Please Come to Order" (March), the charts on page 83 should have been credited to Bruce Sanders.