Succession: Mastering the Make or Break Process of Leadership Transition, Includes PDF on a Bonus Disc; Library Edition

Tichy, Noel M.

ISBN 10 : 1480596582 ISBN 13 : 9781480596580

Editeur : Brilliance Audio Lib Edn, 2014

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INTRODUCTION

Every question about leadership ultimately gets down to development. It’s about creating crucible experiences that make others better as a way of making yourself better. It’s about focusing on a task you don’t think can be done. Where you are rallying people across cultures and functions, where you’re challenged ethically, and where your integrity is going to be tested.

In my experience, you don’t go searching for those experiences. They tend to find you. The older you get the more you learn that people decisions are the most difficult. They are emotionally difficult, and they are also the best measure of how well you are doing as a leader.

—James McNerney, chairman, president, and CEO, Boeing; lecture at the University of Michigan’s Ross School of Business

Placing a Big Bet on the Long Game

I have known and worked closely with Jim McNerney, the current CEO of Boeing, since early 1985 when as a senior executive at GE Information Services, popularly known as GEIS, he participated in a series of workshops I was facilitating for his unit’s top team, of which he was a key member. Later that year, after agreeing to head up GE’s famed Leadership Development Center at Crotonville in upstate New York, I got to know Jim even better. Over the more than quarter century since, I have closely tracked his career and had an opportunity to both work with and write about him as he moved through multiple business leadership positions inside GE—including head of Asia Pacific, a senior position in GE Capital, and CEO of both Lighting and Aircraft Engines—before being recruited to serve first as CEO of 3M and then chairman and CEO of Boeing.

McNerney and I are both proud products of and participants in the Jack Welch era at GE, so it is only natural that we share a mutual admiration for Welch as an exemplary leader/teacher who developed more leaders than any CEO in modern business history. This was no happy accident, but rather the result of an elaborate process, framework, and infrastructure of talent development, unique to GE, which has more deeply embedded a culture of leadership in the DNA of that organization—both before and after the Welch era—than any other outfit I know of, whether public or private, for profit or nonprofit. This started with founder Thomas A. Edison, who in 1879 envisioned a company that would light up a nation, through Charles A. Coffin, who started GE on a seemingly permanent path to innovations in technology, management, and leadership and skillfully organized the world’s first true industrial conglomerate over his nearly thirty-year reign from 1892 to 1922. While Coffin created a vertical, hierarchical, centralized structure to control the various “GE Works” scattered across the country, he conceived of organizing national sales forces along product lines, and established the nation’s first industrial research laboratory under Charles Proteus Steinmetz, widely known as “The Wizard of Schenectady.”

But apart from all the patents, inventions, and innovations that GE pioneered—more than any company in the world over time—its most singular contribution to the evolution of modern business has been the intensity of its focus on leadership. By the 1920s under the duo of Coffin’s successors Gerard Swope and Owen Young, GE began conducting specialized management retreats in the Thousand Islands area of upstate New York stressing the inculcation of leadership values, the first true corporate leadership curriculum in the world, which served as the precursor to the establishment of the leadership development center at Crotonville in 1956 under then-CEO Ralph Cordiner. The center spearheaded a thirteen-week executive leadership program that would be emulated by Harvard and other leading schools of business as they developed their own leadership programs.

This by-then well-grounded tradition of innovating new business models as well as machines led during the Depression to the foundation of GE Credit (later called GE Capital) to provide struggling householders with the means to buy GE’s washing machines, toasters, fans, and other electrical appliances. During that period of the New Deal, as labor relations became a new battlefield, management focused on the adoption of generous pension plans and profit-based bonuses to keep its employees from joining unions. During the post–World War II period of rapid economic expansion, the company continued to develop its core management and leadership curriculum, commissioning such leading lights as the great Austrian-American consultant and theorist Peter F. Drucker to contribute to its famous Bible-like “Blue Books,” a series consisting of five volumes of meticulously detailed guidance for GE managers that shaped management theory and practice around the country and the world for decades to come. In the 1960s, GE led the way to strategic planning, while in the 1980s and 1990s under Jack Welch, its warm embrace of such then-cutting-edge leadership development concepts as Work Out, Boundarylessness, and Six Sigma made them an integral part of global management culture.

What I will refer to from here on as the “GE Pipeline” or, in some cases, the “Jack Welch Pipeline,” was a marvelous thing not just to behold but to be part of. Its unique design, equipped with multiple redundant systems and an intricate array of checks and balances, was entirely in keeping with the deeply held conviction—adhered to by Welch but also by all GE leaders both before and after his time—that the most important products GE produces aren’t aircraft engines or locomotives but great leaders. According to a report in USA Today,1author Del Jones noted that the top three companies for producing CEOs of other companies at that time were GE with twenty-six, IBM with eighteen, and McKinsey with sixteen.

The piece openly celebrated the fact that at certain companies, a comparatively small group that includes GE, Procter & Gamble, PepsiCo, and Yum! Brands (all organizations frequently referred to as “academy companies,”2 which will serve as role models of robust pipeline production in this book), seeing senior executives leave even after decades of investment in their development for presumably greener pastures outside the company is not looked down on or frowned upon, but rather regarded as a high honor, not just for those executives selected for higher office but for the organization that trained, developed, and produced them. When a GE highflier leaves “for a huge external opportunity,” executive vice president of executive development Susan Peters—now head of HR at GE—was quoted as saying, “it enhances our employment brand.” When USA Today e-mailed Procter & Gamble (P&G) a list of 12 alumni, now CEOs of companies with a market cap of $2 billion, P&G faxed back a list of 128 chairmen, CEOs, and CFOs at other companies that it had produced, running in alphabetical order from Fernando Aguirre of Chiquita Brands (CQB) to Sergio Zyman of Zyman Group, a former senior marketing executive at both Coca-Cola and PepsiCo.

The pipeline Jack built—with the help and input of many others, including my own team at Crotonville and its successors—included a number of future stars, many of whom would go on to lead winning teams at other organizations. Just a smattering of the name-brand CEOs turned out by the Jack Welch GE pipeline includes, most notably, former GE vice chairman Lawrence Bossidy, later CEO of AlliedSignal and Honeywell (CEO of the Year, Chief Exective Magazine, 1998, and CEO of the Year, Financial World Magazine, 1994), whose successor, David Cote, is another GE alum, as is of course former 3M CEO and now Boeing CEO McNerney; Tom Tiller, former CEO of Polaris; Steve Bennett, former CEO of Intuit and later Symantec; Home Depot CEO Frank Blake; former Home Depot and Chrysler CEO Bob Nardelli (along with McNerney a runner-up to Jeff Immelt for Jack Welch’s job); and former Siemens CEO Peter Loescher, who was a former senior executive at GE Healthcare before moving to Merck, and then Siemens.

The three finalists—Bob Nardelli, head of Power Systems, Jim McNerney, who led Aircraft Engines, and Jeff Immelt, who led Medical Systems—were all tried and tested in the field under Jack’s leadership, and judged by him and the board not just on their innate and conditioned leadership capacity but on their tangible business results. Of those final three, while McNerney went on to become a transformational leader at not one but two iconic companies, 3M and Boeing, Nardelli—sometimes referred to as “Little Jack,” in reference to his famous faithfulness to his mentor—didn’t handle the political and cultural elements at his new home while attempting a Welch-like transformation at Home Depot nearly as deftly as his mentor Welch might have. He was ultimately forced out at Home Depot, before going on to serve as CEO of Chrysler, which he successfully sold to Fiat. As for Jeff Immelt, winner of the grand prize, who took over the company within days of 9/11, having faced and lived through a nearly decade-long perfect storm of terrorist attacks—which wreaked havoc on the company’s aviation and insurance businesses—a technology bust, and a Great Recession and global financial near-collapse deeper and longer than any economic downturn since the Great Depression, it is safe to say that he and the company have withstood and sustained macroeconomic turbulence unprecedented since the outbreak of the Second World War.

During the darkest days of the financial crisis, GE stock dropped to under $7 a share. Immelt felt obliged to cut the company’s cherished stock dividend, and faced the loss of its equally cherished triple-A credit bond rating. The simple and undeniable fact is that over the first thirteen years of the Immelt regime, the stock price is down 37 percent (as of mid-2014) below its value when he took over. Yet it is far too early, particularly in the long-term context of GE, to judge his time at the helm, particularly since GE shares soared more than 30 percent in 2013 as he successfully revised the portfolio and continued to promote and drive some impressive initiatives, from Ecomagination to the Industrial Internet to a Guest House at the R&D center that directly connects business leaders to the company’s latest technology. Shifting the portfolio is part of the job of every CEO at GE—Welch divested billions in assets and hundreds of businesses, while acquiring others. In short, as of our last status check, even after thirteen years it was still too soon to call.

But one thing we can be sure of is that like all of his predecessors before him, Immelt is thinking long and hard about the selection of his successor. In fact, as The Wall Street Journal reported just as this book went to press, Immelt and his fellow directors were conducting high-level “board discussions about shortening the expected tenure for GE’s next chief executive to between 10 and 15 years” from what has been widely regarded as a traditional two-decade-long term, despite the fact that Welch’s two predecessors, Reginald Jones and Fred Borch, both served at the top for “only” nine years, so the two-decade time frame is scarcely set in stone.

Succeeding at Succession at Crotonville

Just reading that article about CEO succession at GE in the Journal took me back more than twenty-five years to the meeting where I was given my first inkling that Jack Welch was seriously committed to blowing up the process that created the pipeline at GE. I had first met Welch in 1978, when as a professor at the Columbia Graduate School of Business I had a team of MBAs do a project with GE on succession planning. At the time, Welch was a sector executive running as hard as he could—and that was hard—in a multihorse race for the top job. After he beat all competitors and was named CEO in 1981 I worked closely with Ted LeVino, GE’s longtime head of human resources, running leadership development workshops for senior HR leaders across the company, while also consulting with various units of GE on leadership development, including GE Information Services, Lighting, and Medical Systems (GEMS).

My next interaction with Welch took place in late 1984 as I was completing my book The Transformational Leader.3 I’d interviewed Chrysler’s Lee Iacocca, Burroughs’s Mike Blumenthal, and other corporate luminaries of the era, and was well aware that leaving out Welch would have been a glaring omission, but he had responded to my first request with the uncharacteristically humble explanation that since his transformational revolution remained in its early stages, any insights or reflections he might have on the subject seemed to him premature. Disappointed as I was by that rejection, I respected him for it. But then, a few months later, on a cold winter’s day in January 1985, I was winding down a teaching session at Crotonville on my favorite subject—transformational leadership—when I was handed a message that Welch would be happy to sit down with me to talk about my book, assuming I was available.

Later that afternoon, I found myself sitting with the-then notorious “Neutron Jack”4 in a small office joyfully brainstorming about the complex set of imperatives, challenges, methods, and mechanics of leadership and transformation at a wide range of organizations and institutions, getting Welch’s comments tape recorded for the book. Throughout our lengthy and wide-ranging discussion, I was, I must admit, blissfully unaware that Welch was operating with a covert agenda. I thought I was there because I was interviewing him for a book, but he was actually interviewing me for a job. All was revealed the following day, when after I’d completed my last session with the executive program and was preparing to head home, I received an urgent summons from Jim Baughman, an ex–Harvard Business School professor who five years before had accepted a strikingly similar offer from Welch to run Crotonville.

Growing more curious by the minute, I was taken aback when, within seconds of my taking a seat in his office, Baughman cut straight to the chase. “I’m being promoted to head of organizational planning and management development,” he said. “Jack and I were wondering if you’d like to run Crotonville.”

Run Crotonville?

Flattered as I was by the offer, I felt I had no choice but to decline as graciously as I could. As I explained to Baughman, I’d accepted two overseas teaching assignments, half the year at INSEAD in France and the other in Tokyo as a U.S./Japan fellow, that would keep me busy for the next year, on top of a number of other pressing programmatic commitments. Back home in Michigan, I had an International Leadership Development Program and an Advanced Human Research Management Program to run, as well as serving as editor of the journal Human Resource Management, none of which could function without me. That said, I told Baughman that I was more than flattered by the offer. I was intrigued—intrigued enough, in fact, to hedge my bets by responding that I’d think about it on an upcoming vacation with my family.

On the con side, if I said yes, my name and reputation would be permanently linked to a man many people, particularly in the press and academia, regarded at the time as a dangerous lunatic, not to mention the quintessence of everything that had gone wrong w...

Présentation de l'éditeur :

Noel Tichy has been the trusted adviser on management succession to companies including Royal Dutch Shell, Nokia, Intel, Ford, and Mercedes Benz. Succession distills his decades of experience and provides a practical framework for building effective transition pipelines - for multi-billion dollar conglomerates, family businesses or anything in between. Through revealing case studies - like Hewlett Packard, IBM, Yahoo and P&G - Tichy examines why some companies fail and others succeed in training and sustaining the next generation of senior leaders. He highlights the all too common mistakes that can generate embarrassing headlines and threaten survival. And he puts leadership development and succession where they belong: at the top of every leader's agenda.

À propos de cette édition

• Éditeur: Brilliance Audio Lib Edn
• Date d'édition: 2014
• ISBN 10: 1480596582
• ISBN 13: 9781480596580
• Reliure: CD