Tuesday, April 20, 2010

Does GE Have a Leadership Problem?

Business Week's cover story asks: Can GE Still Manage? The story points out that GE's market value has been cut in half over the past ten years. The question is: What's wrong at GE? In the article, author Diane Brady focuses on leadership development at the company. She interviews a number of experts who question whether GE has fallen behind the times in the area of leadership development.

I would like to offer a different perspective. Perhaps GE's problem is not in the area of leadership. Perhaps GE has a strategy problem. My question is: Does GE's unrelated diversification strategy still make sense in the year 2010? Can this $157 billion conglomerate be managed highly effectively by anyone? Before GE tackles a transformation of its leadership development approach, it needs to determine whether it has the right strategy for the decades ahead. The corporate strategy will drive what types of leaders it will need moving forward.

8 comments:

Adam Kuebler said...

Great way to look at it, and I think you ask the right question. But how does GE choose to to keep and what to let go. Choosing the most profitable units might not be the best decision in the long run, but choosing the best mix may give up very lucrative positions. I think this may be where GE finds who it really is.

Gina Fineza Rose said...

Yes you have a point there - It is Strategy but what do you tell a comglomerate that represents the entire Dow Jones average just by the sheer number of all the industries they are in. I used to work at GE and if you haven't experienced that, you don't know what you are talking about. I propose the author interview all the employees- the top managers/executives who have left, ask them why they left and see how they are using GE's development and process improvement skills in their new companies and how relevant those are. I think the B and C employees are the ones that stay and don't grow and find comfort in the steady safe pace GE processes have become.

Jagadeesh Venugopal said...

Ah, this brings back memories of the MBA capstone class with Professor Roberto.

One could argue that GE's management system (See Welch's book "Winning") was the synergistic glue that made the conglomerate work. The question is whether GE's management processes are a competitive advantage any longer (they've been copied, others have come up with great techniques). Furthermore, it appears that the future belongs to nimbler companies which are fueled by passion in one area (e.g. Apple, Amazon, Google). What are the areas that GE is passionate about? Is there any product for which a customer says "Have to go with GE and no one else"? And you'd also have to ask how great GE's management system was if it allowed a potential Welch heir (Nardelli) to crash and burn not one but two companies!

Skyline College said...

Hi, your blog is really nice & wonderful, while reading it I truly like it.
mba

Erick said...

Professor Michael's blog is enriched with good ideas. I love the page. Looks like his readers could get prestigious luxury training of GE and leadership from him.

Erick said...

By the way, I hope you'll let me join your discussion. I am the one who have all the requisites to join such intellectual discussion. I am simply an arabian horse breeder but I hope its okay... I love hearing about people.

Michael Roberto said...

Thanks for all the comments. While I have not worked at GE, I actually have interviewed many, many people who used to work at GE. I also worked at General Dynamics during the time when one of Welch's proteges served as CEO, and I've researched other firms led by CEOs who came from GE. I think the strategy is the key question. What businesses should they divest? That's a much longer story. For my students, we'll debate that in class next week!

nish said...

Really Appreciated to you for this post
Thanks
bba