The early morning news on Monday that General Electric ousted CEO John Flannery was surprising to many of us, and it certainly matters to investors, analysts, employees and competitors (and probably historians).
But does the success or failure of GE’s CEO really matter that much when it comes to how most of us lead, manage and plan each day? Not necessarily.
For one thing, an increasing percentage of Americans are working at large companies, but it’s still not a majority, and most of us aren’t running these companies or even their divisions. Our direct reports (hopefully) are a small group of people, even if we’re ultimately responsible for larger causes. The communication, relationship-building and coaching we do in these small groups is a vital part of any leader’s job, and you can have almost any title and work in almost any setting while doing it.
That said, GE has long been looked to as an example of corporate product strategy, innovation, how to assess performance, ways companies can internally manage talent and leadership development and even the state of the US economy. Not to mention the cult of Jack Welch. So, we’ve been looking to the company for insights for a long, long time.
What I would say today is to look past the headlines. GE’s long-declining stock price is obviously a problem, but the stock price is merely a byproduct of actions taken. You won’t find leadership lessons by tracking a stock graph. Comparing superficial character traits of the company’s recent CEOs probably isn’t helpful for most of us, either. And we have to be careful of lauding or criticizing innovation efforts, such as Predix, in hindsight alone.
Basically, there are few black-and-white lessons that you can lift from GE’s story and apply to your world. So, what’s left? Here are a few areas I’d suggest looking into and then comparing and contrasting with your organization:
Can you say what your organization does?
If you can’t, or your newer and lower-ranking employees can’t, this could be a communication problem. That’s serious, but there is a mission there that simply needs to be promoted more. There are a lot of ways to go about this, some more expensive than others, but the answers are there.
But not being able to explain what the organization does could also mean it’s less of an organization and more of a holding company, if not a mess. As former Medtronic CEO Bill George wrote almost a year ago about GE’s plan to focus on three core areas:
“GE’s deep problem today is that it doesn’t know what business it is in. There is no central purpose that unites its disparate businesses, or enables them to be greater than the sum of its parts. Even GE’s three remaining businesses – aviation, health care, and energy and power – bear little relationship to each other. As CNBC’s Steve Liesmann noted after Flannery’s announcements, why not go all the way and split GE into three separate companies, thereby eliminating the corporate staff and associated corporate costs?”
Are outsider CEOs better? It depends
You’ll probably see a lot of opinions about whether GE was right to reach outside its ranks for John Flannery’s replacement. Some people will be bullish on the change, while others won’t, and they’ll have well-articulated reasons.
What’s research say? There can be a benefit to an outsider CEO from another industry, but that’s not a universal answer, as outsider CEOs can face conflict when they try to implement changes and find themselves kicked out almost as quickly as they were ushered in.
The bigger lesson, at least according to that research, might be in the mindset you seek. This requires careful detail to succession planning, talent management and board responsibilities rather than gambling on the magic of a CEO. As Matt Palmquist of Strategy+Business wrote:
“Rather than breadth of experience, boards and recruiters should look for a proven track record of challenging conventional wisdom and experimenting with unconventional ideas—especially those that pay off.”
Don’t underestimate the difficulty of big changes
Reorganizations might be necessary, but they always involve discomfort and pain. Layoffs occur. People are asked to change roles, relocate, abandon their old ways of thinking for new ways. The new plan isn’t always justified (at least not to the satisfaction of those affected) and can easily become perceived as a burdensome directive.
Restructurings, reorganizations, reconfigurations: They are each complex, and they each have situational challenges that require organizational introspection, as Stephane J.G. Girod and Samina Karim wrote in Harvard Business Review last year:
“Whether you are restructuring or reconfiguring, the way you group and allocate activities and resources must play to your strengths and differentiate your company from competitors. That might seem obvious, but not all firms have the discipline to follow this guideline—or even understand which practices are most suited to their situation.”
GE probably could do better in its rethink, but the lessons found there might not necessarily help your reorganization, especially if you don’t work for or run a multinational industrial public company.
Instead, think about your people, your job titles and what functional areas of control you give your managers, as Pingboard CEO Bill Boebel advises:
“As you’re giving thought to your organization’s leaders, identify those who are ‘people’ managers and those who are ‘work’ managers. People managers are excellent at leading a team, while work managers are those more skilled at overseeing tasks.”