Strategy Leader

Monday, April 28, 2008

GEWatcher- Measuring performance

In the mid-1950's the GE CEO, Ralph Cordiner with the help of some of the best management academics and consultants, created a course, Professional Business Management, to develop the strategic and implementation skills of the company's management. This course was based on four words: Plan, Organize, Integrate, Measure.

I wish to discuss the last word: measure.

Measuring included a comprehensive listing of key business results, such as profitability, cost reductions, market share. Every business unit, then called "product departments", had a very extensive evaluation of these key result areas. In addition, GE had a very large "financial traveling audit" staff, that continually evaluated the operations and helped the company avoid embarrassing surprises.

In the 1970's Fred Borch installed a new strategic management system and again included a very comprehensive review system. But this went beyond the numbers and included in depth strategy reviews. These strategy reviews included assessing the business units, renamed "strategic business units"; product/ service, marketing/ sales, production, technology and financial strategies, implementation plans and programs to assure that the business units were being responsive to external, market, technological and competitive changes and were implementing programs that were consistent with their investment strategies and strategic drivers.

These reviews were time consuming and expensive and in some cases, and often an overkill, but they did enable GE to avoid missing its promised numbers and the key stakeholder expectations.

Since I have not been part of the GE system for over 24 years, I am not sure what the company does in reviewing strategies, at all levels, and assuring that they are internally consistent and able to respond to change, but it appears that this might be one area that needs to be re-assessed and changed so that the company doesn't embarrass itself with the investment community as it did this past quarter.

I am strong believer in learning from the past and from mistakes. GE's ability to ADAPT is one of its "secrets to its success".

Bill Rothschild, author of "The Secret to GE's Success", now available in Korean, Indonesian, Japanese, Spanish and English, and will shortly be published in Chinese.

GE was a very unique company... Swope and Steinmetz were SOCIALISTS...click her to read a moving obituary of an ELFUN who was a Libertian...

A Unique Employee Organization being liquidated by GE

Last week I was delighted to be able to discuss my book ( The Secret to GE's Success) and evaluation of GE's current "GO BIG" strategy with 150 Senior Elfuns in Schenectady, NY.

The Elfun Society was formed by Gerard Swope in 1928 to enable the company to gain the objective insights (even criticisms) from a select group of GE managers and professionals.

This was the mission of the organization from Swope's own words: "A society which would be their own, which would be separate and independent of the company and where we can have an open form for discussion, where any question may be asked and will bring someone to his feet to answer it".

In short, Gerard Swope was interested in getting the input of his "best and brightest" and to challenge his strategies and actions. In addition, he established one of the first "mutual funds" so that GE leaders would increase their personal wealth outside of company stock and had a managerial education program.

Over the years, the Elfun Society moved into providing volunteer work for the GE communities. For instance, the Schenectady chapter has a unique personal computer program, where it salvages old computers and gives them to needy schools and students. It helps to rehabiliate community buildings, parks and so on. In short, it makes a great contribution and shows the world that GE and its employees care.

The ELFUN society is truly unique and should be encouraged and developed, but interestingly enough, GE has been trying for the past few years to liquidate the organization, even though it continues to do "volunteer work" and serve as an alumni association and place where retirees can keep their company friendships alive and learn about what is happening in GE today. It has discouraged recruiting new members and having meetings.

Most companies today, say that they want to get employees involved and have the benefit of their objective opinions and insights, but few have an organization like the Elfuns to build on and use for this purpose.

I don't understand why GE is not growing and supporting the ELFUNs and trying to liquidate it, DO YOU?

If you want to learn more about the ELFUN society review pages 43-44... and if you want to see how Swope invited the Union to organize the company...continue to read the next feww the next few pages.

Swope truly believed in having employee participation and gaining the insights of others. Many talk about it but few do it.