Siemens restructuring and General Electric

When I was GE Corporate Strategist, I created a number Strategic competitive teams to learn about the key multi-business companies that competed against GE in numerous sectors. These included: Siemens, AEG, Hitachi, Toshiba and Westinghouse. Each team was to create the competitor's corporate plan in the same format as the GE corporate plan.

The CEO at the time was Reg Jones. He used these evaluations to assess the GE Corporate Plan and to anticipate major competitive moves. The teams met quarterly at GE's Crotonville and then gave presentation annually to Reg.

Over the past few decades, GE have moved out of many of its traditional businesses and Welch had little interest in this type of evaluation.

Recently, Siemens has had major problems, including a scandal in its telecommunications business, which forced the resignation of its CEO Klaus Kleinfeld...the new CEO is a GE alumni, Peter Loescher...who has made major moves to streamline the company and improve its earnings. Since Peter held a major executive position in GE's Health care...he continues to use GE to demonstrate that GE has a major earning advantage. Bloomberg reported on November 29, 2007 that Siemens earns $7850 per employee compared to GE's $65,290 per employee. However this may be not a good measure since Siemens is still an "engineering company", which GE is half financial services.


In my book, The Secret to GE's Success, I point out that GE's success includes having the right home grown leaders and talent... this has been a tradition of Siemens as well. Siemens and GE still compete in several markets, including Power Systems and Health care... it will be interesting to see how successful an "outsider" can be in this highly conservative and traditional German company.

Training Leaders...

The September 25th Fortune has an interesting headline..."GE's secret boot camp" that describes how the un-pretentious locomotive business in Erie, Pennsylvania has become a training ground for GE leaders...

Let's put this business and article in perspective.... GE is one of the FEW producers of locomotives in the world...in fact, it was once on the "divestiture" list for the company since General Motor was the dominant leader in this market and had over 75% of the US market, while GE had only 25% and was declining. GM developed the electro-mechanical version and GE was the electric only leader.

But GE was lucky...GM decided to harvest/ divest its non- automotive businesses and so GE was given the opportunity to take control. Fortunately it had strong manufacturing leaders and the business moved from a poor number 2 to the leader.

Over the past decades, GE locomotive continued to make its numbers and its portfolio position moved upward... it became a consistent CASH COW and its management was rewarded.

If GE is using this business to train leaders, it must be training those who can lead mature businesses, where they are the leader in a monopolistic market and have the resources to incrementally innovate and maintain high quality and competitive costs...unfortunately this is a very selective part of the world of business...

I addressed this leadership issue in my fourth book" Risktaker, Caretaker, Surgeon and Undertaker...the four faces of strategic leadership" and stressed the need to recognize that there is no one leadership style or type for all seasons and situations...obviously GE Transportation, which should be called GE LOCOMOTIVE... requires the skilled of a caretaker... and they have been able to provide this type of leader...

If you are interested in learning more about matching LEADERS and TEAMS to strategy, you can purchase my book by visiting my website: http://www.strategyleader.com/

It clearly demonstrates that there is "no leader for all seasons and situations" what it takes to leader a new venture is very different from one whose role it is to just defend and incrementally improve position...if GE needs leaders to lead mature, dominate share businesses..then ERIE is a good proving ground, but if it needs to create new, high risk businesses, which it does if it wants to acheive the Immelt GO BIG strategy...then this is not the right place to train them...this is the dilemna and challenge of Jeff Immelt and the strategy he is articulating..

Investing in Talent continues to be key element in GE's Success

In my book: "The Secret to GE's Success" I pointed out that one of the key's GE's success is its continuing investment in the development of people.


It started at the beginning when GE developed three key training programs...one for its engineering talent, the other for financial personnel and the third its apprentice system. Swope and Young established the annual "Association Island" programs and Cordiner created the first and still strong management institute at Crotonville to teach the art and science of Professional management.


All of the CEOs since the mid 1950's have used Crotonville to develop key people and to get support their selective initiatives. I spent five great years developing and leading strategic thinking and development courses and the four week Management Development Course and it contributed significantly to my own development and enabled me to be an effective leader and coach.


According to a recent November 25, 2007 Reuter's article, GE and Immelt continue to make major investments in development globally.


They reported that GE spends $1 billion in training its own people and another $1.5 billion on customers...Crotonville was updated under Welch and still serves as the center of "learning"....(It is interesting that GE has a LEARNING officer and not just a development leader... I think this is appropriate since as a teacher and consultant, it is clear that everyone can learn from a professionally developed and implemented program.)


Having the right talent, at the right time and in sufficient numbers often is the difference between winning and losing. Take a look at my extensive descriptions of GE's programs and their strengths and limitations in my book.

Lack of Common Courtesy!

When I grew up... I was taught that if someone sent you a letter, or called you on the telephone, you would respond, because it was the "just common courtesy".

Today we live in a world of CONTINUOUS interaction... we have email, cell phones, call waiting and so on.... we even have machines that tell you " your call is very important to us", but then either puts you on a waiting list or prescribes ways to avoid waiting...

This is one of the "fatal flaws" of our society... I call it "virtual response"... that is it really is not a response or interest in people at all, but the pretense we really care.

All generations are involved.... you can call your peer age group and get the same response...they may look at the phone ID and say it can wait, or it is not important... you can call your classmates, friends, former associates and get the same "lack of response"...Many have accepted that the fact that you don't want to speak to someone it is okay.

During most of my career, I have had the good fortune of dealing with people who had "real people answer their business phones, or who would personally pick the phone or answer their letters or emails... They demonstrated interest...even if their message was not what I wanted to hear.

I have many notes from CEOs who personally responded...Jack Welch was the best at this since he would personally write notes in his own handwriting and tell you what he thought, even if it was not positive.

His successor is not like this... you write him a note and you don't even get an acknowledgement.

When I published my latest book: "The Secret to GE's Success" I sent our several dozens of books to individuals that have a STAKE in GE and though I didn't expect them to endorse the book, I did expect a THANK YOU.... only a few showed common courtesy...

When I grew up I was taught to say thank you... even if it was just some one opening the door, or giving me some information and especially if they had the courtesy to send me something for nothing.

The combination of "lack of common sense" and a "lack of courtesy" (which I discussed last week in by blog)... could partially explain why the United States, and other developed and developing nations are having trouble anticipating and dealing with key issues, like the recession, the greed in corporate and governmental offices and the so called "War On Terror".. we are too busy passing the blame and not talking to each other...

I recognize that it is wrong to have simple answers...but often it is the simplicity that helps identify, specify and solve very complex problems.

Bill Rothschild

ShanghaiDaily

GE writer: Adapt useful GE policies, don't just blindly adopt and copy
By Bill Rothschild 2007-11-20
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Dear Wan Lixin:
As the author of "The Secret to GE's Success," I wanted to clarify that my book is not about Jack Welch, but is a comprehensive strategic history and commentary about the remarkable 127 years of General Electric.
The book puts the Welch era in historical perspective and emphasizes that Jack was just one of GE's competent leaders. The book summarizes GE's success in one word: LATIN, which stands for Leadership, Adaptability, Talent, Influence and Networks.
All of these success factors are discussed and illustrated to include both GE's successes and failures.Leadership is just one of the five key factors and though it is important it must be viewed in the context of all five.
I agree with Larry Lang that size is not the most important factor.In the book, I emphasize that what has worked for GE may not be appropriate for other companies. I stress that the reader review the GE code of success and then determine what is appropriate for them. I stress the need to ADAPT and not just blindly ADOPT GE practices and strategies.I also provide an analysis of the current leadership and its strategies. I too am concerned that GE's focus on size ("GO BIG Strategy") and complexity are areas of concern.GE is a remarkable company and is an excellent case study, but like everything it too has its limitations.
If you wish to view my continuing assessment of GE and other companies, visit: www.strategyleader.com.

Lack of COMMON SENSE

I grew up at a time when you had to have common sense to survive and prosper.

In simple terms this meant that you looked at the world critically and objectively and concluded: "if it is too good to be true, it is probably not".

I majored in Russian Language and Area studies and since I went to FORDHAM a Jesuit University, I spent more time learning logic and philosophy than trying to learn the fundamentals of finance.

I did graduate from GE's prestigous FINANCIAL MANAGEMENT PROGRAM but even there I was taught to be a critique and not an enthusiastic number manipulator.

Today, most of our leaders have had the opposite experience. They have spent more time learning how to interpret and even manipulate the numbers than on asking the simple questions: "if it is so easy to do why isn't everyone doing it, or if the numbers are so good why and will they last forever?"

I am amazed at the sudden surprise about the "sub-primes" and the fact that so many SMART (?) people are losing their jobs and don't even know how deep the problem is. Isn't "common sense" that if you give money to people who can't afford to pay the monthly payments that they will fail?

We need to teach LOGIC, COMMON SENSE and the simple question "does it make sense?"

If we do, we may cause a major decline in the enrollment in EXPENSIVE MBA programs and for the need to have "high paid" consultants and experts... but it will be worth it since we will get back to what makes sense and not create unreal, non-achievable expectations.

We need to get back to teaching fundamental logic, critical thinking and logic and forget teaching the art and science of "making numbers create a "feel good" environment.

SURGEON NARDELLI

Over my forty years as a GE student, I have concluded that in the past 30 years GE's leaders great skill is being able to do "sound surgery" of sick businesses. In some cases, the surgeon moved from the "emergency operation" to "plastic surgery"...

When Bob Nardelli took over Chrysler, I concluded that he would have trouble pulling off this transition... but the November 26, 2007 Fortune article had made me reexamine by first conclusion. Bob is clearly following the "surgeon" course.

The article describes that he has segmented the company into winners and losers. This is sound GE tradition... "he started immediately poking his nose everywhere."..he drives a different car every day to work...When sales started to decline... he closed six plants...In November, he announced over 10,000 additional layoffs... He took the short term financial hit.. which is a GE tradition designed to set the expectations low and then easily exceeding them. Wall Street always seems to believe that upward moves are the best, and they often forget that if the base is low...multiple growth rates are easier, than if they are high... it is the "numerics" game.

If his predictable "surgery" is success... Bob will be a "savior".

If it fails he will carve up the company into pieces and sell off each piece separately. Most often the pieces of any company are worth than the total, especially if the company is too broad and has tried to be "all things to all people".. one of the reasons that the US auto companies are having the trouble they are experiencing.


Bob is a "honor student" of the best College of Surgeons- GE and we will see if he can pull off this major challenge of turning around the #3 and most often the LOSER of the US auto game.

Stay tuned... your comments are welcome...