What it takes to be SURGEON leader!!!

In my last blog, I asserted that the UNITED STATES needs both a SURGEON President and Congress, because the country is in the mature stage of its life cycle and it continues to believe that it has the resources to be ALL THINGS TO ALL PEOPLE. The reality is that the country has limited financial and military resources and they need to be selectively allocated. The country is a debtor nation and it is getting worse.

So the country needs to have leaders at all levels with a clear recognition of reality and not a bunch of dreamers.

Surgeon leaders have three key characteristics:

1. First they are realists and survival driven. This means that leaders must be focused on setting priorities and then allocating the resources to the highest priorities and not just spread them across the entire portfolio. In simple terms it means that some programs will be cancelled and the resources allocated to the key priorities. This is not simple, but it is critical to survival.
   
2. Second, surgeon leaders are not tied to the past or the "status quo". "Nothing is sacred" and all of the programs and projects are given the same objective and comprehensive evaluations. Even the "sacred cows" are considered to be expendible. This means that some of the traditional services will be curtailed or eliminated.



3. Third, surgeon leaders "challenge the folklore" and evaluate the present and anticipate the future and not just the past. The old saying it "worked in the past" and so it is assumed it will work in the future, is not accepted. This requires understanding why it worked and determining if the situation is the same as the past.
   

Surgeon leadership has enabled many companies to succeed. My favorite example is GE. If the GE leaders in the 1970s and 1980's didn't recognize the need to execute sound and critical evaluations and accept the philosophy that nothing is sacred, GE would be among the list of companies that no longer exist.

In the next blog I will discuss the type of team that a surgeon leader needs.

• If you wish to learn more about strategic leadership, I recommend you read my books:
• Risktaker, Caretaker, Surgeon, Undertaker- the four faces of strategic leadership

THE SECRET TO GE's SUCCESS.

SURGEON PRESIDENT and CONGRESS.

Since we are in the mist of an election, in which leadership is being highlighted and emphasized, I thought it would be useful to review what I believe are the four types of leaders and when they are most successful.

Can't Be All Things To ALL People.
Before I start I need to emphasize that all organizations and governments are Portfolios, that is they are comprised on pieces. Some of the pieces are new, growth, others may be mature and still others may be declining. Further successful organizations can't afford to "be all things to all people" so they must be selective and invest in some of the pieces, discard some and use some as the "cash cows" to fund others. In short, the investment strategic alternatives are GROW, DEFEND, HARVEST or EXIT.

In my book" Risktakers, Caretakers, Surgeons, Undertakers- the four faces of strategic leadership", published by Wiley in 1993, I used the life cycle as a first step in determining which component of the portfolio, fits which type of strategy. For instance, business units, or components that are new, embryonic and rapid growing, like the i-phone, wind generation, hybrid cars, are all in this category and are clearly growth businesses and must be led by a Risk taking, entrepreneur. Businesses like the broadcasting networks, traditional oil and gas, credit cards are clearly in the mature stage and need to have "surgeon leaders". Then there are components that are declining and need the skills of the trained undertaker.

In today's world there is a mix of all of these types of situations and it is critical that the leader and the team have the skills, motivations and talents to lead in these very different situations. This is the ability that has been demonstrated, by my Alma Mater, GE, who has had different type of leaders for different phases of their portfolio. Even though the CEO could be classified in these categories, it is more vital that the leader of the specific business unit be right for the strategic direction of the business unit. For instance, GE has used its traditional businesses, like lighting, motors, turbines to generate funds to finance the growth businesses, like wind, new financial services, medical systems.

Unfortunately this talent and selection has not been found in most companies and even governments and this had contributed to the problems we have today. The US government, still believes it can be ALL THINGS TO ALL PEOPLE and has unlimited resources to do everything. Unfortunately this is the reason that the US is a debtor nation and is so dependent on foreign funds.

Both Obama AND McCain saying they will change this situation and focus. But neither have shown the ability and willingness to say what they will DIVEST and HARVEST and not just what they want to grow. The discussion is on where the revenues will come from. Obama has the ROBIN HOOD strategy, steal from the rich and give to the poor. This is called socialism, but it may be acceptable to the voters. McCain is emphasizing the need to generate more revenues by using the REAGAN strategy of growing the economy and this will yield more money to spend.

I have said before and still believe, that the US must accept the reality that can't be the the defender of the world, the land of opportunity- that invites illegal aliens, that is willing to erode and even destroy is ability to make its own products and provide its own services... it continues to want to do everything and make everyone happy. History has proven this is FAILURE. The companies that tried it are no longer around, the major governments who continued to implement these failed programs are either second rate countries, or just foot notes in history books.

We NEED SURGEON LEADERS...The United States needs leaders who are realistic and willing to "give up something" and not just pretend it can be all things to all people... it needs SURGEON leaders in all levels of government and in all branches of government.

Bill Rothschild, author of THE SECRET TO GE's SUCCESS and CEO of ROTHSCHILD STRATEGIES UNLIMITED, LLC

Standing and Fighting- a key success

Many leaders have taken the easy way out. Rather than taking strong stand against adversaries they have been willing to give in to unreasonable and uneconomical demands rather than standing a fighting.This is painfully obvious today when we witness the problems in the automobile and its supplier industries. General Motors and Ford have bleeding heavily and are not able to compete against its non-union foreign competitors. Not only are their wages high, but they are forced to pay for workers who don’t work, fund pensions, and contribute to ever increasing health benefits. In addition, these companies are forced to operate in old, non-competitive factories in locations that have high taxes and worker protection laws.All of these problems were not caused by the current management but by those who preceded them, especially the leaders in the 1950’s and 1960s.

Following World War II, the United States experienced its most prosperous times. There was enormous demand for consumer and industrial products. During the war, the entire US manufacturing effort was focused on winning the war and not on providing consumer and industrial products. Further the US companies stood alone in the ability to provide these products worldwide, since the European and Far East producers had been devastated during the war.

Unlike other major companies in autos, steel, aluminum and transportation, GE was unwilling to “pay off” the unions with overly generous, non-economic wages and benefits. Instead, GE leaders took a strong stand in the mid-1950s against the then strong labor unions dominance and uneconomic demand.

Led by Lemuel Boulware, GE’s refused to participate in industry bargaining and negotiated with the unions on a company basis. They carefully thought though what was in the balanced interest of employees, investors, stockholders and made a “fair offer” prior to the negotiations. Though they were willing to make some concessions, they were firm and were willing to take a strike rather than give away the shop. They christened this approach “Doing Right Voluntarily” and used these policies and practices to assure that the company didn’t mortgage its financial future. In addition, GE made it clear that it was ready willing and able to move its established plants to friendlier, non-union locations, rather than be blackmailed.

This practice became known as “Boulwarism” and though it received a great deal of negative press, it worked for a number of reasons:

1. First, GE had a long positive track record from the company’s inception of caring about its employees and their well fare. They instituted a suggestion system in 1906, a pension program in 1912 and insurance in 1920.
2. Second, the major GE union, the United Electrical Workers (UE) was a communist led union that appeared to be more concerned with having a people’s revolution than about the conditions faced by the GE workers themselves. This union was highlighted in the McCarthy hearings and was ultimately ejected from the CIO.
3. Third, the CIO created a competing non-communist controlled union, under Jim Carey, who aggressively sought to convert the UE members to the IUE. Further other powerful unions were part of the GE bargaining units, including the Teamsters and the IBEW. So Boulware divided and conquered the unions and didn’t have to face one dominate union, as there were in the auto, coal and steel industries.
4. Fourth, as we said GE did its homework and was willing to give the workers, both union and non-union, attractive and even innovative benefits before they were required. In most cases, the workers recognized that the benefits and wage increases were fair and balanced and were will to accept them without a strike. This neutralized the unions bargaining power.
5. Fifth GE hired the “Great Communicator” and the popular host of GE Theater, Ronald Reagan to tour all of the GE plants and spread the message of evils of Big Unions and Big Government. Reagan claimed to have visited 135 GE research and manufacturing facilities and met with some 250,000 individuals. It ultimately led to his own conversion and gave him the underpinning of his successful election to President of United States.Sixth and probably most important, GE was willing to close plants in unattractive union locations and move them to non-union cities. This was very powerful, since it gave the company power that the auto, steel and coal companies didn’t have. GE was an early proponent of moving to the southern US and overseas.

Overall the GE Boulwarism approach enabled the company to maintain control over its own destiny and not allow Big Unions and Big Government to dictate to them. GE was unwilling to mortgage the future for short term gain and was willing to take a strike if it was needed. This was sharp contrast to the other industry leaders who accept peace at any price and didn’t appear to care about the long term implications of giving away the shop.

This is just one of the elements that has enable GE to prosper and grow over its 126 years of existence, while other United States giant companies have gone out of business or are one the verge of bankruptcy.
The complete story can be found in Bill Rothschild’s latest book “The Secret to GE’s Success”, published by McGraw Hill and is now available Simplified Chinese, Korean, Indonesian, Spanish, Japanese and CD.

Talent required to implement an aggressive growth innovation strategy.

In my most recent book: THE SECRET TO GE's SUCCESS... I used "LATIN" to summarize why I think GE has been so successful. LATIN stands for Leadership, Adaptability, TALENT, Influencing and Networks.



Over the past few months I have focused on Leadership and Adaptability, to evaluate the Immelt Team's actions and policies, but it is really TALENT that can make the difference. No leader can do it by him or herself. It takes the RIGHT TALENT to make it work.

In my fourth book: Risktaker, Caretaker, Surgeon, Undertaker... the four faces to strategic leadership. I describe the unique talents and team required for the most popular strategies. In the next few blogs I wish to demonstrate how these talents differ from one strategy to another and the challenges they present to the human resource organization.


I will start with the talents required to successfully implement an aggressive growth, innovation strategy. This innovation can be either based on creating a new innovative product, like a new electric car; or a service, like a new way to teach foreign languages; or software and systems that improve communications.

Folklore challengers. Obviously the first talent required in the innovators of the product, service or software. These individuals must be willing to experiment and challenge the current technologies or the folklore. Experimentation is key.

Next Generation before required. The innovative staff must recognize that no matter how clever they think their innovation is, it will be replicated and copied in time. This means that the team must not fall in love with their innovation, but be prepared to respond when the enemy tries to replicate or leap frog the innovation.

GOOD AGGRESSIVE PATENT and Copyright LAWYERS...Even if you have the best patents or copyrights, you must be prepared for challenging the copycats... this means you have a strong legal staff or access to the best legal patent and copyright lawyers who will aggressively challenge any and all violations, even if they are questionable.

MISSIONARY SELLERS - the sales and marketing staff must be COMPLETE zealots and believe in the innovation. They can't even be objective...but must appear to be objective.

PRODUCTION MUST MEET EVEN EXCEED EXPECTATIONS. The production team must meet even exceed expectations and respond quickly to any problems. This is a no quibble mentality.

Enough funds to stay the course...This requires accountants and financial teams that can get the money and then assure that the budgets are met and not exceeded.

This is the first in a series of articles that will describe the RIGHT TEAM and RIGHT TALENT required to execute a variety of strategic options and alternatives.

If you wish to see the total picture...read my book : Risktaker, Caretaker, Surgeon, Undertaker- the four faces of strategic leadership. It can be purchased on www.strategyleader.com

GE and China... a love affair

Recently, Immelt bragged that GE's Chinese revenues would hit ten billion in 2010.

Ten billion dollars in GE revenues equals about 6% of total company revenues. This is good, but it is still less than the Appliance business that Immelt and his team are disposing. There is no question China is a growth opportunity, but I would like to know how profitable this business is. Based on my experience the Chinese are good negotiators and never leave money on the table.

In addition, it would be interesting to know how much know how and technological strengths GE is giving to China, either willingly or unwillingly, to get this business.

Bill Rothschild, author of GEWatcher blog (www.strategyleader.com) and The Secret to GE’s Success.

GEWatcher - Risktaker/ Surgeon... a unique leadership style!

Since the early 1990's I have enabled my clients to integrate strategies with leadership and human resources. In 1993, I wrote "Risktaker,Caretaker,Surgeon, Undertaker- the four faces of strategic leadership."

The basic premise of my consulting practice and the book was that there was "no one type of leader for all times" or to challenge the premise of St. Thomas More's biographers, there is no one leader for all seasons.

I used the simple life cycle to describe my theory. There are four stages of the life cycle:

• Embryonic stage, birth and childhood, and this requires "risk taking, missionary leaders".
• Teenage and early adulthood/ growth stage, that needs Caretakers..who will care for and grow the organization systematically;
• Then there is middle age and maturity and this requires the surgeon, a leader that will focus on the best and growth and prune the declining or dying.
• Finally there is the decline, fall and death stage and this requires an Undertaker.
  
  Like all categorizations, they are simple but don't cover all situations. But this simple relationship to the right type of leader and the stage of a business enables organizations to spot the mismatches. It is clear that you don't want a risk taker when the company needs major surgery or when it is time to divest or liquidate the assets.
  
  In a company like GE... which has businesses in all stages, the message is that the company needs a portfolio of leaders and the willingness to place the right type for the right situation. Historically, GE has had a "portfolio of leaders" and was able to match the type with the strategies. This was part of the strategic system when I was Corporate Planner in the early 1980's.

However, in my book and subsequent articles I concluded that GE's CEO's since the mid 1970's have been skilled surgeons. Borch started the pruning, Jones did some more and Welch was a great deal maker. I wrote an article several years ago called the "College of Surgeons" and described how most GE alumni were surgeon leaders when they left GE.

Now we have the Immelt era. Jeff started as a traditional surgeon and pruned many businesses, but as his years progressed he has become a very unique leader, which I have concluded is a RISK TAKER/SURGEON.

Risk taking Ventures...Immelt and his team have worked hard to focus on moving GE back to its traditional innovation, systems, solution role, which Welch had de-emphasized and even negated.This was achieved primarily by acquisitions and some internal innovations, but he has further increased the complexity and risks by making these global and increasingly moving into unstable, but potentially long term profitable areas like China, Middle East etc. He has bet billions on these ventures and even was willing to open research labs in countries that are not secure. In short, he has the missionary zeal and attributes of a "risk taker" leader.

Surgeon...but Immelt and his team have also continued the pruning. In fact, it has been greater and more pervasive than any of his predecessors. The latest surgery is demonstrated by his willingness to prune the "traditional GE" businesses, like appliances, lighting, motors etc. He clearly willing to to get out of businesses which he believes are not fast growing and global.

Complexity, confusion and unpredictability are the results. Since most leaders fit one of the four categories, they are easier to understand and predict. The stakeholders, investors and the media understand what a risk taker or surgeon is and so they begin to feel comfortable with them, even if they don't agree.

However, when you have a compound/ split leadership personality it gets very complicated and difficult for the key stakeholders to understand and support. This is even worse when the leader says one thing one day and then does something different the next. This was the problem Immelt demonstrated when he promised a 13% growth and only delivered 5% in the first quarter of 2008.

I am not sure the combination of "risk taker" and "surgeon" really works and can be successful in the long run.

Bill Rothschild...author of The Secret to GE's Success and Risktaker, Caretaker, Surgeon, Undertaker- the four faces of strategic leadership.