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Jeffrey Immelt, Please Meet Henry Mintzberg: Fixing GE’s Leadership Challenge

April 26, 2010

Updated June 14, 2011

Poor Jeff Immelt. Despite being named President Obama’s job czar, in his regular day job as General Electric’s top dog Immelt hasn’t been doing as well. Weak past performance by some of GE’s heavy industrial divisions and weighed down by its GE Capital unit have produced substandard performance.

Seen as a general indicator of the U.S. economy’s performance (the results of its wide-ranging product line) GE still has a mountain to climb if it ever hopes to regain its former prominence.

How things have changed since former CEO Jack Welch retired from GE in 2001 after 20 years at the helm.

Welch, who had a PhD in chemical engineering, worked for GE for 21 years before becoming CEO. His focus was on dismantling a highly bureaucratic company (attacking its nine managerial layers), reducing inventories, eliminating non-performing divisions, improving productivity and strengthening the company’s managerial cadre.

Welch’s long-running edict was that GE would be number one or two in a particular market or it would exit it. That approach worked, producing success after success, to the extent that other CEOs emulated it.

Neutron Jack, as he was dubbed early on in his tenure as CEO, slashed GE’s payroll from 410,000 employees in 1980 to just under 300,000 by 1985. Despite subsequent criticisms about some of his methods and outcomes, Welch has received strong accolades for his commitment to management and leadership training at GE. He frequently visited the company’s huge Crotonville campus (30 miles from Manhattan), assisting in the training.

With that said, what worked for Welch in the eighties and nineties is not necessarily appropriate in today’s rapidly changing global market, characterized by upstart emerging economies, massive conglomerates that sell everything from tea to chemicals to hotels to telecommunications to consulting are gaining ground. An excellent example is India’s Tata, whose corporate brand is estimated at $2.2 billion USD. Brand recognition in emerging regional markets where consumers number in the hundreds of millions is seen as one key strength, not to mention the increased ability to attract talent.

So what about leadership, and where does Henry Mintzberg fit in? In a moment; some more background first.

Jeff Immelt, CEO of GE since Welch’s retirement, has faced an uphill climb in replicating his predecessor’s successes. Indeed, the world has changed, as just noted. But this requires a CEO to step back and to lead the creation of a new corporate strategy on how to succeed in the evolving marketplace. And in so doing, a critical decision is how managerial leadership is to be perceived and practiced throughout the organization.

In a BusinessWeek feature Can GE Still Manage?Immelt was placed under the microscope. What struck me was how bureaucratized its approach to leadership has become. Ostensibly, it’s great that GE places so much attention on developing potential and existing leaders. Now I say the word “leader” with caution since I’m not clear on just how pervasive GE extends leadership throughout the ranks of its employees. It would seem that it pertains to managerial positions.

I encourage you to read the BusinessWeek article; it’s very revealing. However, here are some examples that illustrate the challenges facing Immelt. John Sullivan, formerly head talent chief with Agilent Technologies, states: GE has a “…20th Century model for a 21st century world.” Based on his experience teaching at the Crotonville Campus, Sullivan found that employees were weighed down by slow reaction times and a preoccupation with looking inwards. He also stressed that other companies (e.g., Best Buy, Hewlett-Packard and Cisco) were much better innovators of talent.

One area that has come in for criticism is GE’s tortuous performance review process. Jeff Immelt attends each visit, which culminates in April after a grueling three months. A wrap-up takes place in May, with a review by board committees in June, a teleconference in August, and a meeting in November. The process then starts again. As one former HR executive stated anonymously, “ It felt like your entire team was spending all of December and all of January on this, instead of focusing on the business and on customers. It was such a time suck.”

And I thought that government was over-bureaucratized. This is tantamount to suffocating the creativity, ingenuity and productivity of people. Immelt is apparently re-evaluating GE’s processes and looking for new approaches. I wish him well, because over-processing people like sausages produces a very unappetizing outcome.

Enter Henry Mintzberg, Cleghorn Professor of Management Studies at McGill University in Montreal, Canada. From his PhD dissertation over 35 years ago (based on empirical research) on what managers actually do in the course of carrying out their daily responsibilities to the present, Mintzberg has remained consistent and focused on studying and explaining the practical necessities of managerial leadership. He’s not one to mince words, achieving some degree of fame for his sustained criticisms of MBA programs and their historical inability to produce effective leaders.

In fact, Mintzberg takes issue with the word leader. He prefers to speak of managers, seeing leadership as a function that is intertwined with the managerial role. In a 1999 CBC Radio interview, Mintzberg stated that managers “…sit between their organizations and the outside world….they manage information in order to encourage people to take action.”

So where does leadership fit in his view of organizations? The long lists of attributes and characteristics of leaders sparked Mintzberg to assert: “…Superman’s abilities are modest in comparison. We list everything imaginable.” For Mintzberg, good managers/leaders are candid, open, honest and share information with people.

For GE’s Jeff Immelt, rather than wanting to experiment with new approaches while maintaining a smothering organizational bureaucracy, I’ve summarized below Henry Mintzberg’s five point approach to the “natural development” of managers. This is drawn from Mintzberg’s superb new book with the simple, yet elegant, title Managing.

1) Managers, not to mention leaders, cannot be created in a classroom.

2) Learning how to manage is done while working on real issues and challenges.

3) The role of training programs is to help managers make meaning of their experiences through personal reflection and interaction with peers.

4) What a manager learns during training must be transferred back to the organization if it is to have any positive effect.

5) Management development activities must be organized around the real work of managing.

In Mintzberg fashion, he worked with colleagues from other countries (Canada, UK, India, China and Brazil) to create the International Master’s in Practice Management program. This first-of-a-kind Master’s program crosses geo-political boundaries, engaging managers doing real work in different contexts. One of the intriguing aspects of the program is “Coaching Ourselves,” in which the participants in small groups empower themselves to extend their personal reflection, learning and reciprocal support.

Back to Jeff Immelt.

GE will do what it has to do. Experimentation is good–to a point. Jack Welch achieved outstanding results for GE at a certain point in the company’s history. That was then. This is now, a world that has become more complex since Welch’s departure in 2001. Simplicity in design is often the best approach to tackle complex issues. And in a period of escalating change, uncertainty and global competitiveness, does Jeff Immelt have time to experiment?

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