The Irony of the (Leadership) Industry – General Electric

One could make the case – and I do – that hardly any of America’s corporate behemoths have had a decade as degrading as General Electric.

The decline began during the financial crisis when GE, once proud to the point of arrogance, turned hat in hand to the federal government. The government obliged with a bailout – to the tune of $140 billion.

It climaxed this week with a spate of headlines, each screaming GE’s continuing degradation to the point of debilitation.

  • “GE’s Awful Week Pushes This Year’s Stock Wipeout to $100 Billion”
  • “Odds of a GE Dividend Cut 100%”
  • “GE Vows Changes as View Darkens”

GE’s new CEO, John Flannery, was forced to say something, so what he said was this: “Our results are unacceptable to say the least.” He went on to add the obvious, “Things Will Not Stay the Same at GE.”

Flannery took over from his predecessor, Jeff Immelt, this summer. Recently, Immelt took himself out of the picture altogether, stepping down earlier than expected as director and chairman of the board. His performance as CEO had been, shall we say, erratic. After all, he took over a thriving operation and left one in a semblance of shambles. For his troubles he was, in any case, paid handsomely, earning, for example, a cool $54 million during the period 2006-11.

Immelt himself succeeded the storied Jack Welch in 2001. Welch had been GE Chairman and CEO since 1981, and when he retired he was widely acclaimed one of America’s best and most admired chief executives. His formidable reputation, while not untarnished, remains generally intact to this day.

Here though is the irony – the ultimate irony. One of the skills of which Welch was proudest was developing leaders. He prided himself on his singular ability to locate leaders and then to groom them, to educate and train them, for the sole purpose of keeping GE at the pinnacle of corporate America.

To this end his special baby was GE’s fabled management training center in Crotonville, NY. GE is by no means the only company to have designated an off-site space for leadership learning – the Boeing Leadership Center near St. Louis is another example. But, Crotonville is special. It was founded in 1956, and since has come to consist of a 59-acre campus where selected GE employees “can engage in continuous learning with a personalized curriculum to develop unique strengths and own their leadership journey.” Leadership is, in other words, what Crotonville does – Welch made sure of that. As its website advertises, Crotonville offers a “broad curriculum of leadership experiences and skills courses around the globe [as well as] world-renowned leadership development programs.”

Up to now, Crotonville has continued to be deemed by management to be worth the investment. Despite GE’s humiliating descent, and despite the high cost of its leadership training operation, reported to be $1 billion worldwide, so far at least Crotonville remains undisturbed.

The question now is will Flannery see the irony? The irony of running a fancy, costly leadership center when GE’s own leadership cadre has fallen so far short? I have no doubt that good things happen at Crotonville – that many of those who go learn something about how to lead and manage. I similarly have no doubt that something’s wrong with this picture. That running a leadership center when your own house is other than in order is curious – if not ridiculous.

“Things will not stay the same at GE”? Things should not stay the same at GE – including at Crotonville! At an absolute minimum, those responsible for its leadership curriculum should review, revise, and reconstitute it in light of GE’s own painful recent history.

 

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