THE ENTERPRISE
A week after Peter Drucker's death, it dawned on me why his beliefs resonated so much with me. It was his deep conviction that people are the key to everything in management. It was Drucker who saw the modern corporation as an invention of people, for people, to make society a better place. He abhorred the ruthless raiders who pillaged corporations leaving damaged lives--damaged people--in their wake. For the best write-up I've seen on Drucker's amazing life and contributions to society, I recommend John Bryne's great article in the Nov. 28 edition of BUSINESS WEEK.
Something else also dawned on me. I think I have finally realized what my niche is...one part pragmatic business strategist, one part creative artist, one part Peter Drucker and one part Andy Rooney. That means a mixture of the practical, the eclectic, the profound and the wry, sometimes cynical. If that isn't a mixture I don't know what is...but it feels right, so here goes.
You know how Andy Rooney always says, "I've always wondered"....well, me too. I've always wondered why people act like they believe things, when they know better.
For example:
---Does anyone really think we can dodge a nasty dose of inflation over the next year? I don't. Oil, gasoline, natural gas, plastics, chemicals, metals, and more commodities have jumped in cost multiple times over the past year. These increases are just now making their way through the supply chain, and will fully hit in 2006. But we've been through a bit of inflation before and know how to deal with it.
---Does anyone believe there won't be a plan to bring most of the troops back from Iraq by 2007? Sure, there will be a force that stays, but less than 20% of those in Iraq now. Why bring them home in 2007? Because there will be many more Iraqi soldier/police trained by then, and also, 2008 is an election year.
---Does anyone believe it when GM says bankruptcy is not in our plans? Maybe they think that, but every time I've heard that over 25 years, it wasn't long before bankruptcy WAS in the plans.
---Does everyone over age 50 realize that more than 50% of you have no plans for how you will support your lifestyle in retirement? Social Security will still be around, but that won't do it. More "boomers" will have to work longer than they thought, and many will live poorer than they hoped. There is neither the time nor the means to change that much in the next 10+ years. It will not be pretty for many--it will be tragic. (And Europe and Japan have the same aging population problem too).
Finally, my management part is to share a recap of an excellent speech I heard this week. Jeff Immelt, Chairman & CEO of General Electric spoke at Miami University (OH) business school. His remarks were interesting, entertaining and relevant, so I am sharing them with you.
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First of all, Immelt is tall, and slender--more slender than he was when he took the CEO helm 4 years ago, succeeding the legendary Jack Welch, at a very tough time. He seems very comfortable speaking about GE, as its leader, as he should be, given GE's results during his leadership. We were able to meet briefly at a reception following the speech, and there it was clear that his tough schedule weighs on him as the day wanes.
Immelt pointed out that GE is a BIG company with $170B in revenues, earning $20B, with 320,000 employees scattered throughout 100 countries in the world. He further pointed out that it is a bit of an anomaly-a very large company, which is also a growth company. Its plans are for 8% growth each year, which means $15B in new revenues, and that it has been achieving about 10% growth in recent years-remarkable for a company of its size. He started by pointing out three large world themes.
---It is a slow growth world…and most of that growth is coming in places far away from and not familiar to the US.
---Volatility of everything is greater than ever….get ready to deal with it. Get as comfortable as you can with volatility.
---There are, and will be a lot more laws and regulations as people and governments become more and more concerned about protecting themselves.
Immelt then shifted to the challenge of how to lead and manage such a large company in that kind of environment.
It starts with the choice of the businesses to be in. If you are going to be a large company and grow, you must be in large and important businesses. He named and commented on the major businesses GE is in-infrastructure (like locomotives), aircraft engines, health care, financing, appliances and entertainment.
Next, you must operate with a sense of performance …and compliance (with regulations, etc.), and having that performance-oriented operating mentality is very important.
Finally, you must always be driving growth-that is the role of corporations that are leaders.
How to drive growth is the issue. It requires a focus on technology; a strong focus on customers (he spends 5 days per month with customers), being a global company; seeking growth where it is available; (since there is overcapacity in most industries) it requires a strong competitive thrust and cost effectiveness; a most important aspect of driving growth is innovation (he described GE's “Imagination Breakthroughs”-100 projects with $100MM growth potential to which resources are allocated); and last, but more likely first, you must have great people.
Immelt commented that he couldn't possibly know all of GE's 320,000 employees, but that he could, and did know the 500 highest potential/highest performing ones who are the leaders who set the pace for the rest. One of his most important jobs was to develop those leaders. Another of his critical jobs was to cultivate the culture-a “company-first” sense of one-ness of GE. This is so necessary because GE tries to be a different kind of company-a very big company, but a growth company that can move quickly and numbly when it is called for.
He then addressed the students telling them that if they wanted to start something small and run it, then GE wasn't the place for them. But, “if you want to see big dreams happen and be a part of it, we are the place for you.” He repeatedly told them that if they graduated from a good university, a good business school with a good education, then they had the “smarts” that was needed. The question was whether they had “the rest of it.”
“What we look for is the ability to learn, determination to get the job done, able to be part of a team, passionate about what you do and believe in, and have that right attitude-a can do, spirited attitude.”
He closed by stating five of his beliefs:
1. Passion for what you do-making the place better by doing it.
2. People-you must believe in people and connect with them.
3. Change-don't live in the past, what was or might have been, live in the now and the future-what's next?
4. Commerce-business is a force for good and makes more good things happen.
5. Great & Good-a spirit that believes “compete to be your best.”
His delivery was very natural and relaxed and never seemed scripted. He spoke equally to the students and the faculty and business community in the audience (the first 3 rows were either GE employees or their guests/former associates of Immelt.)
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That's plenty for this week. I hope readers enjoyed hearing the beliefs of one of our strongest corporate leaders. I also hope you'll all think hard about the things you hear that you just know can't be so. As Will Rogers was known to say, "It ain't what you don't know that gets you; it's what you think you know that ain't so."
Best, John
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