GE is in for a rough ride. Actually, scratch that. The ride has been rough for this 126-year old company as wall street analysts are negative about GE for a host of reasons, ranging from poor cash flow to a large pension funding deficit. However, what’s most worrisome is that GE no longer resembles the conglomerate that at one time, had a unified vision and purpose.
GE’s stock inched its way toward the bottom of the Nasdaq food chain at $18 a share—40% of its once-esteemed value—which means one of two things:
The “steal” will be solely based on CEO John Flannery’s ability to stop that ship from sinking. Here’s what he’s accomplished so far:
When you tack on the fact that 30% of the world’s power comes from GE but the company reported a 5.06% lower profitability than their competitors in Q3 of 2017, it reminded me of a very similar situation that we faced in the joint special operations community that centered around three challenges: operating rhythm, execution, and culture.
As Navy SEALs, Rangers and Delta operators, we were best in class. I don’t say that out of arrogance but out of observation, and to highlight the next point even further: we were losing.
In the mid-2000s, JSOC (Joint Special Operations Command) faced an enemy who was constantly changing and challenging our next move. The problem was, as this big militaristic machine replete with bureaucracy and an overabundance of processes, we couldn’t act as fast as they could. Here’s a snapshot of how we operated:
Here’s how al Qaeda operated:
We couldn’t move as fast as our competitors, and it wasn’t because they were better than us. It was because of how we operated. GE's problem is how they operate.
Here are four lessons learned that GE can take away to navigate their competitive landscape:
In most companies I work with, the information flow within business units is vertical only, meaning, that employees report “up” to their boss or supervisor. However, what this does is exclude other business leaders from gaining the situational understanding they need to operate. What happens more often than not at the top is leaders expect (i.e. hope) that their senior leaders will communicate the right message to their business, and then those senior leaders do the same with their managers and so on. I don’t know about you, but in my kindergarten class, the message that originated during the game of Telephone was never the message received. Solution: Report across rather than up.
GE has been operating as a big corporate machine for years—decades—which has given rise to sub-cultures within a culture. Unclear metrics for success—not to mention an overabundance of— make it more difficult for leaders to understand exactly what’s working and what isn’t. One Economist article, for instance, said that “The firm has long used multiple non-standard measures for reporting its financial performance, juggling various business assumptions and costs. This has made it harder to understand its true financial picture. For example, it has in the past favored “industrial cash flow from operating activities.” Solution: it’s incumbent for leaders at the top to not only set a compelling direction but clarify what winning looks like to all--and communicate it consistently.
You can over-communicate, or you can under-deliver.
An operating rhythm is the pulse of the company—it’s the timing and frequency of meetings, decisions, and communications. When it comes to operations, there’s nothing more powerful than discipline and accountability. Without either, operations go adrift, second-level priorities suddenly become “urgent” because people want immediate feedback, one meeting turns into four or—even worse—the same person finds him or herself in five different meetings that all cover similar topics.
1) consolidate meeting agendas, frequencies, and participant deliverables
2) make sure everyone who needs to be at the meeting is there and those who don’t need to be are not.
When too many people are in attendance all it does is confuse membership. Meetings aren't a place to assuage egos, they're meant to get real results in real time.
From an outsider’s perspective, GE's assets appear similar to how I felt during the holiday season: a little bloated (and by “a little,” I mean a lot). Since Flannery has already changed the pay structure for senior executives, if he really wants to sharpen GE’s culture then another way to do so is through teams. Specifically, incentivizing team performance over individual performance. The Society for Human Resource Management (SHRM) cited a joint study that found that “incentivized teams increased their performance by 45%; incentivized individuals increased performance an average of 27%.”
One of the biggest obstacles I see in the way of business teams today is this: how they’re expected to work (as a team) differs from how they’re rewarded (as individuals). If you want people to think and act as a team, then give them work that’s worthy of a team.
Change isn't easy, being changed is even harder, but obsolescence is the worst. Flannery has been off to a good start so far, let’s see how the GE saga unfolds.
Originally posted on Forbes
Every week I share news, articles and insights on mindset, leadership, and teams designed to help you grow as a person, as a team and as a company.
Join the hundreds of people who receive relative and practical advice every week on how to get better. Period.