'This is where you go to get promoted'

SETH STEVENSON
Last updated 12:18 10/06/2014
GE Learning Center
Project Frog/GE/Slate

BUILDING BETTER MANAGERS: The planned Project Frog building at the GE Learning Center in New York.

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How do you build a better manager? In lots of corporate settings, executives are left on their own when it comes to improving their skills.

They may read management advice books in their spare time, or trade notes with peers over lunch in the office cafeteria. But shouldn't companies do more to educate these people, given the power and responsibility they've been granted?

Consider the case of General Electric. In the mid-1950s, the president of GE, Ralph Cordiner, decided the biggest limitation to his company's growth was its roster of managers.

GE was expanding exponentially, adding new facilities in different locations, and its supply of high-quality general managers was growing thin. Cordiner needed to groom people he could trust to run these far-flung outposts - people indoctrinated in the company's culture.

So in 1956 GE bought a parcel of leafy land about an hour north of New York City and established its Crotonville management training center. GE claims it is the oldest corporate university in the country.

The first seminar Crotonville offered was 13 weeks long, which sounds absurd today - no modern manager could spend a full quarter of the year solely on professional development. But that initial course paid dividends: Among its students was Reginald Jones, a future GE CEO.

I recently visited Crotonville's 24 hectare campus and sat in with a group of about 80 midlevel GE executives who were beginning a two-week session. The class included both men and women, of widely varying ethnicities and ages.

They'd been sent here - on the recommendation of their superiors - from GE units all over the world. The only thing that united them was that the company felt they possessed superb managerial potential. Or, more simply put, as one Crotonviller said to me: "This is where you go to get promoted."

Over the next fortnight, these handpicked proteges would be coached on topics ranging from corporate finance to presentation skills to emotional self-regulation and mindfulness. They'd receive one-on-one counselling sessions tailored to their own strengths and weaknesses.

They'd socialise over team-building activities in converted barns, walk together on beautiful hiking trails, and eat group meals in the dining hall. On this, their first day, seated in an amphitheatre classroom with their name placards before them, they were being led - by GE's chief learning officer, Raghu Krishnamoorthy - through a discussion about the nature of GE's corporate culture.

A massive company like GE - which has 305,000 employees - needs to pay special attention to its management corps. As Ralph Cordiner realised back in 1956, no single person or even handful of people can adequately oversee all the operations. Power is decentralised; the company now has units in 171 countries. That diverse and disparate collection of employees needs to function as one. So GE relies on Crotonville to instill consistent values across its management echelon.

How important are values? Former CEO Jack Welch wrote in his 2000 letter to GE shareholders that, forced to choose between 1) a manager who shares GE values but isn't quite making her numbers or 2) a manager who delivers the numbers but doesn't fit the corporate culture, he'd give a few more chances to the former but immediately fire the latter.

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Those who don't share the company's values "have the power, by themselves, to destroy the open, informal, trust-based culture we need to win today and tomorrow", wrote Welch.

But corporate values are not static. They evolve over time as different attributes get emphasised.

Under Welch, the company trumpeted the "4 E's of leadership" - somewhat confusingly described as "energy," "energisers," "edge" and "execute".

When current CEO Jeff Immelt rejiggered the language of GE in the 2000s, he extolled a new set of five "Growth Values" he wished to see enacted on his watch: "external focus," "clear thinker," "imagination and courage," "inclusiveness," and "expertise".

GE, as a behemoth with a long history, is a legendary font of corporate argot. It was once known for its embrace of Six Sigma - as the GE website describes it, Six Sigma is a movement bent on achieving empirical excellence.

"The central idea behind Six Sigma is that if you can measure how many 'defects' you have in a process, you can systematically figure out how to eliminate them and get as close to 'zero defects' as possible. To achieve Six Sigma Quality, a process must produce no more than 3.4 defects per million opportunities."

But nowadays the company is moving away from its obsession with perfection, as Silicon Valley startup culture reveals the benefits of putting out a beta product quickly and then constantly iterating.

And so Krishnamoorthy tells his class of midlevel managers that the "New GE Beliefs" - still being finalised in the highest ranks of the company, for release sometime within the next few months - are likely to include concepts like "stay lean and go fast" and "adapt, adapt, adapt".

It's easy to make fun of the jargon so common to these sorts of corporate commandments. But the truth is it's no easy feat to reshape a 300,000-person company every few years to keep pace with a rapidly changing world.

Key overarching concepts need to be put into words, and then propagated. A place like Crotonville is where that propagation begins.

The managers I'm sitting with are getting their first doses of the new ethos when, for example, Krishnamoorthy tells them that instead of spending US$300 million ($353 million) to design a completed product, as GE might have done in the past, the company would now prefer that a division spend US$30m, put out a less-than-perfect prototype, listen to customers, and quickly respond to feedback.

GE is by no means the only company with a corporate college. The Boeing Leadership Center near St Louis and Deloitte University in North Texas offer similar programmes for those firms' executives. But is it really worth it to spend all this effort and cash on employee development (US$1 billion worldwide, annually, in GE's case) and to pluck managers away from their desks for weeks at a time to indulge in self-betterment in a sumptuous corporate compound?

GE certainly thinks so. Even during the depths of the financial crisis, when it could have easily chosen to slash this cost centre, GE kept Crotonville running at full bore. And Jeff Immelt makes the helicopter trip from the company's Fairfield, Connecticut, headquarters to greet every new class of management trainees.

There may be no more data-driven corporation in the world than GE, and for more than half a century the company has done the maths and deemed Crotonville a smart investment.

- Washington Post/Bloomberg

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