Leadership as a Product

Last week USA Today ran an article describing how a relatively small group of companies have spawned a preponderance of CEO's.

One in every five CEOs running the 1,187 publicly traded corporations with a market value of at least $2 billion have at one time held a job at one of just 20 companies. One in every 10 CEOs worked at one of eight companies. One in 27 have earned a paycheck at one of these two leadership factories: General Electric, with 26 CEO alumni; and IBM, with 18.

Regular readers know that we are not impressed with GE-style leadership, especially that developed under Jack Welch.

GE, known for an intensive performance review process and the dismissal of workers who perform in the bottom 10%, is so well known for its executive alumni that some experts, including Good to Great author Jim Collins, say that the conglomerate's key product may be leadership.

Not exactly aligned with the second pillar of lean manufacturing, respect for people.  Mark over at the Lean Blog has even called Neutron Jack a turkey.  But let's move on and investigate why these companies produce supposed leaders.

GE is well known for its 52-acre leadership campus, known as Crotonville. But Bennett says he spent only 10 weeks of his 23 years at the campus. He says GE has mastered identifying and grooming talent.

Baxter didn't have anything like GE's Crotonville.  [CEO Bill] Graham placed recruits as assistants to leading executives; those assistants would then be put in charge of an international operation as the company expanded.  At Baxter, people were given freedom and allowed to make mistakes. "They didn't punish."

As a similar article pointed out, companies that create such deep leadership benches are not afraid of their best "products" leaving.  In fact, they would be more afraid if they didn't.

"If people aren't going after your people, you really aren't building a great company," says Yum Brands CEO Novak, a PepsiCo alumni.

Baxter so celebrated its departures that it sponsored CEO reunions, says Harvard Business School professor Monica Higgins, author of Career Imprints, which documents Baxter's CEO alumni.

When a GE highflier leaves "for a huge external opportunity, it enhances our employment brand," says Susan Peters, executive vice president of executive development.

So which company might be the centerpiece of a similar article written a decade from now?

Textron, a conglomerate like GE, wants to establish itself as "the premier multi-industry company," says CEO Lewis Campbell, a General Motors alumni. Keeping talent is a priority, but "as we move closer to realizing our vision, I expect other companies will go to great lengths to recruit our best people. In a way, it is an indication that we are considered to be among the best of the best."

The companies that groomed today's CEOs did so in decades past. Google's CEO, Eric Schmidt, came from Novell by way of Sun Microsystems. Baxter International in the 1990s was the CEO farm system for today's biotech industry, so Google could well be grooming tech CEOs of tomorrow, says Joe Moglia, CEO of TD Ameritrade, who became a Merrill Lynch trainee after 16 years as a football coach.

Past performance does not guarantee future results.  I can see CEO wannabees jumping on the bandwagon of success... let's just hope they learn some real people-centric leadership this time.

Comments

[Neutron Jerk]

What about the leaders being hired away from Toyota? Will Toyota be the next GE in terms of being the place from which to raid management talent?

[Richa]

We should not assume that CEO factories of the past will produce successful CEOs of the future. The expectations from CEOs are changing, whether it is in terms of leadership style, management style or accountability. Therefore the business leaders of tomorrow may not come from the CEO factories of yesterday.