One of the continuing fatal flaws of many executives in the business, public and religious sectors is that they appear to be incapable of admitting they made a mistake. In fact, many of them make matters worse, sometimes fatal, by trying to cover up the mistakes or looking for scapegoats.
My latest book “ The Secret to GE’s Success” demonstrates how GE leaders from the inception of the company in most cases, have avoided this problem by admitting that they made a mistake, taking responsibility and moving on, hopefully trying to avoid repeating the mistake in the future.
Edison made the first, almost deadly mistake, of selecting the wrong way of generating and distributing electricity. He selected the direct current approach (DC) while his adversary and the rest of the industry selected alternating current (AC). Recognizing his error, he at first tried to discredit the competitive approach, but when it was clear he was wrong, he moved aside and allowed others to merge his company with Thomson Houston, which held second place in the alternating current market. The new company became even stronger and was gifted with innovative and strong management. If Edison didn’t admit he was wrong, GE would never have been able to survive.
But GE management was not always willing to admit its mistakes and resulted in a major set back. GE unfortunately was not as forthcoming in the late1950’s when it was accused of price fixing and instead of admitting the mistake it adopted its own version of “Watergate” which forced the company to abort its planned succession plan, slowed its growth and negated its historically strong relationships with the electric utility executives.
For three years GE’s revenues leveled at $5 billion and it forced the new CEO, Fred Borch to pursue nine major new ventures simultaneously, covering a wide spectrum of product and services growth opportunities. Because of a series of miscalculations and wishful thinking five of the nine ventures failed and even the four successful ventures took longer to yield positive results than anticipated.
To Borch’s credit, he recognized his mistakes and took corrective actions, which led to the installation of a very successful strategic portfolio leadership system and philosophy. The failed ventures were aborted and the limited financial and manpower resources focused on the winners. This lead to a very thorough and continuing assessment of all the key businesses and the ability to anticipate the need to change before it was necessary.
My latest book “ The Secret to GE’s Success” demonstrates how GE leaders from the inception of the company in most cases, have avoided this problem by admitting that they made a mistake, taking responsibility and moving on, hopefully trying to avoid repeating the mistake in the future.
Edison made the first, almost deadly mistake, of selecting the wrong way of generating and distributing electricity. He selected the direct current approach (DC) while his adversary and the rest of the industry selected alternating current (AC). Recognizing his error, he at first tried to discredit the competitive approach, but when it was clear he was wrong, he moved aside and allowed others to merge his company with Thomson Houston, which held second place in the alternating current market. The new company became even stronger and was gifted with innovative and strong management. If Edison didn’t admit he was wrong, GE would never have been able to survive.
But GE management was not always willing to admit its mistakes and resulted in a major set back. GE unfortunately was not as forthcoming in the late1950’s when it was accused of price fixing and instead of admitting the mistake it adopted its own version of “Watergate” which forced the company to abort its planned succession plan, slowed its growth and negated its historically strong relationships with the electric utility executives.
For three years GE’s revenues leveled at $5 billion and it forced the new CEO, Fred Borch to pursue nine major new ventures simultaneously, covering a wide spectrum of product and services growth opportunities. Because of a series of miscalculations and wishful thinking five of the nine ventures failed and even the four successful ventures took longer to yield positive results than anticipated.
To Borch’s credit, he recognized his mistakes and took corrective actions, which led to the installation of a very successful strategic portfolio leadership system and philosophy. The failed ventures were aborted and the limited financial and manpower resources focused on the winners. This lead to a very thorough and continuing assessment of all the key businesses and the ability to anticipate the need to change before it was necessary.
The Welch era continued to practice this “nothing is sacred” leadership style and to take calculated risks, but also willing and able to admit mistakes and move on.
However, the current GE leader and his team appear to be reluctant to admit that their GO BIG/ GO GLOBAL strategy needs to be challenged and adapted to meet the changing world. Immelt is vowed and determined to continue to invest globally and is highly dependent on government business to be successful. This is okay, but it is a challenge to develop and sustain strong relationships with governments, many of who are in a crisis mode.
Bill Rothschild, author of the ONLY comprehensive, objective and insightful assessment of GE's successes and failures, THE SECRET TO GE's SUCCESS.
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