Former GE Chief Shares His Thoughts on Management Trends

Reece: You have written one of the best and most concise books I have read regarding how to run a more effective company. Why do you believe leaders have such a difficult time executing on what many believe are basic leadership skills?

Bossidy: I think CEOs are being pulled in lots of different directions and as a consequence, they don’t apply themselves to what will ultimately decide whether they keep their job or not. It isn’t that these principles are new notions, but they are more complicated to execute than they were ten years ago just because of the marketplace in which we are in. So if they don’t pay enough attention on one hand and it’s more difficult to implement on the other, then there are performance issues, and as a consequence, CEO turnover is up higher than it’s ever been before.

Reece: Do you see this trend continuing?

Bossidy: I think the answer is yes. CEOs are conducting themselves very differently than they did five years ago. They know this is a relatively slippery slope, and that they have to pay more attention to things than in the past, so I think that will improve performance. On the other hand, I think the world gets ever more competitive. It’s challenging and turnover may not be as high as it was the last three years, but it will be high.

Reece: You describe execution as much more than tactically getting things done. Is the heart of execution really planning and executing against that plan?

Bossidy: The heart of execution is making sure things happen. In other words, it has to be a discipline we call creating and sustaining and energizing around making things happen. There are so many companies that philosophize and wonder and have unimplementable ideas. And the ones who are successful are those who get an idea, do an evaluation whether it will fit in the company, put a timetable on it, and get it done.

Reece: How do you keep your plan alive in the organization?

Bossidy: Most assumptions made during planning don’t turn out as expected because we are not able to see things clearly. Keep it refreshed and put a contingency plan together. Quarterly, sit down and look at the plan and identify those things that have changed and what midcourse corrections are needed to keep it alive and relevant. For example, if you have a big target and the world falls apart, you change the target. Don’t have people chasing a target that is never going to happen. So you keep the challenge refreshed as well so people have a chance to find fulfillment.

Reece: What specific methods do you use to evaluate both strategy and execution?

Bossidy: Did we make our goals? Did we keep our commitments that we said we were going to make? There are so many companies that commit to goals they never make. And they find lots of reasons they didn’t make them including lots of excuses. The fact of the matter is you judge how well you are doing by whether you made your commitments or not.

Reece: Is there a specific scorecard or key indicators that you use?

Bossidy: Yes, and the metrics change every year. I want three measures all across the company. Those companies with ten goals, ten measurements, don’t know what they are talking about. It’s too many for people to concentrate on.

Reece: As a CEO, you have been very involved in marketing in your organizations. What do you believe are the biggest marketing challenges businesses face today?

Bossidy: Selling to product teams that demand more. They want economically priced products and they also want a better product built for them. The quality standard has gone up. Also, companies once kept customers for years. Loyalty is not near what it used to be.

Reece: You provide several examples throughout your book of companies that chose the wrong strategy at the wrong time. How would you suggest companies create an accurate strategy given these uncertain times?

Bossidy: With a lurch back to realism. Basically, strategies that failed were unrealistic to begin with. In other words, if you look at companies that are going into an entirely different area that they know nothing about and there are different customer dynamics, they don’t succeed. That’s why we use the AT&T story in the book. Yes, they had a big strategic problem in the sense of a declining telephone business, but they didn’t know anything about cable.

Reece: I have read about your case for companies to eliminate the COO position in their companies. How is this being received?

Bossidy: Theory is this: The CEO can’t be divorced from the things the COO is doing. Often times when that exists the CEO is involved in external matters and strategy, and the COO is involved in operations, and that’s a dangerous separation to make. The CEO is supposed to be involved with both of those things. I think it’s unnatural to divide them, and sometimes when they are divided, there is a friction that begins to develop. The CEO and COO each have their camp and it doesn’t provide for a very efficient and effective organization.

Reece: As you consider your vast career as a CEO, what do you consider to be the single most important concept you use to govern your leadership and how do you want to be remembered?

Bossidy: Two things. You don’t ever think of a legacy until you retire. But if I had a legacy, it was one, that I grew a lot of people who learned to run their own companies as CEO. I have a lot of pride in that. And two, I think I have a reputation for being fair and equitable. Not everybody liked me, but I was straightforward and candid with everybody.

Reece: What’s next for you?

Bossidy: Writing another book. I run a venture capital company in California and oversee a couple of companies. I’m on a couple of boards. I’m as busy as I want to be. But I don’t have the 7-to-9 schedule every day anymore. You have to keep growing. You hope the day you die you learn something. You make your own life dynamically.

Copyright, American City Business Journals. Reprinted by permission.