What went wrong: Why CEOs fail
Try and think of a management academy where companies can recruit CEOs from. The first name you would probably think of is General Electric (GE). There is something about the rigour of leadership training and processes at GE that have made it a popular breeding ground for managerial talent.
Look at some of the biggest US companies , and the people who head them. In most cases, you will find old GE hands: Larry Bossidy at Allied Signal, Jim McNerney at 3M, Bob Nardelli at Home Depot... But these are the success stories. There is another set that not many know about. Of successful GE CEOs who failed in their new company: Gary Wendt at Conseco, Paolo Fresco at Fiat, Lawrence Johnson at Albertson’s and Joe Galli at Amazon .com.
Were these people incapable? Clearly not. Were they simply the wrong choice for these jobs? Perhaps . This issue—of picking the right outsider CEO—is becoming increasingly important because a lot of companies, in India as well as the US, have departed from the ‘insider-as-CEO ’ norm.
“There is a lot of mobility now, but does it always lead to the outcomes that companies desire?” asks Nitin Nohria of Harvard Business School. That prompted Nohria and two others—Boris Groysberg, an assistant professor at Harvard, and Andrew McLean, a research associate—to look for answers to the intriguing question: are leaders portable?
They looked at GE alumni , because of its reputation as a CEO factory. The first bit of their research is already out as a Harvard Business Review article, ‘Are Leaders Portable?’
Picking the right CEO:
Most companies tend to think that a good track record is a guarantee of future success . But it is not that simple, cautions Nohria. “One needs to look at leadership as a portfolio of skills,” he says. Leadership talent is a set of five capabilities: general management , strategic, industry, relationship , and company-specific. Out of these, general management skills (or how one manages resources and takes decisions) are the most portable.
“These skills are applicable in almost any situation, but they are not easy to learn,” says Nohria. Companies like GE and IBM in the US and HLL in India train people to do these things well. Strategic skills (cost-cutting , managing through cycles) and industryspecific knowledge are moderately transferable.
NEELIMA MAHAJAN, ET
Try and think of a management academy where companies can recruit CEOs from. The first name you would probably think of is General Electric (GE). There is something about the rigour of leadership training and processes at GE that have made it a popular breeding ground for managerial talent.
Look at some of the biggest US companies , and the people who head them. In most cases, you will find old GE hands: Larry Bossidy at Allied Signal, Jim McNerney at 3M, Bob Nardelli at Home Depot... But these are the success stories. There is another set that not many know about. Of successful GE CEOs who failed in their new company: Gary Wendt at Conseco, Paolo Fresco at Fiat, Lawrence Johnson at Albertson’s and Joe Galli at Amazon .com.
Were these people incapable? Clearly not. Were they simply the wrong choice for these jobs? Perhaps . This issue—of picking the right outsider CEO—is becoming increasingly important because a lot of companies, in India as well as the US, have departed from the ‘insider-as-CEO ’ norm.
“There is a lot of mobility now, but does it always lead to the outcomes that companies desire?” asks Nitin Nohria of Harvard Business School. That prompted Nohria and two others—Boris Groysberg, an assistant professor at Harvard, and Andrew McLean, a research associate—to look for answers to the intriguing question: are leaders portable?
They looked at GE alumni , because of its reputation as a CEO factory. The first bit of their research is already out as a Harvard Business Review article, ‘Are Leaders Portable?’
Picking the right CEO:
Most companies tend to think that a good track record is a guarantee of future success . But it is not that simple, cautions Nohria. “One needs to look at leadership as a portfolio of skills,” he says. Leadership talent is a set of five capabilities: general management , strategic, industry, relationship , and company-specific. Out of these, general management skills (or how one manages resources and takes decisions) are the most portable.
“These skills are applicable in almost any situation, but they are not easy to learn,” says Nohria. Companies like GE and IBM in the US and HLL in India train people to do these things well. Strategic skills (cost-cutting , managing through cycles) and industryspecific knowledge are moderately transferable.
NEELIMA MAHAJAN, ET
