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General Electric. GE made headlines back in twenty twenty two when it decided to close Crotonville, it storied corporate campus in New York's Hudson Valley. In its heyday, GE was known for making well almost everything, from trains to microwaves. It also had a reputation for making good managers who took classes in leadership at that Crotonville office park, and many of them eventually left GE to run other companies.
GE for years was the training ground, the original CEO factory.
Matt Boyle covers work and management for Bloomberg, and he says Crotonville was legendary.
It was just sort of the sprawling facility upstate, just not far from the city where you would go and it wouldn't just be like a one day leadership seminar like a lot of companies would do where you might get a guest speaker from Harvard Business.
School to a trust fall.
Yeah, you would stay there. You would stay there for days and days, and you know, you would of course also learn the ins and outs of like some of gees, you know, like their six sigma black belts, you know, management techniques, then you would hear from management professor.
If you're a fan of the sitcom Thirty Rock, all of this may sound familiar. One of the main characters, Jack Doneghie, the brassy network boss played by Alec Baldwin, had climbed to the top of GE's corporate ladder. I'm giving the keynote address of the company's six Sigma Retreat to Move Forward in Croton On Hudson.
Oh, is that like a corporate retreat?
Doneghie is so nervous about that speech. He makes Liz Lemon, Tina Fey's character, go with him.
Lemon.
The Retreat to Move Forward is a global meeting of GE's best and brightest.
Careers are made there.
It's no wonder Jack Doneghie was anxious. GE's training center was where the company put managers through their paces.
Your weaknesses would be identified, they would be worked on, you know, really hammering home if your weakness was in financial statements or on the finance side, if your weakness was on marketing, they would work on those and they would just churn through hundreds of people.
That rigorous training made those GE managers attractive to other companies when they were looking for new leadership and by virtue of how big GE was and how much it did, those trainees had broad experience.
They were conglomerates, so you could work in you know, jet engines, you could work in GE Capital, you could work making refrigerators, and if you were the head of that business unit, you're basically the CEO of a fortune one thousand company that did a lot for their global stature to be Like, if you learn how to be a CEO at GE, you can run anything.
So Matt says it was the end of an era when GE closed Crotonville and sold it, raising questions about where the next generation of executives would come from and what values they'd learn along the way.
Just three dozen companies accounted for preponderance of SMP fifteen hundred CEOs over the years, so we knew these factories always existed. What we didn't know, though, was how they were changing. So I said, well, if GE's not the pre eminent CEO factory anymore.
Who is.
I'm David Gera and this is the big take from Bloomberg News today on the show, the next generation of CEO factories, the new pipeline for executive talent where tomorrow's CEOs are learning to lead and what that says about global business. For years, GE's management training program was the gold standard, according to Bloomberg's Matt Boyle, and other companies sought to emulate GE's approach.
So that model was replicated, not perfectly, but look at a Procter and Gamble, where if you were running Pampers or something, you know, you were basic the CEO of a global company, or even abroad at Semens, the German conglomerate, Honeywell IBM. You know, this was replicated. Johnson and Johnson is another one. So you have these sort of other CEO factories coming up. But traditionally GE was the be
all end all. So if you went through Crotonville, whether you only spent you know, a few days there or a few months, you're really seen as sort of this management material.
I know they sold it off in twenty twenty four, so there's a delicious metaphor there. But what led to the end of GE's reign as a factory for s a lot.
Of it, you know, the end of GE as sort of the paragon of American business. It's fall from grace has been well chronicled by Bloomberg and by other outlets, certainly, But once you get broken up, once the bloom is off the rows in terms of the CEOs you are producing and sending out into the world, not exactly distinguishing themselves.
As you've saw some of the people, especially more recently the GE alums who have gone to run Boeing to the ground basically yeah, barb no daily at home depot, some of them not really setting the world on fire, and so it sort of just ceased to be the factory that it was still churning out very talented business executives, of course, but once you got past that period in the nineties and the aughts where it was, you know,
in a pedestal. But I think GE, since they were so high up, had the furthest to fall.
And as that happened, as GE struggled to find its footing and broke up, we saw big tech continue to rise. But replicating the kind of leadership that sets those companies apart isn't easy. We had Mark Kerman on the show, our colleague at Bloombergoo covers Apple, and he was talking about the uniqueness of that company that they've tried to bring in outside executives, and it's failed time and time again.
There's something about Apple's culture that can't be replicated. It's hard to get somebody to come in and recognize what it is or how to operate in that world. How much of an outlier is it as you see it? Are there still major companies today in tech or other sectors that are just kind of by virtue of the way they're built or they've evolved, kind of resistant to having somebody come in from the outside to run them.
Yeah, and I think what mark set is totally true. Another supporting point there is how hard it is to come out of those big tech firms and be successful as a CEO elsewhere.
That was happening a lot now that was a big head scratcher.
Matt worked with a data research group called Live Data Technologies.
I said, okay, well, can you just tell us where every public company CEO over the past twenty years has come from, or where have they ever worked, what's on their resume? And so we generated this data set that showed over three five year periods, how the factories to speak, have risen and fallen. When so, when these rankings came in and we're looking down the list of the top CEO factories. First thing we said was, Where's Apple, Where's Meta,
Where's Amazon? Where are all these tech titans that are these days the sort of paragons of business whatever they do, whether it's their return to office policy or their approach to try you know, companies model themselves on big tech these days, and so we said, well, where are they? And we realize there's a couple of reasons why you don't see a lot of the big tech firms outside of IBM. One reason is positive to us, is that when you leave big tech, you often go into the
world of venture capital. You want to invest. You want to invest in the next Meta or the next Google, So that kind of takes them out of their running to be a corporate CEO. Another reason is that they're often very skilled and being what's called like a product CEO rather than a general management CEO. So their skills are really applicable to launching the next iPhone or launching some sort of you know, software as a service type
of thing. But they're very concerned to tech, and you can't just take them out of tech and then send them to some other company and be like, okay, now go sell refrigerators, so you don't have that GE model that you used to. And the third reason is they're just young. They don't have enough of a track record. Metta only went public twenty twelve, which is just like halfway through the time period we were looking at here. So there's just not enough executives that they've hired to
go off into the wilderness and become CEOs elsewhere. So that might change, we might see some more CEOs in corporate America or the corporate world at large who have that big tech pedigree, but for now not as many.
So there was the underrepresentation of big tech. And another trend emerged in the data.
And it just hit me over the head immediately as soon as I saw the chronological breakdown of how the professional services firms and the consulting firms were just slowly, steadily and then all of a sudden, you know, occupying nearly the entire top ten. In our top ten, we have McKinsey, Accenture, the A Deco Group, Ey, Deloitte, and PwC. And so you start to think, well, where's where's IBM,
You know, where's GE. They're still there, but much further down, so they've been knocked from their perch, and I think this is the first sort of story that really takes a look at here is the case and here's why.
So how did large consulting firms become the new CEO pipeline? And how is that changing business?
That's next pop quiz.
What do Sundar Pichai, Sheryl Sandberg and James Gorman have in common? They all used to work at McKenzie. My colleague Matt Boyle has been reporting on this trend that the new pipeline for executive talent runs from consulting firms to C suites and he's been thinking a lot about what's required of a modern day executive. So it's twenty twenty five.
What are the.
Qualities or assets in a good CEO today? I imagine that definition has changed in recent day.
It really has.
I mean, he speaks to the evolution of the role of the CEO. One big thing I came acro is adaptability. You have to be able to adapt quickly to an ever changing role. Then if you talk about ever changing world today is a perfect example in terms of the word uncertainty being used what ten million times over the past three months on earnings calls and the estimate, yes, exact, probably it's low balling it. But you need that ability
to anticipate. And if you can't anticipate because you don't know what, let's say, President Trump's going to do with tariffs next week, you have to at least be able to adapt quickly. And that's where consultants are pretty strong. Their whole job is to go in blind to a company, assess it very quickly, and then figure out what to do. So adaptability is one another one is just a sort of a facility with digits and data, let's call it,
you know, a tech savviness. They also have a good understanding of corporate cultures because again they have to come in fly in parachute, in blind, get to read on a corporate culture quickly and sort of suss that, okay, what's going to be possible, you know, within the scope of of this engagement. And they are usually pretty good
at selling themselves. These are consultants, you know, that's sort of if you're not good at selling yourself and your vision, you're not going to last very long at McKinsey, a Bane or a BCG. And so that is a huge part of these days of a CEO's job.
So this new pipeline runs from the accentures and the PWC's and the McKinsey's of the world to these C suites. Let me pose to you an age old question, and that is what do consultants actually do?
Well? What are they so fast? Side? That is the age old question.
Certainly, what consultants do, I think is a little bit different than what a lot of Americans think consultants do. They might just think of a consultant as you know, someone who jets in first class, comes to the company and has a quick look around and then delivers, you know, a presentation. This is what you should do, you know, lay off twenty percent of your people, you know, go into China, you know, launch a new product, and then
they get skidattle, they're gone. While that is one element of what some consultants do usually more on this strategy side, what I learned in the course of reporting this story is that that is not what most consultants are doing today. The big difference being that they are often sticking around and making sure that you know, whatever they recommend, whether it's a new technology, a new way of management, they
stick and make sure it's actually working. So they're kind of they're getting their hands dirty in a way that I don't think a lot of people recognize that consultants normally do.
We were talking about the kind of training apparatus that these old industrial companies built up, if that was a corporate campus or just a program, a training program. Do you see the same thing playing out at these consulting firms. Do They have very rigorous training programs of their own with the goal of, yes, building their ranks, but getting
exactly to the head of HRT accentsure. They spend as much on training what they call learning and development, as GE used to spend on all of its Crotonville apparats. That said accentre has hundreds of thousands of employees, so there is a lot of training that needs to be done. But I've talked to other firms as well, and they're just getting a lot more rigorous about creating putting some structure behind this, which is a good thing.
Certainly.
Now we all laugh and joke about, oh I got to sit through with stupid you webinar, or there's some course from hr I have to take, But these companies really take it super seriously and they know if you're actually paying attention in some of this training. And granted it shouldn't all just be boring webinars. It should be one on one learning with senior leaders, you know, in person stuff, stuff that you're not just going to do
over a zoom call. But the point is, whether it's Accenture or the Swiss Staffing firm a deco group, you talk to the heads of HR there, you really learn that they really have realized, wait a minute, we've got to put some more structure and rigor into this training. So it's not just something you tick a box and do on a random Friday in the summer. It's something
that you want to actual we spend time on. You know, it's going to make you a better employee and then a more employable executive hopefully down the line.
Is the most common path to go from being a partner at one of these firms directly to becoming a CEO or their other stops along the way to them.
It should never be a direct path actually from partner at Accenture right into the C suite. That is kind of actually a recipe for disaster. Some of the advisors I talked to for this story. Had really said you have to allow them to make all the predictable mistakes in one or two let's say lower level corporate jobs. So usually if you're coming out of consulting and you get a corporate job, you should maybe work as an operations chief or a strategy chief is a very common one.
Walmart and other companies have hired being consultants as heads of strategy, so then you get the feel for the company and the culture and you're really immersed in it without having to be the sort of the be all, end all decision maker before you're elevated right into the CEO position.
I want to ask you about times when this has worked out well, drawing from the world of consulting, putting folks from there into the c suite, and times when it hasn't.
Yeah, I mean a good example. And this is a CEO I talked to as a CEO of Ranstad. Now this is company not a lot of Americans know about staffing company. Staffing company. They do a lot of you know, staffing solutions. If you've got a workforce issue, you'll call him in to fix it. They also own the job site Monster dot com. So some of us might know them that way.
So anyway, their CEO is this Dutch guy.
They're based in the Netherlands, and he had run two massive units of Accenture. He'd actually been there so long he was there when it used to be called Anderson Consulting in.
The old days.
But the point is, having talked to him, he got to know just about every industry under the sun, from retails to autos to utilities. So he had the industry knowledge of just about any industry, which is very helpful now that his clients are across industries. But he also was very good at deploying experts to fix whatever problems issues their clients were having in his years and Axcenture.
And he's also just like he's a personable guy too.
He's not this robotic consultant who just speaks like he's a PowerPoint in human form, which I think goes a long way as well. So when he missed out on the job of running Accenture, he was on everyone short list to get a global CEO job and he took the job at Ranstad. So he's a great example sort of a consultant made good. Now, how about a couple examples when this hasn't worked out. Yes, the recent poster child for a consultant who did not turn out well in the c suite was John Donahoe at Nike, a
longtime Bain and Co. Consultant, did very well there. He also had some other corporate roles before he was at eBay, did extremely well there. So he was following like the proper path, you know, a couple of corporate roles in c suite seasoning. But then he goes Intoni, which you know is a challenging culture, a very challenging culture to come into from the outside, and it was a flame out.
Now it wasn't just because he was a consultant that it didn't work, but it's sure as heck didn't help that he was trying to bring some of his bin teachings into a culture and sometimes these corporate cultures will just reject it out a hand and say, no, that's not how it's done here, this is not you know, this is not the Nike way. And you know, financial performance COVID on top of it. A lot of things contributed to his downfall. But another one is the former
CEO of Starbucks, who's Mackenzie Alum. There you have a case of a founder, Howard Schultz, who just never.
Really seems to go away.
Yes, and maybe you know, he didn't have as much of a runway as he needed to do some of the things to turn Starbucks around, but there was not much patience given to him, and so he was out after.
Just over a year.
I want to end with a philosophical question, and that is, what do we gain or lose by hoving a pipeline like this, having this kind of mold of who the ideal CEO is? What does it mean that we're kind of restricting I don't know, a diversity of opinion or perspective on what that job entails or could entail.
Yeah, I think it's a really good point, and we are probably constraining and constricting ourselves a little bit to say that, Okay, well now we don't need to hire and the CEO doesn't have to be from ge but he now has to be from Accenture. So okay, you're not getting someone from this box. You're getting someone from
a different box. Whereas, especially these days in the world of business, we really need to be hiring people who are not in a box at all, or at least willing to look up outside the box and have a
peek around. But I think it's the job of corporations, though, when they are figuring out who's going to be leading us into this wilderness that we're into right now, to be hopefully looking across the board at not just the people from let's say Central Casting, whether Central Casting is ge or now it's Accenture and McKinsey and saying or at least filling up the senior management roles with enough people who are willing to challenge orthodoxy, have a sense
of you know, is this really the way we should be doing things guys? And I think there's a lot to be said for maybe taking a chance at least on someone who's in a non traditional type and you know, roll the dice there and see what happens.
This is the Big Take from Bloomberg News.
I'm David Gerra.
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