GE plays a bet in China (3 of 3)
The Challenge of Leadership
Teaching people how to be leaders is a widely debated topic in the field of leadership studies. Are leaders born, or are they made? Can someone’s leadership potential actually be developed with the right coaching and mentoring? General Electric has created an entire business largely based around the fact that it believes the answers to these questions are yes. General Electric has had leadership development programs for over 100 years that have trained many of the company’s top leaders. Many of the management teams and CEOs in the Fortune 500 have gone through these leadership development programs, and rate them very highly. The program of leadership and officially running a lean organization has inspired other business concepts and best practices, including the “Six Sigma” system of project management. GE has been able to go into underperforming businesses in multiple different industries and have placed its people and processes into the company to completely turn the company around and to create financial success. For over 100 years of existence, this strategy has worked for GE. It has a AAA rating, one of only three firms to have this rating, and it is the only firm that was originally apart of the Dow that is still on it today. For GE, the question, and challenge that it has remains, how does it keep this legacy going? In today’s quickly changing world and competitive dynamics, it must constantly evaluate and prioritize in what it wants to invest in. However, the hallmark of the company will continue to build and develop great leadership. But as the company expands and globalizes, will it be able to build these leaders in these emerging markets? The challenges of merging cultures could be quite formidable. In coming to Asia, it has been apparent to me that the idea of leadership is drastically different than that of the US. In preparation for this report, I decided to interview two new colleagues that I have met that come from different backgrounds to gain their opinion on this issue. The first, CJ Wang, is a head broker at Tradition Inc, which is one of the largest brokerage houses in the world. CJ lives in Beijing, and his father works for the PRC government. I posed this question to him, and it was interesting to gain his very candid response. CJ basically said that “As Chinese, we don’t think about leadership in this way – the way you think about it in the US. In China we think its more about power. You either have it or you don’t. If you have it, by default, you are the leader. If not, then you must fall in line”. In this case, according to CJ, leadership in China is not something that is developed and encouraged, but it is more of a status born into or given. If this is the case, it would be in GE’s interest not to find and develop leadership talent, but to focus on building the relationships with the ones who already possess the power to make things work. I asked CJ if he thought this dynamic would change in China, and he thought that it eventually would, but that this could take generations to change. In addition to CJ, I also interviewed a local Hong Kong entrepreneur, John Liu, to gather his perspective on the subject. John was a very interesting person to interview, because he was originally from Taiwan, educated in Canada, and had worked for GE for two years right after university. John then moved back to Asia and has lived in Hong Kong for the last 10 years. Along the way, John has started three businesses and has become fluent in Cantonese. John has developed a software platform that has been very successful in Hong Kong and Japan. He is currently planning an execution strategy to try to penetrate the Chinese market, but even he, an Asian fluent in Mandarin, knows the hurdles he’s up against. “The Chinese market is super tight, and you have to have a very powerful and extensive network to get anything done there”, Liu says. “My only hopes of penetrating the Chinese market would be to do as GE does – establish JV’s”. Mr. Liu further believes that GE could start to try to build its leadership development programs in China, but not to expect much from the effort for a long time, but rather to consider it an investment for the future. “The Chinese market will not change overnight”, he says. “ For thousands of years, the Chinese people have been subject to some form of dictatorship in one way or another. Its ingrained in the culture to look to others for direction”. However, as markets such as Taiwan and Hong Kong are developing with a more western view of leadership, perhaps China will learn to adapt, Liu thinks. I did a final interview with another entrepreneur based in Hong Kong, Chris Crook. Chris has successfully ran a business in the Hong Kong area over the past four years, and just last year has started to enter the Chinese market in Shenzhen and Shanghai. Chris had some very interesting insights that helped me articulate the types of challenges that GE is facing as well. “What most people don’t understand about China is that its not just important to know more about the Chinese market, but its crucial to understand the different regions within China”, Chris said. “Each different region has its own unique culture and ways of doing business. Also, brand awareness is crucial in China. In the US, people will buy a product just because it is from “Costco”, for example. In China people must know the brand or they will not feel comfortable buying. You can’t just come in and market to them directly. They must first associate your product with a brand that they trust, and this is actually a very tricky thing to do”. Chris has had success selling his product through some local channels based in China. “I basically can’t do it on my own. I have to team with local Chinese to sell my products, and then I just have a revenue sharing plan with them. I think for the foreseeable future, this is how business has to get done in China”. GE seems to be following a similar strategy of entering businesses cautiously, and with tremendous support from local Chinese firms. As most of GE’s products have not reached the consumer level, it has not yet built its brand with the Chinese people, and this will be critical for GE’s future success. On my last visit to China, I visited both Beijing and Shanghai. On the highways coming to and leaving the airport, there were numerous signs that served as advertisements for GE. It appears that GE knows brand awareness in China is crucial and is making efforts to be known. Another example of this is how GE is sponsoring the Olympic games this year in Beijing. There should be many commercials and many advertising blitzes that will put GE front and center this summer.
GE’s big bet – training tomorrow’s Chinese leaders today
Training remains one of GE’s strengths. GE is still implementing the same system with Chinese locals as it does with the rest of the world in terms of training. According to Sherin, GE has “700 financial management trainees in the company today, and 52% of them are outside the US. Everybody is going through the same program. They take the same courses and rotate to a different job every six months. They all spend time on our corporate audit staff. We take Chinese and put them on assignments in Europe and the US to give them global experience, to give them exposure to the company and confidence in the GE system”. So, it appears that GE believes that its system of developing leadership talent can translate to any culture. Only time will tell whether GE’s bet pays off.
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06-20-2008, 09:56 PM
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