Sunday, July 24, 2011

How GE develops innovation leaders through the LIG program

GE launched Leadership, Innovation and Growth (LIG) program in September 2006 and ran it till September 2008, mostly in Crotonville, epicenter of GE’s learning & development. Altogether 2,500 senior managers in 260 teams went through this four day program. The purpose of LIG was to make innovation and growth as much of a religion at GE as Six Sigma had been under Jack Welch. On day four the course wrapped up with a plenary session at which each team had 20 minutes to deliver a presentation to Jeff Immelt, GE’s CEO. When Immelt was asked why he devoted so much time to LIG, he said, “LIG gave me a way to drive change and develop leaders at the same time”. What happened at LIG? Here is an overview on what GE Power senior management team went through at LIG. (source: An excellent HBR article “How GE teaches teams to lead change” by Steven Prokesch, a senior editor of HBR who was invited to attend one of the LIG programs in October 2007).

LIG program is a brainchild of Susan Peters, GE’s VP of executive development and Daniel Henson, then CMO. Before attending the LIG, the senior managers at a business would assess their team’s success in creating a climate supportive for innovation. The assessment would generate an innovation dashboard that would be used during the program. During the program there would be talks by external gurus as well as internal role models. A large amount of time – about 15 to 20 hours – was set aside for breakout sessions. What happens during these breakouts?

During the first breakout on the morning of day one, the Power Gen team guessed and the learned their actual team scores for the 360 degree review of their growth values. This triggered a reassessment of almost every aspect of their business. Some of the questions that got raised by the team were: “We’re not as good at anticipating major trends as we ought to be”, “Is solar a good place to be?” or “Renewable energy, clean coal, nuclear – all are going to be policy dependent. Are we good at this?” The reassessment continued in this manner throughout the four days.

The reflections generated insights – may be the old rules don’t always apply; may be limits on carbon emissions and tax incentives for clean, renewable power matter more. That sparked a conversation about GE’s ability to understand and influence government policies. Managers agreed that it was deficient and that beefing it was therefore a priority. In the next breakout session the Power Gen managers talked soberly about the state of their core. Unless the operations are strengthened it is difficult to free up time for innovative thinking.

At another breakout session the team assessed their innovation portfolio by putting each project in one of the three boxes, a framework created by Prof. Vijay Govindarajan: incremental (aimed at strengthening the core), adjacencies (taking existing technologies to new markets or taking new technologies to its existing markets), nonlinear shifts (discontinuous shifts in technology or markets with radically new products or business models).

The final LIG session involved the reports to Immelt. Power Gen team led by Bolze talked about their biggest takeways from the program, their 10-year projection of revenues (from $13 billion to $40 billion with renewables’ share going from 30% to 50%), and a vision statement – “Powering the world responsibly”. They committed themselves to strengthening the core. They confessed they needed to get better at looking around the corners to spot nonlinear shifts. They listed the capabilities they needed to build: regulatory expertise, faster product development, creating emerging-markets products “in country for country”. They vowed to lighten up a bit and become more playful, a characteristic of innovative companies. As they spoke Immelt asked questions and shared observations.

Within a few weeks after the LIG session Steve Bolze, as required, sent a commitment letter to Immelt, laying out the measures his team would take to increase the pace of organic growth. Such a letter becomes a living contract between Immelt and the team.

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