Would Today’s General Electric Recognize the Ideas in their Old “Blue Books”?
Mark's note: It's been a long time since Andy Wagner contributed a post to the blog, but we've remained friends and I was happy that he accepted my invitation to share thoughts on a recent discovery of his.
As a student of continuous improvement and organizational excellence, over the years I've run into a few articles that talk about the General Electric “Blue Books” — a management curriculum put together in the 1950s by none other than the father of management gurus, Peter Drucker, on behalf of GE CEO Ralph Cordiner.
Typically, the Blue Books come up when talking about Jack Welch's work at GE, which centered on destroying the Blue Book culture and the hidebound bureaucracy associated with it.
Being somewhat skeptical of Jack's management methods, my curiosity was piqued. It took some persistence, and luck, but I finally found a set of the famous books on Ebay. I haven't read the three volumes cover to cover and yet there are some gems that emerge just scanning the pages of the first volume.
CEO Ralph Cordiner's introduction letter is another document that would seemingly send Jack into fits.
Here are the four tenets, which Cordiner says guide how the company will be managed:
Bullet two — stewardship to
Piepenbrock found that integral enterprises, such as Toyota and Southwest Airlines, experience steady, continuous growth in cooperation with that list of stakeholders. It's a win-win strategy that he contrasts with the intermittent fits and starts of growth seen by what he calls “modular enterprises,” such as the Detroit Three and the legacy US airlines. These companies view customers, employees, and suppliers as interchangeable parts. And, as a result, their customers, employees
The book closes out with a diagram, “Progress in Social Relations,” that calls to mind the continuing conversation in Lean circles about servant leadership:
If you're familiar with David Logan's 5 Stages of Tribal Leadership, I think there's an analogy there as well.
As we develop as leaders and organizations, are we aspiring to climb this ladder? To advance beyond paternalism and meer participation to full on *
A friend pointed out to me that the early Greek philosophers, Aristotle and Plato, believed that all people should aspire to become “statesman” in their interactions with others, through their personal growth and development. That's certainly an aspirational goal–and a surprising artifact, coming to us all the way from 1953.
All of this makes me wonder what Ralph Cordiner and Peter Drucker would have to say about the state of General Electric today. After decades as one of the world's most respected companies, and being hailed for its ability to generate highly capable executives and managers, we see now the trouble that existed beneath the surface.
I spent nine years of my career at GE, the first two as a contractor. I value that experience as much as any other in my professional development. There's no doubt in my mind the depth of talent and organizational capability embedded in GE's bones.
But I must say, even at the time, I did have doubts about some of the choices the company was making — putting short-term results and “fixing the game” to hit the numbers ahead of excellence in service of the customer.
Perhaps the path forward can still be found in some dusty old books in a forgotten desk drawer in Schenectady.
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- Would Today's General Electric Recognize the Ideas in their Old “Blue Books”? - February 21, 2019
- America's Oldest Bike Company Could Use Lean Manufacturing to Remain the Oldest? - June 11, 2014
- Guest Post: What It Means - July 15, 2010
Andy was a classmate of mine in the Masters in Engineering Management at the Gordon Institute at Tufts, aka TGI. For two years, the 40+ of us spent every other weekend in classes, discussing a whole host of topics involving corporate giants such as GE, GM, Toyota…Andy always had such great insight. After being challenged by one of our expert professors on globalization, I recall he drafted a letter to send to the then chairman at GM. I don’t recall the contents, issue or even remember who the chairman was at the time but I do remember Andy’s tenacity and ability to spot a fly in the ointment!
The key word in Mr. Cordiner’s letter is “stewardship.” In 1976, the paper by Jensen and Mecking, “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure” had a great influence in changing the view of the job of hired managers from stewards to owners. This was facilitated by a change in executive compensation from 90% salary and 10% stock options to 90% stock options and 10% salary. So, over time, as “stewards” turned into “owners,” leaders abandoned the logic of business as seen by stewards and fully adopted the logic of business as seen by owners — to do with their plant, property, and people as they wished, to achieve whatever end was most expedient in relation to owners’ interests. Lean struggles to make headway against this understanding of ownership, in part because the stewardship view was an anomaly peculiar to U.S. business between the 1920s through the 1970s. Prior to and after those years, the prevailing view of the role of leaders in a business was as owners, not stewards.
Ironically, family-owned companies, like the German Mittelstand companies have a well earned reputation for stewardship–and a track record of passing ownership from generation to generation, while protecting the business for all stakeholders as they do so.
I think you should scan the GE Blue Books and post them on the internet. They are of historical significance, and not readily available.
Matt Lechner, Chmn.
WSSIG – the Wall Street Special Interest Group
It’s a good thought. It would take some doing. There are four volumes! I haven’t even read them through, yet.
If there were more copies out there, I’d be up for sacrificing one for scanning, but it took me a few years to find a copy.