Collaboration Speeds Up at General Electric

MIT Sloan Management Review: What does the leader of culture transformation at General Electric Co. do?

Janice Semper: I’ve been in this role for about five years now. It’s focused on being one of the main architects for how we evolve the culture of the company for this new digital era so that GE can continue to be successful and relevant and sustainable as we move out of what I consider the industrial era into the digital era. It’s asking what that means in terms of mindsets and mechanics and behaviors we need to have in the company.

Following up on that, can you talk about why GE thought this was important to do and to appoint someone to do it?

We began to recognize that the world around us was fundamentally changing; we were starting to feel some disruption. We were looking at the technological innovation that was happening and started to understand the potential impact it would have on the company. Our customers and our employees were both telling us, “Love the company, but it’s slow.” Our customers were saying, “You guys are a little bit too hard to do business with.” Our employees were saying, “We want to do a better job working with our customers.” It was coming from a number of different places, but all recognizing that the world was fundamentally changing, and if we were to continue to be in existence, we had to change our culture and our solutions for our customers, how we work with our customers, how we think, and how we operate.

We also recognized that somebody has to be thinking about this strategically, that while it’s certainly everybody’s responsibility to create the culture, if you’re trying to change it, you need an architect to figure out how you actually do that, at least initially. That’s why we thought I should take this role.

Our first foray into this was actually the work we did with [The Lean Startup author and business consultant] Eric Ries. We recognized that while you could teach a lean startup to work faster, be more customer-focused, and be more agile, unless you have an environment that supports that way of working, it’s not going to stick.

Initially, our introduction to Ries came through our business innovation team, but we quickly realized that this is a human issue. I was brought in from a human resources perspective to say, “This is about mindset and behaviors.”

You’re five years into it. What are some of the key successes you’ve had, and what are some of the key challenges you’ve faced over those five years in making this cultural transformation?

We knew it was a transition that would not happen overnight. We knew you wouldn’t walk in the next day and see everybody thinking and acting differently. Five years in, we have a new language in the company. We talk about things differently, which is a testament to things changing. We talk about testing and learning. We ask, “What problem are you trying to solve? How do you know? What are you learning?” We talk about the elimination of “success theater.” We talk about capital allocation differently. The language has changed.

We’ve learned that this type of radical transformation is messy. It comes down to each person actually thinking and acting differently; therefore you have to meet people where they’re at. It’s very lumpy in terms of adoption. We have some parts of our organization that have radically transformed. We have other parts on the other end of the spectrum and everything in between. The messiness of it comes with the territory, although we didn’t know that early on.

You also can’t control it. You can help set the vision, but at the end of the day, it’s not a linear, change-control process. The vision has to be established at the top, but it’s emergent in nature.

While we definitely have pockets of the organization that have radically changed and we have changed a lot of our language and the way we think about things, we still have a ways to go in terms of everybody really working and thinking and acting differently.

You said you’ve had pockets of success. What is it about those pockets that have made them successful? What are the key success factors?

First of all, we looked at our culture and said, “What do we need to change? What are our key symbols or processes in the company that have to change to signal to the company, and to our employees, that we’re becoming a different company?”

We have three pillars, three levers. One is we changed our values and articulated what we called the “GE Beliefs,” which are really the North Star for thinking and acting differently. Those are (1) customers determine our success, (2) stay lean to go fast, (3) learn and adapt to win, (4) empower and inspire each other, and (5) deliver results in an uncertain world.

We introduced those and said, “This is how we need GE people to think and to act. And by the way, we don’t know how long they’ll be around because in a fast-paced world, these things do not have a long shelf life, but this is what it is for now.”

We also introduced a set of tools and principles that we call “FastWorks,” which is based on Lean Startup. It’s a way of working where the first questions you ask are “Who is my customer? Who is the recipient of this work? What is the problem I’m trying to solve? What would be a successful outcome from their perspective? What assumptions am I making, and how do I test and learn to get to the best solution?” We’ve been introducing and teaching it across the company.

The third thing we did was redesign our performance management system, which was probably the biggest HR process that influenced people’s behavior in the company because it’s also tied to our reward process. We moved away from our annual, traditional performance management process to something that’s more ongoing and fluid that’s in sync with the FastWorks way of working and with the GE Beliefs mindset. This new process is called “Performance Development.”

Those are the three “interventions” we did, and we have subsequently been rewiring the rest of the ecosystem in the company to align with them — from shifting the role of a manager in the company to what we call a “people leader,” to asking, “What are the behavioral expectations that are aligned with supporting a team, working in a more iterative way, and empowering and inspiring one another? How do we develop our talent? What are we teaching them? What competencies are we building?” We’re now in the process of redesigning many things in the company to align with this new way of thinking and acting.

Is there a particular division or project team or success story that captures what you’re trying to do or that makes you say, “Ah, these are the ones who get it”?

One group within our health care business, Sustainable Healthcare Solutions, has completely embraced all the things we’ve laid out and taken it even further. The critical success factors are that the business leader set the tone for it, gave permission for people to think and act differently, and has held them accountable for doing that, as well.

Providing health care solutions in some of our emerging markets like Africa and India was new business. The business leader basically started this business and within, I believe, the first year, they were already making money, which is pretty unusual. It absolutely led to business outcomes. The environment she created is very much based on customer discovery, experimentation, embracing learning or failure, if you will, for those tests. It’s about creating more agility and flexibility and being smart about capital allocation and changing funding models to not only run the business but also invest for growth. That’s one story I repeatedly refer to because it’s leading to business results. It’s such a great proof point that working and leading in this way and creating an environment where people can work like this is required to be successful.

Do you notice any difference at all in the way functions adapt to a new way of working?

It’s been tough. We had certain functions that have been more difficult to embrace than others because they’ve had to radically transform some of their processes. It’s been challenging because it’s required a lot of our functions to rethink the role they play, especially enabling functions, and to move away from a compliance role or a control function to one that’s truly an enabler and thinking about what that really means.

Where we have seen this take root, or become more further along, is with some great leaders who are willing to do different things. That’s where you really see it take off because they’re willing to say, “Hey, let me rethink this process or that process and my role in it,” and they know they’re a part of this effort as much as everybody else is: “I’m the messenger, but this is about me, as well.”

A big aha moment for me has been that everybody in the company has to be in, to be willing to stop and say, “Wait a minute. How do I actually work differently? What is my role in the company? How do I even do this?” Then, “How does it apply to me as a person? How do I turn around and help others depending on what my role is?”

The natural follow-up question is, How does this change the way you work, and how does it change your role in the company — or has it?

The best example is how we considered changing our performance management system. We followed the FastWorks methodology, and the first thing we did was use a discovery process. Who’s the customer of this? It turns out our employees are a customer segment. Our people leaders and senior leaders are a customer segment. We said, “Let’s go talk to them and understand what a successful outcome would be, what problems and pain points they currently have with our current process, and let’s go learn before we lock ourselves in a room and design something based on our own assumptions.”

We did the discovery work and learned a lot by talking to employees through one-on-one interviews and focus groups as to what would be a successful new performance management approach from their perspective. What would be of value to them?

Then, we took all that, synthesized it, and designed an approach. But before we even launched it across the company, we did minimum viable tests and tested components of it for a few weeks at a time with small groups of employees and then went back and asked, “Tell us about your experience. Did it work? Did it not work? Do we need to pivot or persevere?”

We learned before we actually finalized the design. Even when we introduced it into the company, we didn’t do a big bang launch. We brought on cohorts one at a time, and we kept going back to those organizations and asking, “How’s it going? What’s working? What’s not working? What do we need to iterate?” so that we were continuously learning and iterating.

When it came time to ask, “Well, did it work or not?” in the past, I would have just measured activities and said, “Well, we launched it. Check green, success.” Now I hold myself and my team accountable for the impact and say it doesn’t just matter that it’s out there. What impact is this new performance development having? Is it meeting the needs of our employees and our managers and our senior leaders as they defined it early on? If not, why not, and what do we need to keep iterating?

For me, it’s been a completely different way of working. I stop work that doesn’t add value, which is very hard to do in a performance-driven and goals-driven world. I work with a lot more data, qualitative and quantitative. I spend the time doing the discovery work up front before I jump to a solution. I ask, “Is this an assumption we have, or do we know this for a fact?” before we go off and do it. That’s how it’s changed me personally and the environment that I set up for my team and the behaviors I hold them accountable for.

You’re not just any company trying to do this. You are GE, which is known for process execution. Is there an inherent tension there?

There is an inherent tension, but we often bust a lot of myths, and we’re finding ourselves in the position to do that. When you actually apply what we call the FastWorks way of thinking or working, it’s just as rigorous as Six Sigma because it’s about experimentation. It’s not, “Let’s just go do something.” The process is actually quite rigorous.

We have to get people comfortable with the idea that it’s not about chaos. It’s about learning how to work in a world with a lot of uncertainty and ambiguity and volatility — the world we are all in today — and move forward. You do that by being much more iterative and experimental in your way of working, but you’re moving and making decisions on the basis of data, so there is rigor to it. So, although it’s different from Six Sigma, it’s still just as rigorous.

We’ve also had to get the company comfortable with the idea that these tools can still exist alongside one another; it just depends on when you use them. We still need Six Sigma in our toolkit. Once you have determined what your solution is going to be and you’re ready to scale it — and in our case, we’re building aircraft engines and nuclear power plants — at that point, you need Six Sigma rigor. In the up-front part of development, though, when you’re determining the next engine we should be building, you better be experimenting and testing lots of different things. In many cases, FastWorks helps us determine not whether we could build it but whether we should build it.

We’ve been trying to help acknowledge these tensions in the organization and say it’s not just one tool. It’s not just all about Six Sigma or all about FastWorks. These tools now exist in our entire portfolio. It’s been extremely challenging to get our folks used to thinking in those terms. Again, I would say we’ve got pockets where it just makes more sense given the context in which they’re working.

It’s been harder in some of our businesses where they don’t have as much volatility or disruption yet. They don’t necessarily feel the same need as those parts of our businesses that are being disrupted or are in extremely challenging, volatile, ambiguous environments where this is really the only way to go forward and work.

So, you’re not transforming one organization — you’re transforming multiple different organizations within the conglomerate.

Yes, and there are multiple tools that you would use at different points in time. It’s been extremely challenging and extremely rewarding at the same time.

How has it been rewarding?

When you see teams working differently and they talk about it and you see how rewarded they feel; when I hear our senior leaders use terms like experimentation, testing, learning, and eliminating success theater and solving what’s most valuable to our customer, creating customer outcomes, and being held accountable to outcomes, not just activities. When I hear this, I just sit back and smile because I’m like, “Yes, yes!” They may not say, “We’re going to do FastWorks,” but they’re talking about all the elements of it.

You see it and you hear it, and that’s very rewarding. When you listen to teams that are working in this way and their level of engagement and excitement and the connection they feel to their customers and the value they know they’re creating, it’s really fulfilling.

If a manager came to you from a traditional legacy company and said, “OK, we are going to start a cultural transformation to become more digital,” are there two or three things you’d tell them to be careful of or that they should absolutely do? What are some key takeaways if you had to give a 30-second elevator pitch of what to do?

This may sound a little cliché, but the tone has to be set from the top if you have a large organization. It doesn’t cascade down like it historically used to. It’ll be more emergent in nature, but the vision, the tone, has to be set from the top. There has to be a willingness to radically change. Everything has to be put on the table.

The other thing is the functions. This is not a spectator sport. Everybody has to be all-in. It can’t be just the innovation group doing this. It has to be pervasive throughout the entire company, and every leader has to be willing to be at the table and to redesign their work in their areas to align with this new way of thinking and acting because, again, it’s not just to one group or another. It has to be pervasive.

I would also say it’s messy. It really is. It’s not something that can be completely controlled. You will learn as you go. Approach it like you are asking everybody else to work differently. Test a lot of things and then go back and measure and be willing to change course and to iterate.

We started out five years ago, and honestly we’ve been learning as we go. We don’t know what the next two years will hold. We have the vision, but we’re continuously refining on the basis of what is taking root in the company, what’s not, what’s happening in the world around us, and how we have to adapt to that. You have to come at it with a test-and-learn approach. Those would be the three things I would say to a company.

We get a lot of questions, especially from large corporations, about this. GE, a very large, old company, has clearly made a commitment to transform itself. You guys have made some big bets on things. What would you say to these big, maybe old companies out there that are still asking for a return on investment or financial proof that transformation is really needed and that it’s going to bring them all the promises people are talking about?

I would tell them they’re not acting fast enough. Even though we’ve done a lot of work, we keep saying, “We’re not fast enough, we’ve got to accelerate this.” I would just say to someone who asks some of those traditional questions, “You’re not going to go about this the traditional way.” That’s the first thing you’ve got to get comfortable with. It’s not uncontrolled or chaotic, but you’re going to come at it from a different perspective in a different way.

By the time you’ve answered some of those questions, it may be too late. A sense of urgency is really, really important, because it’s hard. The easy thing is to continuously default back to what was, and you have to constantly fight that in an organization to say, “No. We have got to push forward. It’s not perfect, but it’s progress.”

There’s an inherent tension that’s going to exist. I would advise these big, older companies to look around and see what’s happening. The level of disruption is massive. It will come, and it will impact them. They really have to start to think now about how they position the company for success and for growth. It’s different than in the past. I would say, “It’s not going to be easy, but you probably have no choice.”

You talked a lot about this being a people issue, and this is about mindset and behavior sets. I know you have a little bit of background in psychology and talent. How do you get people to change their mindset and their behaviors?

It’s a great question because you can’t tell people to do it. It involves dialogue. It involves people actually engaging, getting their hands dirty and doing it. You basically have to give them platforms and find opportunities for them to try it on, to experience it for themselves, to be able to reflect on it, to talk about it, to discuss it, to debate it, and then get coaching. It’s very hands-on.

That’s what makes this hard, too, because you really want to package it in a neat little package. To give you a specific example, when we started this, we were using our very traditional corporate communications techniques. We sent out a really nice, consolidated message from senior folks, and it was all corporate-speak to people. They didn’t get it. It was viewed as an initiative of the day.

What we found was most powerful, the big pivot for us, was people telling their stories. So, we used more storytelling, but even then it wasn’t enough to have the stories filter up to corporate and for us to distribute them back out. People needed to hear stories of the people who were sitting next to them. It wasn’t about the people who were on the other side of the company because then they’d say, “I can’t relate to that person. I don’t even know who that person is.”

Then, we had to do another pivot to say, “Let’s identify and encourage people who are working in this way, who are experiencing it, to go tell their story about what value they themselves are getting from it,” and then share that and pull those people into a meeting and ask them to speak up because that gives it credibility if it’s somebody I know who’s sharing something with me.

It’s very hands-on. It’s personal versus this neat package where you’re going to put people in a training program for two days and send them back. It doesn’t work that way. As a matter of fact, our data tells us that just going to a training program has absolutely no impact on behavior change.

That’s consistent with things I’ve read, too. How do you create the dialogue, though, on a daily basis or on a regular basis in such a large organization where people are inundated by data?

It’s part of the role of our HR function now. We said, “We need you to be culture shapers and here’s what that means.” It’s not necessarily about ensuring that everybody is following the steps of this process. It’s encouraging dialogue and then coaching so that your role changes in terms of how you’re interacting with people. We’ve also found change agents at all different levels of the company and asked them to be proactive in talking and engaging people, sharing their stories, asking others to keep an eye on it, and we have given them tools to help them do it. We said, “Here are some questions to ask if you’re sitting down at a lunch table with people” and basically armed them with ways to create moments for engaging in dialog.

We have continued to encourage all that storytelling. Some of our communication, too, even though corporate is involved, is not us delivering the message. For example, we’ve tried something called “Practical Tips” from people leaders to people leaders. We have about 30,000 people leaders in the company. We find people leaders who have some great tips to share around this new mindset and behavior, tactical things they do. We ask them to write it up, or we help them write it up, and we distribute it. But we’re just behind the scenes, so it looks like people leaders are talking to people leaders. It’s practical. It’s short. It’s real. You get out of the corporate speak. Some of it we’re trying to orchestrate, but again, we’re behind the scenes. It’s really just getting to these people and saying, “We need your help to do this.”

The other thing is helping our people leaders really understand the expectations of what it means to lead a team today and asking for their help and encouraging this level of dialogue and discussion and experimentation. It has to happen locally. We’re using different mechanisms to fuel it, if you will, in the organization.

It’s a lot of work.

It is. Like I said, it’s inconsistent because you’ll have some leaders who are just fantastic and take off and other leaders who are great at doing it themselves but don’t want to create the space to bring others along. In that area, we’re still learning how you fuel it so that it’s not just chaos, but you’re orchestrating the emergence of it in some way.

The fact that you’ve changed the role of your talent folks is quite interesting, making them change. “Culture shapers,” I think, is what you said.

Yes, that’s been a big shift, to have our HR business partners and human resources managers out there coaching and facilitating these conversations versus just delivering the messages or telling people, “You need to do this.” You’re asking them different questions. It’s getting them to discover. It’s getting them to try it and coaching them, so it’s a very different role.