GE had been viewed as a company where executives could be recruited to serve as CEOs elsewhere. But, that is changing, according to a November 20, 2019 Wall Street Journal article. The article reports that Amazon has replaced GE as the company where CEOs come from.
This is not surprising. We are in an era of rapidly changing technology and it is said that every company must become a technology company. Tech businesses like Amazon, Google and Apple have been quite successful. GE, on the other hand, which was previously a go-to source for CEO recruits, has experienced tough times. So, it seems reasonable that in today’s technology-oriented world, more CEOs would come from a company like Amazon.
Further illustrating why CEO recruitment would shift from GE to Amazon is the November 25, 2019 Wall Street Journal article/report “Management Top 250”, which is “A ranking of U.S. companies by the Drucker Institute”. The big tech firms are near the top of the list, with Amazon in the number one spot. Microsoft, Apple, and Google’s parent company Alphabet, are ranked numbers two, three and four respectively. GE, however, ranked 100th on the list. The list is based on “five areas: customer satisfaction, employee engagement and development, innovation, social responsibility, and financial strength.”
In my view, as someone who researches business success patterns, it does make sense that more CEOs are coming from a high-tech powerhouse like Amazon. However, it’s important to remember that a CEO needs to be a good fit for a company. Merely coming from an organization known to produce potential CEO candidates is not enough. Whether from GE in days past, or from Amazon today, a CEO candidate is not necessarily suited to take the helm of every company. Different companies have different cultural and business strengths. A new CEO is most likely to succeed if he/she fits the company and understands the kinds of things required to drive its success.
Nonetheless, there are underlying principles that often apply widely. As pointed out in the Wall Street Journal article about Amazon as a CEO source, Amazon has a set of principles and its former execs do choose to apply them if take the helm elsewhere. As I see it, applying the principles elsewhere can often work. However, it’s always important to ask what from the former employer applies in the new assignment, versus what might be different and, thus, not lend itself to fit well in the executive’s new setting. CEOs from the outside should build on their new company’s strengths. When a newly recruited CEO brings too much that worked well for a former employer, but doesn’t fit the new company, results can be disastrous. This can happen whether it’s a CEO recruited from GE, or from a tech powerhouse like Apple, which, for example, was very different than Penney’s, where a former Apple exec took the helm.
So, in conclusion, it’s not surprising that CEOs today are coming from Amazon instead of GE. But, it’s important to remember that, regardless of where a CEO comes from, good fit really matters.