How I Got Here Jan 19 2012

The Upside of a Demotion from Jack Welch

By joseph walker

In the mid 1990s, the career of General Electric Chief Technology Officer Mark Little was nearly destroyed by a series of mechanical failures in the company's $40 million industrial turbines.

The malfunctions caused GE's Power Systems group, where Little was vice president of engineering, to miss its financial targets by hundreds of millions of dollars. Chief Executive Jack Welch and then-President of Power Systems Bob Nardelli demoted Little and replaced him with someone with greater turbine expertise. Everyone acknowledged the problems predated Little and weren't his fault, but his responsibilities were diminished nonetheless.

Little was flustered, demoralized and angry. The son of a bartender and schoolteacher from the working-class Dorchester neighborhood of Boston, he had worked briefly as a grammar school teacher before earning a master's degree in mechanical engineering from Northeastern University and, later, a Ph.D from the Rensselaer Polytechnic Institute. Until the rotors fell off the turbines, he had been a rising star at GE.

After his demotion, he resolved to excel at the duties still assigned to him. In 1997, he got another chance to help lead the then-unpr ofitable Power Systems group and by 2002, the division earned $4 billion in annual operating pr ofit.

Current Chief Executive Jeff Immelt in 2005 chose Little to head the firm's global research division, making him responsible for an elite group of 3,000 employees from Rio de Janeiro to Shanghai who work on the next generation of technology in clean energy, health care, medical devices and aircraft jet engines. He directs a substantial part of the company's $6 billion annual R&D budget.

Little, 59, talked to FINS about what he learned from Jack Welch, getting demoted from his first big executive role, and how a directionless kid from Boston became one of GE's top 22 corporate executives despite it all.

Joseph Walker: Did you know always know what you wanted to be when you grew up?

Mark Little: I had no damn idea whatsoever. I had a sense that I liked math and science even in grammar school, but I really had no idea where that was going to lead me.

JW: Your first job out of Tufts University was at Texas Instruments. How did that go?

ML: I went to Texas Instruments in 1974 and back then the economy was in a very rough spot. It wasn't very far away from the oil shocks and gasoline lines. Jobs were not easy to come by. I got a job as a manufacturing engineering -- not very sophisticated stuff, but it was a start. I went into work three months after I started and there was a sign that said 400 people are getting laid off. My boss pulled me into the office and said, "Sorry kid, but you're outta here."

I was looking around, and there wasn't much of anything to do anywhere. I got a job as a teaching assistant in the Boston public schools, a grammar school, nothing sophisticated. And I started to go to school at night while I was looking for a job and I ended up going full-time at Northeastern to get a master's degree in mechanical engineering.

It was an interesting, transitional time for me. As an undergraduate, I was completely unfocused, then I got displaced and it gave me time to get refocused. I became a very dedicated student.

When I finished my master's degree, I went looking for an industrial job. I got a number of offers, one of which was to go to GE. This was 1978 and I came to GE in Schenectady and I joined what was then called our power business, now our energy business, and I worked on the large turbine generator equipment team.

The reason I picked to go there was because there was a guy I had a chance to work for who I thought was terrific and he turned out to be a great boss. His name was Duncan Walker. He was a very bright engineer, very articulate and engaging. He gave us the help we needed to get our skills built up and the flexibility to take on a good challenge.

JW: What was your first big executive role?

ML: I got a chance to run our gas turbine business, which was $2.5 billion at that time. Then I got to run engineering for a while, and that didn't go so well. It was a time of unbelievable turmoil where we went from top of the charts to the bottom of the charts. We missed our financial targets.

We had a gas turbine product that was best in class, but before long and shortly after I got into the job running engineering, we experienced a series of failures that were substantial. It was so bad that The Wall Street Journal was writing that it was the end of the energy business because of these failures.

It was horrible. I was a very young officer, very much a rookie. They brought in another guy to take over the gas turbine business. I thought at that time that my career at GE was over. I saw Welch at the time and he said, "This is a mess."

At a deep level I didn't feel personally responsible for either the financial or the product malperformance because I didn't have control over the financials and on the product side I wasn't responsible for the engineering when the products were designed. Nonetheless they wanted to strengthen the team, and bring in someone with core experience in a technology that I didn't have. I hated every damn minute of it.

Getting your responsibilities diminished, not enhanced is a bad thing. I figured it was the end of the road for me. But I told myself then that I was still the leader of a substantial portion of the organization, still an officer and I didn't want to have anyone on my team feeling anything but positive about what we were doing together. That meant sucking it up and being a positive leader of that team.

I still felt like I was on my way out.

JW: You ended up staying. Why?

ML: When a leadership position opened up on the business side of power generation -- it was the first job I ever asked for in my life and I went and said "I think I'm the right guy for this." Even as I was doing this, I didn't think I had a chance of getting it. A miracle happened and I got it. I remember the relief of getting another chance at doing what I wanted to do.

I was running the power generation business. At that point it was losing money. This was 1997 and we set a vision of breaking even by 2000. I told Welch, and he said it was a very fine goal but difficult to achieve.

We built a great team, all the product issues were behind us. We took the business from losing $200 million to making $4 billion.

JW: What was it like working for Jack Welch?

ML: He was, for me, a great leader. He was tough-minded and aggressive. He had a reputation of being terrifying, which in some ways he was.

He had a very keen ability to observe business situations and hold down the essentials. He understood what you'd tell him in a minute. But then he would give some very aggressive, stretched goals to push you to be your best.

When I was very young, we were at a management training session and I saw him in a circle of 25 people. He saw a young guy across the way, he stopped the discussion and said, "Hey, I heard you did this, that's the greatest thing," and he went on for two minutes praising this kid, for what felt like an endless amount of time. And this kid's face lit up like a beacon because he had the CEO of GE praising him.

Calling attention to a person's good performance in a public, emphatic way is very meaningful thing. The other side was he could give a kick in the ass that could really be felt. He taught me that when you're praising people, do it in a strong way and do it for long time, and when you're kicking someone in the ass, make it hard, but do it quick, do it infrequently.

JW: How important has luck been in your career?

ML: Circumstance and luck matter. You have to have a plan of your own, and drive and skill. But being in the right place and the right circumstance matters. I've got great humility knowing that I've been on one side of the one of the worst business circumstances I've ever seen at GE, and one of the best circumstances. I was doing the same thing in both, but one felt a hell of a lot better than the other.

Write to Joseph Walker at Joseph.Walker@dowjones.com



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