Protocol | Enterprise

The GE Mafia: How an old-school company birthed a generation of tech leaders

The conglomerate hot-housed graduates in the '90s and '00s to create an adaptable army of tech talent. Now those execs are everywhere.

Look at the resumes of the top tech executives at the nation's largest companies and you're likely to find at least one theme: a stint at General Electric.

The once-quintessential American conglomerate has served as a launch pad for individuals now spearheading IT operations at companies such as Airbnb, United Airlines, Unilever, Morgan Stanley, AIG and dozens of others, according to analysis by Protocol.

"You look across [top technologists in] the Fortune 100, it's pretty hard to find someone that doesn't have a background in GE," said Nationwide Chief Technology Officer Jim Fowler, who departed the company in 2018 after a 18-year tenure. "It was by design that it became something of a producer of talent," he added.

GE's ability to cultivate leaders is widely known. The company's famed former CEO Jack Welch, who stepped down in 2001 and passed away in 2020, was laser-focused on pinpointing the most promising talent across the enterprise. But an early emphasis on IT — and the training of its executives to focus on it — put the company on the precipice of what is now one of the biggest trends in corporate America.

In recent years, enterprises have been rushing to digitize their operations, transforming IT leaders from help desk aficionados reporting to chief operating officers into top executives overseeing billion-dollar tech transformation efforts with a direct line to the CEO and board of directors.

That phenomenon has put new pressure on a position that, until recently, could function largely within its own silo. Chief information officers and similar positions are tasked with figuring out how tech such as cloud computing and artificial intelligence can not only support existing operations, but give the firm a new competitive advantage. Or, more bluntly, turn IT from a cost center into a profit center.

"That's just the way this role has evolved," Silicon Valley Bank CIO and 17-year GE veteran Mark Rohrwasser said. "If you are just a pure technologist … I don't think you're going to be in the key roles going forward."

That's perhaps the key reason why so many tech leaders today have been on GE's payroll: The company made it a priority to give its most promising future IT executives a broad range of skills, and pushed them into positions in the conglomerate's many different verticals: everything from healthcare to investment banking. Nationwide's Fowler, for example, worked in seven business units throughout his tenure; Rohrwasser served in eight.

"At that period of time, that was pretty unique. You were sitting at the same table as the business leaders, you were expected to engage," Rohrwasser said. "That's commonplace now."

Taking tech in-house

GE also pinpointed those individuals early on in their careers and provided ample training and leadership development opportunities. It was a major investment in a relatively small selection of workers, one that former execs say is foreign in today's workforce.

"They figured out that they needed to pay attention to people throughout the continuum of their careers," said Lynn Boyd, a former talent development executive at GE who helped lead the IT leadership programs. "It's harder to do now, to invest that kind of money [only] to have people leave on."

While the company's troubles are well-publicized, including the way it navigated its own digitization efforts, GE's leadership development programs, many of which bore the fingerprints of Welch, became a de facto gold standard in corporate America: Outside of CIOs, it's not uncommon to find a GE alumni as a CEO.

And in a display of just how strong the connection between alumni is as a result of these initiatives, as many as 25 former GE tech execs get together roughly every other month at events sponsored by an outside consulting company, according to Fowler.

But the foresight to focus on IT, specifically during the late 1990s and beyond, was particularly astute. At a time when a glob of internet startups careened from success to failure amid the dot-com crash, what set GE apart from other corporations, former employees say, was its willingness to spend money to bolster its internal workforce. Instead of relying on the increasingly big providers like SAP and Oracle to manage the tech stacks, it chose to fend for itself.

Working with software companies, "if you didn't know what you were doing, you just gave the farm away. There's a lot of companies that don't know what they are doing," said Boyd, who is now an executive coach. "It became evident to GE early on, maybe because they were so big and were spending a pot-load of money on this … that we just can't have somebody come in and mismanage it," she added.

CIO boot camp

To cultivate that kind of talent, GE started early, recruiting IT employees straight out of college. Those individuals would immediately be placed into a two-to-three week bootcamp, setting them up for what would hopefully become a decades-long career complete with several more iterations of executive training. Once the introductory sessions were over, each person was rotated to four different positions across the enterprise over the following two years. The program also encouraged these next-generation leaders to specialize in a specific technology field, like application development or coding.

"We basically took the material that was coming out of colleges and we would 'GE-ize' it and teach it what we do, why we do it and how does technology play into it," Fowler said.

As they progressed from early to mid-level careers, the coursework would intensify. Each year, roughly 30 first-time IT managers would be tapped to attend the Experience Information Management Program at GE's storied Crotonville campus. At the two-week gatherings that occurred four times a year, they could schmooze with other emerging leaders, such as reps from the top business schools in the country and executives from other divisions. (A standout "rock star" at these events was former GE CIO Gary Reiner, who still serves as a mentor to Fowler and others). But it wasn't all social: Each was given a business problem to work on and, after six months, would report in with a division CIO at the company on their progress.

"We called it a mini-MBA," Boyd said. "That put you on the map. If you weren't already on the map for other reasons, that put you on the map."

Ultimately, a segment of that group deemed executive material was then advanced to another gathering at Crotonville that focused more on developing long-term strategic vision. Of that group, as few as three would be ultimately tapped to serve as a group CIO, former staff said, leaving as many as 20 executives who were likely to jump ship in order to ultimately reach the coveted role.

That is one reason why there is such a large network of GE alumni at the nation's biggest businesses. But it also meant that, when those internal positions did become available, there was little delay in appointing new individuals.

"There was never a time when one of those top jobs came open that we didn't have a list of five to six really strong candidates just ready to walk in," Fowler said.

While GE still runs its postgraduate program for IT staff, it no longer runs the later-stage development programs. Instead, it is planning a new, more accelerated training program that will be rolled out this year. Still, two decades after Welch left GE, the focus on pinpointing leaders early on and exposing them to the numerous facets of the business remains.

"With the speed of change across the industries in which we operate, developing technology leaders with the skills to take on complex, real-world problems is critical," current CIO Nancy Anderson. "We're proud of the tech leaders we've produced at GE."

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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