“There is no need to go far in order to be inspired by people who are better than you in several…
At 44 years of age, Rafael Santana carries great responsibility. He is the CEO of GE (General Electric) in Latin America, one of the largest and most inventive corporations in the world. In an interview of almost an hour with Corall´s blog, given in his office in São Paulo, to the Corall Partners Fábio Betti and José Luiz Weiss, Santana shared valuable tips on implementing transformation models and revealed the main challenges ahead for the organization in the region, including to be positioned globally among the five best companies to work.
In addition, he explained how the Internet of Things is driving this new time of change at GE and as how the technological revolution can increase the productivity of society as a whole.
You have worked at GE for 16 years. What is behind this longevity, so rare nowadays in corporations?
R.S. First, when I look at GE as a company, I see a context in which one is able to change jobs without leaving the organization. The businesses include aviation, health, energy, transport,etc. In addition to this favorable universe of businesses, there is also the geographical aspect, which is quite interesting. Not to mention the challenging positions found in each of these sectors.
The second point relates to Rafael in three important aspects. Adaptability, which works great for me and allowed me to have a career that required frequent changes. I am originally from Belo Horizonte, I have worked in São Paulo, the United States, Germany, Italy, and now I am back in Brazil. This allowed me to develop adaptability to new cultures. For example, when I arrived at GE in Italy, I decided to understand the business, take the time and invest energy to become aware of that culture and understand the local team. I did not make the mistake of coming in with a cookie-cutter approach to managing the organization, even though I noticed several similarities between regions. Of course there is a common basis, but what stands out most is the human element, unique to each different culture.
The second is the inspirational aspect, and there is no rule for this. Each person should seek what motivates him or her. Sometimes the answer may be quite simple. For example, every day in the morning before starting work, I listen to music to provide me with energy. I believe there are songs that take us to another mental stat. I was also a swimmer in my youth and competed in national championships.
And finally, resilience, I have an appetite to go through difficult situations, which sometimes can be enduring. Sometimes we go through a very difficult month or year. In particular, I’ve been through very difficult years and it is hard to understand our own ability to resist, continue, inspire, adapt and learn effectively with what happens around us. It is essential to absorb the results that are not good, and make sure that you can get to a better position in the future.
Executives are under constant pressure, what do you do to manage your emotions?
R.S. Sports help but we need to include it into the routine. Whether it is running or going to the gym, I try to do this at least 3 times a week, between Monday and Friday. The weekend is for staying active, but with outside activities, focusing on other aspects of life.
Another matter is to have advisors on a day-to-day basis. Sometimes you see things worse or better than they actually are. So I suggest having these advisors who do not say what you want to hear, but what they actually see. Thus, your reality is adjusted and you are always connected with what is happening around you.
What was your main reason for returning to Brazil?
R.S. It was the challenge associated with the significant transformation that GE is going through at this time. We decreased investment in various parts of the group, such as home appliances, and invested in new areas, through the acquisition of Alstom, which is very significant in the current context. Only in Brazil, we jumped from 8,000 to 14,000 employees. In the Petrópolis plant, for example, our largest one, we have over 1,500 people. In addition, we are experiencing a profound cultural transformation with various initiatives such as Fast Works * and a renewal of practices associated with people and Performance Development.
Another point is that, six years ago, the status of Latin America was completely different. We were still going through a growth phase, with oscillations, but everything pointed to a strong economy. The region as a whole grew above 2.5% per year. Brazil was growing more than 5%. Today, we look at the result of the region’s GDP and are faced with negative numbers.
We currently conduct business with many transformations in a significantly challenging time. And with that, the opportunity arose to give my contribution, taking advantage of the experience accumulated by passing through several operations and the creation of a strong network within the company. Now, the main challenge is to do the same with 26,000 people working at GE in Latin America.
*Fast Works: is the name of the methodology that GE has been using to promote greater flexibility in the development of new products and solutions, listening to customer feedback from the process of prototyping and then adjusting according to evolving customer using experience. I.e., it ensures greater agility and speed in the launch of the product on the market and more extensive collaboration with those who will use the product.
I would say that our position is always to learn. And when you do that, you need to adjust, change and adapt to new contexts.
What was the triggering factor for the new wave of company transformation?
R.S. As you talk to GE employees, you can see that the company seems to be constantly changing. This change is the continuous learning about what is working well, what is not, and what may work even better.
When we look at the changes which have occurred in the last decade, such as the economy of the Internet, the internet of things and other business models and companies, we need to be sure we live these changes, and we continue to change to attract the best graduates and market professionals to work with us. For this, we need to continually defend our position to be among the 5 best companies to work for in the world.
We are adjusting to what is new. And this also involves an evaluation of our portfolio and the organization itself. In this sense, there were symbolic changes, and others were more practical. A highlight is that, about five years ago, we started an operation in Silicon Valley where we have more than five thousand people. Working in the area, they are in contact with that startup ecosystem to transform and redefine what is new, and they have brought some of that DNA into the company. Another modification was to move our corporate office to Boston, an environment which is closer to many universities. To translate it into one sentence, I would say that our position is always to learn. And when you do that, you need to adjust, change and adapt to new contexts.
Several studies show that most companies are unsuccessful in their transformation projects. For you, what is the model of a successful transformation and how is it led?
R.S. Of course it is necessary to establish a direction, but adaptability is also needed to achieve it. We understand that we must find a more contemporary model. We got to where we are due to our plans within the company, launched in different geographical areas and learning from them. For example, recently I implemented the first pilot of the new performance development model when I was in Italy. It was a fantastic learning experience and we were able to observe what worked well and what did not.
As how much as we have high expectations for our professionals, they have high expectations for the company to live up to.There is the expectation that the organization has clear mechanisms and good processes. The processes are not perfect and we recognize this as an opportunity to evolve. The performance development model launched in the pilot is already very different from today, and it will not be the same a year from now. We seek evolution and adaptability as a key part of our adjusting to new contexts.
You talked a lot about adaptability and evolution. What is the cultural evolution from a model where the company expected to be statistically perfect to an adaptable model in which everything can evolve?
R.S. I would say that it is not an evolution from a six sigma culture to one that does not follow this idea. It is still a six sigma culture incorporating new elements. When I look at performance, on-time delivery and quality, I see the same rigor. And we continue to follow it to ensure further improvement.
It is necessary to recognize that we can evolve our business models and also understand the demand of ecosystems. Today, we are faced with customers that are much more willing to work with solutions that translate into megawatts produced rather than supplying equipment. So, we left the old model and guarantee even more reliability and availability for new businesses. We moved away from the scope that we were traditionally operating in order to understand an even larger ecosystem. We saw what the internet did and how it impacted our daily lives and business models. And I believe that GE strode ahead, making sure to keep the lead in these new formats.
What does this shift to digital, propelled by global CEO Jeffrey Immelt, mean in practice?
R.S. Between 1990 and 2010, industry productivity was in the range of 4% per year. Today, that figure has fallen to 1%. How can it be explained that, after twenty years, despite having better equipment, being more interconnected and technological, productivity is falling? It is a real dilemma and it is an odd time to solve it. I believe that it is the opportunity for the Internet of Things to help society. We always listen to people, to our clients, and we are beginning to listen to the machines as well.
I recently visited our aviation team, which is in Petrópolis. They mentioned that there was an aircraft that arrived at Galeão that day and that the turbine had spoken to them, “Do not inspect me and do not carry out scheduled maintenance, because I’m working well and can operate for another thousand hours.” Imagine what this means in terms of productivity! When you translate this to aviation, 1% more availability in aircraft flight time represents more than 100 billion dollars a year. In the healthcare industry, 1% is 63 billion.
That’s money that is returned to society. This is the great opportunity we have to be able to create impact. It is a transformation for GE and this translates into productivity for the industry, which in turn also translates into efficiency for people. It is also important to talk about the doubt held by some people: “Will we be replaced by machines?”. No! I think it is an opportunity to make people more efficient and to transform the work to make it even better in new contexts.
GE is known to allow a lot of autonomy in its business units. Today, what is your role as the regional CEO in this organizational framework?
R.S. I will again talk about adaptability. I had the opportunity to work in global businesses, in distinct regions, and no country is equal or identical to another in terms of business. We have different stages in the operations in each of our businesses in Latin America and they are distinct from those found, for example, in Africa, the Middle East and China. And adaptability is the key. I would say that at times you feel almost as a COO of some operations, in others as a CEO, and sometimes as an advisor, sponsor or mentor. We need to recognize these stages and, in addition, bring a toolbox, which serves to assist businesses in growth and development in different regions. There are different partnerships in different businesses, the teams are different and it is important to extract the most value out of them, but at the same time connect all areas.
When you look at GE´s portfolio, it is often possible to come across opportunities, because the set of solutions and products is so large that sometimes we cannot add more value than is being executed at each moment. Therefore, this adaptability to recognize different business stages, work with them and be able to add value is more than necessary.
I believe that it is the opportunity for the Internet of Things to help society. We always listen to people, to our clients, and we are beginning to listen to the machines as well.
On another visit we made to your office, we heard about the GE Store. Now, you mentioned the hyper-connection and synergy between businesses. How is this concept evolving?
R.S. I will answer with two examples. Recently we participated in a thermal energy auction in Argentina in which three gig watts of energy were auctioned. This is a market where GE traditionally had less than a 20% share. We won 50%! It was a step in the right direction. It is interesting to note that a model adopted to embrace this opportunity was to set up a war room, where we had a team with a clear mission to win more than half of the available opportunity in Argentina at that time. When you look at what we would normally sell in equipment in the region, perhaps we would reach something in the range of US $ 600 million. In a thermal power auction, there are accessories that go far beyond the supply of turbines for power generation. What we did was bring in other elements, adding offers from several of our business units, which enabled us to add more than US$ 50 million that would not have been part of the original solution.
Stepping back, I emphasize that we had a specific FPSO * in Brazil, where traditionally we were only selling turbo machinery equipment, power generation and turbo compression, with a scope of US$ 130 to US$ 140 million. What we did was provide the so-called E-Houses, which enabled us to reach the US$ 200 million. We need to translate the opportunities that are more valued in the organization to expand the market.
*FPSO: acronym meaning floating platform for extraction of gas and oil offshore
What is the largest challenge that you currently face? Is it related more to business, people or is it a combination of these factors?
R.S. It’s a combination. I start talking about people, because I think that is the key point in this process. I would say that it is to translate for them the need for urgency, on account of passing through a period of readjustment and consolidation; in seeking more efficiency and productivity in our operations; in order to improve, become faster, and to be positioned in an even better way.
The second point is the economic moment. If you effectively have less thermal plants being bought, it is necessary to expand your scope in relation to what is being done; to amplify areas within the market. I emphasize that, when looking at the region, the demand for investment and infrastructure has not changed. There is simply an economic issue to be addressed. We constantly see an opportunity to make connections in different business models and, thus, unlock opportunities.
What will be your legacy when you leave the positiion? What would you like to leave to your people?
R.S. A legacy is always created by individuals and teams. For me, the main thing is to make sure that I had an organization in which people evolved, which created opportunities for them to learn, transferred knowledge and best practices and accelerated the transformation. I emphasize that we have a strong Latin American presence in the leadership of GE as a whole. We are very well positioned, not only by the number of people, but the quality of the region. In number of employees, Latin America is the third largest region in the world, only behind the United States and Europe. We have an investment of more than R$ 1 billion in our research center in Rio de Janeiro and have an engineering center with over 1,800 people in Mexico. In this center, we have developed what is most modern in terms of aviation technology, especially in turbines, such as those that speak. We have high quality infrastructure in plants and factories.
There is a relationship between direct numbers, increased market share and growth. We can grow even with GDP falling. Expansion of the market means seeking solutions. When the business is growing, opportunities to increase the organization amplify further.
Is there any leader who inspired you or inspires you within or outside the organization?
R.S. Is there a specific leadership model that iI attribute to an individual? No! But there are many people who inspire me. However, the most interesting is that they are close to me. There is no need to go far to be inspired by people who are better than you are. It is always better than choosing a distant leader that you do not know so well, that you only read about. Sometimes you are inspired by people on your side, someone who works for you or your peer.
We must treat each moment as unique and seek the best that can be extracted from each situation. We must have the intensity to always get the best value from things. It’s a learning experience. Nobody crosses the same river twice. The river changes, the water became different. And we must recognize it.
What advice would you give to other CEO´s that seek to transform their organizations?
R.S. I would say that it all starts with the team. It is critical to have multipliers that translate what we aspire into the organization. It is very difficult to have an ideal team. The truth is that the perfect team changes every six months, because the environment changes and the group will not necessarily be effective in the same format. It takes adaptability and constant learning.
We must treat each moment as unique and seek the best that can be extracted from each situation. We must have the intensity to always get the best value from things. It’s a learning experience. Nobody crosses the same river twice. The river changes, the water became different. And we must recognize it.
If you had the opportunity to go back in time, what advice would you give to yourself after graduation?
R.S. GE was my third job after graduating. From a young age, I was always very ambitious. I had a feeling that at times things were not moving at the same speed as I expected. I would suggest more patience, enjoyment, and developing greater depth. Give yourself more time. Sometimes we realize that there is not a perfect ecosystem around us so we can focus on becoming an expert in a particular area, in order to expand one´s knowledge and competencies.
