01 Mar 2007
Louis Parker firmly believes in taking risks. Ironically, that trait landed him the top spot at GE’s nearly $2 billion security business.by Roger ThompsonTopics:
Imagine having a conversation with the head of HR that goes something like this: Over the past several years with the company, I’ve helped turn around an ailing division. Now I’d like to try my hand at managing a growth business. Anything available?
When you work at General Electric, one of the world’s largest and most diverse companies, you don’t have to imagine such conversations. They actually happen. Just ask Louis Parker (MBA ’90). In March 2004, he sat down for a routine chat with the company’s HR chief and expressed an interest in moving out of the staid financial-services arena, where he was president and CEO of GE Commercial Insurance, and into something with strong growth prospects. Four months later, Parker’s wish came true: He became president and CEO of GE’s new Homeland Protection unit. In July 2005 he took charge of the parent company, GE Security, as president and CEO, having first served six months as COO.
Since 9/11, it’s hard to think of a business with more growth potential than security. Even before that fateful day in 2001, GE executives made the strategic decision to build from scratch a technology-based security business through best-in-class acquisitions. Today, the company Parker leads from its headquarters in Bradenton, Florida, offers a wide range of products to protect people and property, has 6,500 employees, operates in 35 countries, and generates annual sales approaching $2 billion.
Airports around the world use GE equipment to scan luggage and screen passengers for traces of explosives and narcotics. Public transit systems deploy the company’s surveillance cameras. Homes and offices rely on GE’s security and fire alarm equipment. Exporters install the company’s tiny monitors to track containers of cargo.
Molding a collection of formerly independent companies into a single, cohesive operation “has been the most difficult job I’ve ever had,” concedes Parker on a rare day when he’s off the road and in his office. (Travel requires 60 to 70 percent of his time.) “We bought companies that were No. 1 in their technologies,” he explains. “They were very entrepreneurial and had great niches. And now we have to pull all of them together to act as one company.”
He reels off a trio of management challenges: retaining valued workers whose knowledge and entrepreneurial zeal powered their former employers, standardizing processes across a far-flung network of operations, and motivating everyone with a clear understanding of the new company’s mission. Add to those formidable tasks the steep learning curve Parker faced by moving from the service-based rigors of insurance to the product-driven demands of his first-ever manufacturing job. “The operations of a manufacturing business are very different from a capital business,” he adds. “Frankly, I’m still learning a lot every day.”
And he’s putting that new knowledge into action. Last November, the company rolled out a product management reorganization plan that integrated separate technology, product development, and marketing operations. The reorganization imposed much-needed focus and put renewed emphasis on accountability for on-time, on-budget product delivery.
“At the beginning of 2006, we were working on 282 new products,” says Parker. “Now we have 30. We had to step back and ask, What are the big projects that we want to work on, and who will be dedicated to these projects? When we had 282 projects, nobody was dedicated 100 percent to anything. Now we have dedicated teams.”
Gaining control over an unwieldy product development process was essential to executing the company’s core strategy: using technology to differentiate GE’s products in the marketplace. At an estimated $30 billion globally for high-tech security products, it’s a market with plenty of room for growth. Parker is counting on the company’s deep bench of research talent — 800 engineers on GE Security’s payroll plus hundreds more in GE’s corporate research centers in Niskayuna, New York; Bangalore; Shanghai; and Munich — to come up with a steady flow of innovations.
Hearing success stories about products already on the market gives Parker a deep sense of satisfaction. One involved a kidnapped Texas couple whose captors went on a shopping spree with the victims’ credit cards. “The kidnappers were filmed on our video equipment in a store, and the police apprehended them,” says Parker. Halfway around the world, U.S. troops in Iraq have sent e-mails recounting how the company’s portable explosive detection equipment has kept them out of harm’s way.
Steering Off the Safe Road
For a man who just three years ago was at the top of his game in the insurance business, the question arises: Why risk everything by venturing into unknown territory? Parker’s answer reveals a lot about his outlook on life and his career.
“When we look at career opportunities,” he explains, “we always ask, do I have a chance to succeed? But I think it’s equally important to ask, do I have the opportunity to fail? If you have the opportunity to fail, that means you’re going to be given the opportunity to take risks and be accountable for the outcome. You have to have confidence and faith that you’re going to be OK either way.
“You can’t take the safe road all the time,” he continues. “You have to be willing to take certain risks. You’ve got to do something that’s going to give you that fire in the belly that makes you get up and get going every day.”
For Parker, the decision to attend HBS required a detour from a secure career path with IBM. He landed a sales job with Big Blue right out of the University of Pennsylvania and soon found himself managing a New Jersey regional operation. Eleven years ticked by, and Parker grew restless at work, a sentiment encouraged by his wife, Alita. “Even though I had a successful career at IBM, she thought I could do more,” Parker recalls. “She’s the one who encouraged me to apply to HBS.”
At 33, Parker thought he was too old. “I’ll be 35 when I graduate,” he told Alita. To which she famously replied, “You’re going to be 35 anyway.” Discussion over. With only one week left before the last admissions deadline, Parker hustled to complete his application. Thus began a four-year commuter marriage. Alita remained in New Jersey, where she, too, worked for IBM. Once Parker (known by his nickname “T”) graduated, Alita enrolled at HBS, graduating in 1992, while he headed to New York City for a dream job with Morgan Stanley.
Landing an investment banking offer became a point of pride after classmates scoffed that at age 35 Parker was too old for the Street. Such unwelcome advice “motivated me even more, because I hate it when people tell me something I can’t do,” he recalls. While the money was good and he honed some useful skills — “I learned how to make a balance sheet and P&L statement sing at three in the morning” — Parker missed managing people, not a priority for junior investment bankers. “I realized that money, by itself, was not enough of a motivator for me.” (He came to the same conclusion after writing a 100-page self-assessment paper for an HBS elective. “I didn’t listen,” he concedes.) So he moved on.
Parker spent the next five years at Automatic Data Processing, where he turned around an equipment-leasing division and earned a promotion to division vice president. While he was happy to be back in management, the company felt too safe. “ADP at the time was pretty risk-averse,” he says. “I was looking for something where I would have the opportunity to take risks.”
That chance came from an unexpected offer. GE Capital recruited him in April 1996 to run a financial-services operation despite his lack of previous industry experience. Recalls Parker, “They said, ‘You have the leadership skills we’re looking for, and we trust that you’ll learn the industry.’ They were willing to take the risk that I might fail.” To the contrary, he helped turn around lagging operations and rose to become president of GE Financial Assurance Direct, specializing in annuities, mutual funds, life insurance, and injury settlements. In January 2001, he took charge of GE Commercial Insurance, the position he held before moving to GE Security.
Sand and Sax in His Future?
Through all the job changes and requisite relocations, Parker and his wife have remained close, celebrating their 23rd anniversary last year and joyously welcoming the arrival of their first child, a son, fourteen years after agreeing to start a family. “We never gave up hope,” says Parker, who counts marrying Alita as “one of the best decisions of my life.” Another, which she inspired, was coming to HBS.
“In business we are always looking for ways to change the game in our favor,” says Parker. “HBS was absolutely a way to change the game personally and professionally. The experience gave me confidence to take risks.”
And when he’s ready to put his road warrior days behind him, Parker already has his next dream job planned. “I always say I want to become a bartender on a beach in the Caribbean and learn to play the sax.” It wouldn’t be the first time he has ventured into the unknown, confident that everything would turn out just fine.
Class of MBA 1970, Section E