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29 Leadership Secrets from Jack Welch

Abridged from

Get Better or Get Beaten,

SECOND EDITION

ROBERT SLATER Publisher – McGraw – Hill

Copyright 2003

“JACK WELCH joined General Electric in 1960 after graduating from the University of Massachusetts at Amherst and the University of Illinois at Champaign. From 1981 to 2001, he served as chairman of the company and CEO. He retired in the year of 2001”.

Summary by- Suruchi Nagelia (06BS3617)

& Vartika Rai (06BS3811) ICFAI Business School, Kolkata

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About Jack Welch

Jack Welch born on November 19th, 1935 was Chairman & CEO of General Electric from 1981 to 2001. He pioneered some of the most important Business and leadership strategies, earning for himself a solid reputation for uncanny business acumen for past two decades at GE. Under his supervision GE’s market capitalization was increased by over $400bn. Jack Welch doesn’t believe in sitting still. His innovative, breakthrough leadership strategies as CEO have transformed GE in to a highly productive, Labor efficient power house. He is a man with a mission and GE continues to be the envy of its global competitors. “If Leadership is an art, then surely Welch has proved himself a master

painter”.

- Business Week on Jack Welch

Retd. 2001

Was honored as “Manager of the Century” in 1999

Welch became GE's youngest chairman and CEO in 1981

Became Chairman in 1979.

Named as Vice President of GE in 1972.

Joined General Electric in 1960.

Received his M.S. & PhD at the University of Illinois in 1960.

Attended Salem High School & later the University of Massachusetts Amherst, graduating in 1957 with a Bachelor of Science degree in chemical engineering.

Born on 19th November, 1935.

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Introduction In “29 Leadership Secrets” Jack Welch seems to be a visionary leader who introduces some management tactics for the competitive edge which resonates throughout the business world. Some of these leadership secrets are now followed by most of the American companies today. This book throws light on 29 secrets of leadership in detail naming few as Managing less is managing better, Make quality the job of every employee, Have global brains and vision, Making Quality a top priority, Be Number #1 or Number #2, Three “S” secrets, Use the brains of your workers and S-t-r-e-t-c-h. According to Welch in part I of this book; yester manager had a mind set of accepting compromise; keeping things tidy but tomorrow’s leaders must raise issues, debate them and resolve them. This book also informs us that the art of leading comes down to one thing facing reality and then acting decisively and quickly on that reality also people always overestimate business in a complex way but according to Welch it isn’t rocket science he thinks managing less is managing better because as u become leaner you, you find yourself communicating better. While we go through part II we learn that; Welch discusses about igniting a revolution and gives strategies for dealing with the change, he shares with us that the world is moving at such a pace that control has become a limitation, it slows you down. Welch in Leadership Secret #8 asks to be either number 1 or number 2 and keep redefining the market because there will be no room for the mediocre supplier of products and services as these are the businesses that we really want to nourish and which will take us into the 21st century. Apart from these businesses we would not prefer to pursue other business any further. He also discusses that in order to make quantum leap one should always use acquisitions and the operative assumption today is that someone, somewhere, has a better idea. In the book it is also discussed that big winners in the 21st century will be global and the idea of a company being global is nonsense. Businesses are global, not companies. As we go ahead with part III; we come to know that the boss elements should be out of your company this will give the employees the right and the responsibility to come up with their own ideas for solving problems. The goal was to give everyone a say in the way the organization was managed and to keep bosses from dictating every step in the decision making process. Welch discloses how to spark productivity through the “S” secrets: speed, simplicity and self-confidence, these words may sound just like another adage but when they are truly encouraged and developed, they are powerful management tools that can help streamline any organization and boost the productivity of the entire workforce. He says “It’s really as simple as that”. Welch believes that to survive in an increasingly competitive world large companies like GE must stop behaving and thinking like a large company they should get lean, get agile, and start thinking like a small company. This way they can communicate better move faster and waste less. This book also discusses that the people who are closest to the work really do know it better therefore go before your workers and answer all their questions. Further in part IV; he deals with next generation leadership with initiatives for driving and sustaining double-digit growth. He believes in another business strategy stretching, doing the best possible and then reaching beyond. The other leadership secrets discussed here are making quality a top priority and the job of every employee. He makes sure that everyone understands how six sigma works and one should take advantage of e-business opportunities making existing business internet ready and to put the final nail in bureaucracy.

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Part I – The Visionary Leader: Management tactics for gaining the competitive

edge.

Main Idea In this part Jack Welch says that in earlier times managers were seen as constantly monitoring and supervising, but this is not their job. He wanted that his managers should manage less and give more latitude to their employees. He wanted his managers to be leaders and not managers. He says their job is to create a vision for their employees. Supporting Ideas

� See willingness to change as strength, even if it means plunging part of the company into total confusion for a while.

� Confront what reality is today, it is a management style that forces people to change.

� See change as an opportunity and not as a threat.

� Look reality in the eye and don’t flinch, avoiding it can doom to failure.

� Facing reality can’t stop there, adapting business strategy should be at its earliest and you may turn a bad situation into a good one.

� Managers should be bursting with energy, able to develop and implement a vision and get out of the way.

� A great business leader should be able to get the employees excited about the work, far more freedom and responsibility is needed.

� He emphasized on vision not supervision, improving the performance of the company and making managers think broadly and creatively.

� Cut off in vital information arise complications.

� Create simple, reality based, customer focused vision and passion for excellence; hate bureaucracy and all the nonsense that comes with it.

� He categorized his managers-type A was to be kept and promoted type B to be nurtured in the hope that they might improve and type C to be fired.

Work-out program was implemented by Welch in 1989 to rampant change in the early 1980’s as inflation was raging and global competitors were capturing unprecedented market shares, enforcing everyday change in business environment and products at GE which every employee had to embrace. Categorization of four types of managers as discussed above is as follows:

� The first type delivers on commitments and shares GE’s values. “Make sure that they stick

around”.

� The second type does not meet on commitments and does not share GE’s values. “They are

not as pleasant but equally at ease”.

� The third type misses commitments but shares values. “They usually get second chance

preferably in a different environment”.

� The fourth type delivers on commitments but does not subscribe to GE’s values. “They are

most difficult to deal with”.

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Part II – Igniting a Revolution: Strategies for dealing with change. Main Idea

This part of the book is probably the most important part. Here, Welch talks of the business strategies to build the Market-Leading Company. He says in the wake of changing global business environment and a weakening domestic economy, GE needs to identify its strengths and work accordingly. He says to pursue a strategy that would establish each of the company’s business as either number one or number two in its market. This may lead to downsizing and that the exercise is though painful, it would be worth it. In the midst of all this strategies he also emphasized on adopting a learning culture in the organization, as learning is the most important ingredient of success. He also maintained that learning without implementation is of no use. So, Search for the new ideas, Implement them on regular basis and reward employees for sharing it. In the last part of this section he focuses on globalization, i.e. “Think globally and locally”.

Supporting Idea

When Jack Welch became the CEO of GE in 1981, the company had 350 businesses which was trouble for its investors to understand what GE was producing and its prospects for coming years. In the twentieth century two dramatic changes were taking place, firstly, American economy was becoming increasingly unhealthy; secondly, global environment was getting tough to compete. In this situation Welch realized those who succeed in business do so by becoming more competitive, on this he suggested that GE businesses has to be either #1 or #2 and other businesses should be divested. He adopted “Survival of the fittest” strategy throughout GE. He insisted that while judging #1 and #2, managers should also be in constant touch with the changing environment and growing market segments. “Downsizing” was another strategy that in followed during this time which was surely not acceptable and appreciated by all. For this he was also named as “Neutron Jack”, however he was very positive on his approach and said it is best for GE business and that he had no other choice, he was not there to make all his employees happy instead he was there to make GE more profitable. Welch in order to position GE in future had growth plans like:

� Hire managers who have the ability to compete and come out with creativity and innovation and at the same time give them space to prove themselves.

� Numbers were not the first priority for Welch rather he focused on a clear and well thought management.

� Welch says that one should not stick his head in the sand but create opportunities and challenges for the business and the boldest vision may be the best vision.

� Think outside the box and one should go for the quantum leap even if it is against the culture of your business.

� Sharing ideas within the company and implementing will keep you busy in hunting small opportunities.

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Part III - Removing the Boss Element: Productivity secrets for creating the

boundary less organization

Main Idea

To survive in a competitive world large companies have to get lean, get agile, start thinking like a small company. There should be no excuses made when it comes to work, one should get rid of anything that gets in the way of being informal and being fast of being boundary less. Therefore, Welch directed a lot of attention in getting GE to behave like a small company; keeping this in mind he introduced the three “S” secrets: Speed, Simplicity and Self confidence. The three attributes were able to change with the changing environment. He laid emphasis on turning workers into owners letting them speak out freely and then accumulating the ideas for further development, thus, removing the “Boss Element”. Supporting Idea

� In this part we learn that enemies are not just outside competitors but bureaucracy as well and this bureaucracy babble showed us that we have met the enemy, and it was “US”.

� Welch talks about getting rid of any layers in the management that does not add real value to the process and also not letting emotions get into the way.

� As the three “S” has already been discussed now people should understand their efforts and help the company to succeed.

� If an organization behaves like a small company they will move faster as they are the ones who know the penalties for hesitation in the market place.

� Tear down the boundaries as they slow the operations of your company and make matters complicated.

� Turn employees into owners, this is the way to get faster and more productive which also helps in unleashing the energy and intelligence of an individual.

� By turning hierarchy upside down the Work-Out program introduced by Welch gave evidence for his commitment of transferring power within GE.

� Work-Out program continues even today as a best practice targeting bureaucracy and all its waste, pomposity and nonsense. It is also a prerequisite to more ambitious initiatives such as Six Sigma.

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Part IV – Next Generation Leadership: Initiatives for driving and sustaining

double digit growth

Main Idea

Making S-T-R-E-T-C-H happen, it begins with defining performance targets that are within a company’s capability. For Welch stretching means exceeding goals, he says “you’ve got to think out of the box”. Stretch meant for shooting the stars even if employees fail to reach goal Welch considered them as a crucial stretch issues. He also made quality the top priority he asked to make sure that your products are your customer’s only actual value choice. He implemented the six sigma quality program looking at all products and services and no sooner did the promotion program was linked to Six Sigma, participation soared and change took root. In order to know how Six Sigma quality works one should understand all its components making sure that quality does not fall in the future as your customer are always aware of your quality. Last but not the least, Welch talks about the advantageous of the E-business although he - himself was a late mover in the internet. Supporting Ideas

� Speeding up business processes by increasing investment in information technology.

� Working to simplify business processes and continuing to build a learning organization.

� Focusing on service and quality.

� Push for the impossible by instilling in your employees the idea that they should go beyond ordinary goals.

� One should make sure that customers should be brought into the process and they should feel the result of your quality program as quickly as possible.

� Continuous monitoring of customer reaction should be the main focus making sure that the employees are aware of the point to satisfy customers.

� Think hard about the services that might be directly associated with your products and stay flexible.

� Look before you leap into the E-business awaiting appropriate opportunities and taking the fullest advantage of the web efficiencies.

� One should be “Web Enabled” and not “Web Threatened” when adapting your business model to the internet.

� Success lies in being a fundamentally strong company and with the usage of E-business in the company one can put the final nail in the bureaucracy.

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Key Thoughts by Jack Welch “The mindset of yesterday’s manager—accepting compromise, keeping things tidy—bred complacency.

Tomorrow’s leaders must raise issues, debate them, and resolve them. They must rally around a vision

of what a business can become”.

“As we became leaner, we found ourselves communicating better, with fewer interpreters and fewer

filters. We found that with fewer layers we had wider spans of management. We weren’t managing

better. We were managing less, and that was better”.

“People always overestimate how complex business is. This isn’t rocket science. We’ve chosen one of

the world’s simplest professions”.

“The hardest thing in the world is to move against somebody who is delivering the goods but acting

180 degrees from [your values]. But if you don’t act, you’re not walking the talk and you’re just an air

bag”.

“The world is moving at such a pace that control has become a limitation. It slows you down”.

“These are the businesses that we really want to nourish. These are the businesses that will take us

into the twenty-first century. They are inside the circles. Outside the circles you have businesses that

we would prefer not to pursue any further”.

“The idea of a company being global is nonsense. Businesses are global, not companies”.

“Every layer is a bad layer. Now we don’t have all that nonsense. If Delhi wants something, they fax

me. It’s much easier”.

“It takes enormous self-confidence to be simple, particularly in large organizations. Bureaucracy is

terrified by speed and hates simplicity”.

“The way to get faster, more productive, and more competitive is to unleash the energy and

intelligence and raw, ornery self-confidence of the American worker, who is still by far the most

productive and innovative in the world”.

“Our desire to tap into this creativity . . . to listen more clearly to these ideas . . . led us to a process

we call Work-Out”.

“The people who are closest to the work really do know it better”.

“As boundary less learning has defined how we behave, Six Sigma quality will . . . define how we

work”.

“Quality is the next act of productivity”.

“E-business . . . is already so big and transformational that it has almost outgrown the bounds of the

word “initiative.””