Reviewed by Katherine D. Durham
Jack Welch may have had many
unique names for what he did at General Electric, but his philosophy was
simple: live the GE values, make the numbers, articulate the vision. His
decisions were revolutionary to the business world but to consumers seemed to
be common sense, perhaps this is because he re-staffed his company with
customer based leaders. He did not take the traditional management position and
Welch entered GE in a small
plastics division and slowly worked his way up in the company. From the bottom
to the top he viewed the company’s greatest enemy, productivity’s greatest
enemy, as bureaucracy. In 1980 Welch became the eighth CEO of GE. GE appeared
to be a model company but Welch new it would survive the shaky economy if big
changes weren’t made. For the company to succeed all GE businesses were “fixed,
closed, or sold” with only those that could be number 1 or 2 in their industries
remaining a part of GE. This
became the foundation of the hardware phase of Welch’s leadership initiatives.
He then entered the software phase delayering and downsizing the company to
remove complex bureaucratic structures and reduce cost.
Welch set for GE to be knowledge
based environment and implemented “work-out,” an initiative to open
communication and learning between all members of GE. Welch was famous for his
rhetoric on “boundryless” which has since become a common term in business. Welch believed that those closest to the
products and customers knew the most and would need to be in close contact with
other members of the organization. He encouraged looking for good ideas
wherever they existed and modeled many of his initiatives after those started
at other companies.
Welch modeled the importance of
learning from younger or lower ranking members when he implemented
e-Initiative. He saw the Internet as a means to greatly expand his business and
recognized that if GE was left out of the e-revolution it would quickly fail.
Eager to learn, Welch brought in younger members of his corporation that had
more knowledge of the internet and the served as mentors to older management, including
Welch.
Welch did not like the term
manager but preferred leader, this is what he felt one had to be to be a
successful manager. Leaders should possess the “Four E’s of leadership:”
energy, energizer, edge, execution. Welch only hired “A leaders” that had “head,
heart, and gut.” They needed to be able to motivate employers with their energy
and have a competitive spirit; this would bring about successful completion.
Welch’s thirst for knowledge and
response to employee feedback lead to his greatest revolution, Six Sigma. Welch
never liked TQM, but listened to his employees concerns, saw a need to
implement a quality initiative in GE. The company was losing large profits
because of its lack of quality control. Welch turned to Motorola’s Six Sigma
model to improve processes and products while reducing costs. Welch had Six
Sigma coaches that assisted communication throughout GE, Green Belts. They were
responsible for ensuring that all GE employees understood Six Sigma and
implemented it properly to earn a belt. Green belts took three weeks of
training and were required by Welch for promotion consideration.
Welch’s customer based leadership
style was ground breaking for industry but he understood it was what the
customer wanted from a corporation. For a manager to come in and restructure a
business for the rapid growth that GE experienced shows immense leadership
capability and a realization for what is truly happening within company
holdings.
Welch’s open communication and
learning environment pushed the company stocks up as well as increasing working
satisfaction. He was a firm believer in MBO. Despite Peter Drucker being the
first management theorist to write about MBO it is believed by some that GE may
have been the first to actually have practiced the collaborative management
style.
Lexicon of
Leadership is a wonderful resource. It can be a little repetitive
because of the overlapping of concepts and phrases Welch used. It provides a
clear and thorough description of what made Jack Welch an incredible leader and
how he pushed GE to incredible growth rates.
Any manager should be a leader and
connect to those in the industry, employees, and customers. Welch’s
achievements demonstrate this importance and the importance of balancing
company growth with public satisfaction. Every manager should understand the
importance of leadership and staying in touch with the reality of the
corporation as Welch did. Lexicon of
Leadership should be one of the first reference books that managers and
company leaders go to for company solutions.
