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.