Corporate Leader:

Transformational Leadership

25 Lessons from Jack Welch

Management Insight and Leadership Secrets of the Legendary Former CEO of GE

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Lesson

Key Message

Action Advice

1

Lead

Managers muddle – leaders inspire. Leaders are people who inspire with clear vision of how things can be done better. "What we are looking for are leaders at every level who can energize, excite and inspire rather than enervate, depress, and control."

Leadership vs. Management

• Create a vision and then ignite your organization to make this vision a reality. Get people so passionate about what they are doing that they cannot wait to execute this plan. Have great energy, competitive spirit and the ability to spark excitement and achieve results. Search for leaders who have the same qualities.

• Focus on strategic issues. Your job is to understand the strategic issues within each of your businesses where they are going around the Five Questions. Know the talent they need to win in those markets and the amount of capital they need. And make bets.

• Don't micromanage. Your job is to see the big picture. Don't manage every detail. Don't get caught up in the minutiae or obsess over every detail, but instead inspire others to execute of your vision. Surround yourself with great people and trust them to do their job and contribute their best to the organization.

• Involve everyone and welcome great ideas from everywhere. Anyone can be a leader, just so long as they contribute, and the most meaningful way for anyone to contribute is to come up with a good idea. Business is all about getting the best ideas from everyone. New ideas are the  lifeblood of the organization, the fuel that makes it run. "The hero is the person with a new idea." There is simply nothing more important to an organization than expressing ideas and creating a vision.

• Lead by Example. To spark others to perform, you must lead by example. Jack Welch mastery of the 4 E's of leadership – Energy, Energize, Edge, and Execution – was always in evidence. "He had great energy, sparked others, had incredible competitive spirit, and had a record of execution that was second to none. This is a key of the Welch phenomenon. Had he been lacking in any of the traits he espoused, he would not have commanded such acclaim."²

2

Manage Less

"We are constantly amazed by how much people will do when they are not told what to do by management." In the new knowledge-based economy, people should make their own decision. Managing less is managing better. Close supervision, control and bureaucracy kill the competitive spirit of the company. "Weak managers are the killers of business; they are the job killers. You can't manage self-confidence into people."

3

Articulate Your Vision

"Leaders inspire people with clear visions of how things can be done better." The best leader do not provide a step-by-step instruction manual for workers. The best leaders are those who come up with new idea, and articulate a vision that inspires others to act... More

4

Simplify

Keeping things simple is one of the keys to business success. "Simple messages travel faster, simpler designs reach the market faster and the elimination of clutter allows faster decision making."

5

Get Less Formal

"You must realize now how important it is to maintain the kind of corporate informality that encourages a training class to comfortably challenge the boss's pet ideas."

6

Energize Others

Genuine leadership comes from the quality of your vision and your ability to spark others to extraordinary performance.

7

Face Reality

Face reality, then act decisively. Most mistakes that leaders make arise from not being willing to face reality and then acting on it. Facing reality often means saying and doing things that are not popular, but only by coming to grips with reality would things get better.

8

See Change as an Opportunity

Change is a big part of the reality in business. "Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while... Keeping an eye out for change is both exhilarating and fun."¹

9

Get Good Ideas from Everywhere

New ideas are the lifeblood of business. "The operative assumption today is that someone, somewhere, has a better idea; and the operative compulsion is to find out who has that better idea, learn it, and put it into action - fast."¹⁰

10

Follow up

Follow up on everything. Follow-up is one key measure of success for a business. Your follow-up business strategy will pave the way for your success.

11

Get Rid of Bureaucracy

The way to harness the power of your people is "to turn them loose, and get the management layers off their backs, the bureaucratic shackles off their feet and the functional barriers out of their way."

• Bureaucracy is the enemy...

• Drop unnecessary work...

• Delayer, create a flat responsive organization...

• Cross-pollinate to make faster and better decisions...

• Encourage employees to identify problems and come up with solutions...

• Make your workplace more informal...

12

Eliminate Boundaries

In order to make sure that people are free to reach for the impossible, you must remove anything that gets in their way. "Boundarylessness" describes an open organization free of bureaucracy and anything else that prevents the free flow of ideas, people, decisions, etc. Informality, fun and speed are the qualities found in a boundaryless organization.

13

Put Values First

Don't focus too much on the numbers. "Numbers aren't the vision; numbers are the products."⁹ Focus more on the softer values of building a team, sharing ideas, exciting others.

14

Cultivate Leaders

Cultivate leaders who have the four E's of leadership: Energy, Energize, Edge, and Execution;  leader who share values of your company and deliver on commitments.

15

Create a Learning Culture

Turn your company into a learning organization to spark free flow of communication and exchange of ideas. "The desire, and the ability, of an organization to continuously learn from any source, anywhere - and to rapidly convert this learning into action – is its ultimate competitive advantage."

16

Involve Everyone

Business is all about capturing intellect from every person. The way to engender enthusiasm it to allow employees far more freedom and far more responsibility.

• Start with yourself...

• Encourage people to take initiative...

• Use the brains of every worker...

• Create an atmosphere where workers feel free to speak out...

17

Make Everybody a Team Player

Managers should learn to become team players. Middle managers have to be team members and coaches. Take steps against those managers who wouldn't learn to become team players.

18

Stretch

Set stretch goals.  Stretch targets energize. "We have found that by reaching for what appears to be the impossible, we often actually do the impossible; and even when we don't quite make it, we inevitably wind up doing much better than we would have done."

19

Instill Confidence

Create a truly confident workforce. Confidence is a vital ingredient of any learning organization. The prescription for winning is speed, simplicity, and self-confidence. Self-confident people are open to good ideas regardless of their source and are willing to share them. "Just as surely as speed flows from simplicity, simplicity is grounded in self-confidence."¹⁵

20

Have Fun

Fun must be a big element in your business strategy. No one should have a job they don't enjoy. If you don't wake up energized and excited about tackling a new set of challenges, then you might be in the wrong job... More

21

Be Number 1 or Number 2

"When you're number four or five in a market, when number one sneezes, you get pneumonia. When you're number one, you control your destiny. The number fours keep merging; they have difficult times. That's not the same if you're number four, and that's your only businesses. Then you have to find strategic ways to get stronger.  But GE had a lot of number ones."¹⁴

• Evolve a game plane, a business strategy "number one, number two."

• Send shivers throughout your organization...

• Exact the highest standards and make sure that everyone in your company meets those standards...

• Look for the quantum leap...

• Get rid of fat...

22

Live Quality

"We want to change the competitive landscape by being not just better than our competitors, but by taking quality to a whole new level. We want to make our quality so special, so valuable to our customers, so important to their success that our products become the only real value choice."⁷

23

Constantly Focus on Innovation

"You have just got to constantly focus on innovation. And more competitors. You've got to constantly produce more for less through intellectual capital. Shun the incremental, and look for the quantum leap." Now the fundamentals have got to be more education. More information knowledge, faster speeds, more technology across the board.

24

Live Speed

"Speed is everything. It is the indispensable ingredient of competitiveness." Speed, simplicity and self-confidence are closely intertwined. By simplifying the organization and instilling confidence, you create the foundation for an organization that incorporates speed into the fabric of the company.

25

Behave Like a Small Company

Small companies have huge competitive advantages. They "are uncluttered, simple, informal. They thrive on passion and ridicule bureaucracy. Small companies grow on good ideas – regardless of their source. They need everyone, involve everyone, and reward or remove people based on their contribution to winning. Small companies dream big dreams and set the bar high - increments and fractions don't interest them."¹¹

Bibliography:

1. Jack Welch and the GE Way, Robert Slater

2. The Welch Way, Jeffrey A. Krames

3. Relentless Growth, Christopher Meyer

4. Jack Welch quoted in Nikkei Business, February 21, 1994

5. Jack Welch, speech at the New England Council's 1992 Private Sector New Englander of the Year Award, Boston, MA, November 11, 1992

6. "Jack Welch Speaks", Janet C. Lowe, 1998

7. Jack Welch, speech to the General Electric Annual Meeting, Charlottesville, Virginia, April 24, 1996

8. Jack Welch, interview, December 12, 1997

9. Jack Welch, interview, Industry Week, May 2, 1994

10. Jack Welch, speech, General Electric Annual Meeting, Charlotte, North Carolina, April 23, 1997

11. Jack Welch, Letter to Share Owners in 1992 General Electric Annual Report

12. Jack Welch, interview with Charlie Rose, March 16, 2001

13. Jack Welch speech to the Economic Club of New York, Detroit, May 16, 1994

14. Jack Welch, interview, Business Today, February 7-21, 1995

15. Jack Welch, speech to the General Electric Annual Meeting, Charlottesville, Virginia, April 24, 1991

16. "Speed, Simplicity, Self-Confidence: An Interview with Jack Welch," Harvard Business Review, September-October, 1989

17. Jack Welch in a interview in Monogram, GE internal magazine, Fall, 1989

18. "Control Your Destiny or Someone Else Will", Noel M. Tichy and Stratford Sherman

19. Jack Welch quoted in Washington Post, March 23, 1997

20. Jack Welch, Letter to Share Owners in 1993 General Electric Annual Report

21. Jack Welch, speech, General Electric Operating Managers Meeting, Boca Raton, Florida, January 5-7, 1997

22. Jack Welch, interview, July 22, 1997

23. Jack Welch, interview, Nikkei Business, November 18, 1996

24. "Face to Face: Jack Welch"

25. "Roads to Success", Heller Robert

26. "The GE Work-Out", Dave Ulrich, Steve Kerr, Ron Ashkenas

27. "Winning," Jack Welch and Suzy Welch

28. "Jack Welch on Leadership," Robert Slater

29. 25 Lessons from Jack Welch, Vadim Kotelnikov