THE BOOK
Jack Welch is one of the world's very few business leaders who mastered all critical aspects of leadership - people, process, strategy and structure. Not since Alfred Sloan revamped GM's bureaucracy half a century ago has one corporate leader had such a great impact on a large corporation. Welch made GE as the most fertile training ground of executive talent. Many top managers who later have gone to head the Fortune 500 companies were cultivated and nurtured in GE's organizational culture. He has also been the most admired, copied, and studied CEO of the 20th century. In his two decades as CEO, Jack Welch's principles, strategies, and tenets transformed GE into one of history's most dynamic and valuable corporations--from an aging industrial bureaucracy into a diversified global juggernaut. His visionary initiatives and concepts and adaptive management strategies earned him the title of the most effective CEO in history. And in the process, his strategies have become everyday jargons of business language. Executives in all industries are now eager to hear Welch's every pronouncement and implement his strategies in their own organizations.
The Jack Welch Lexicon of Leadership is the first alphabetically structured collection to place Welch's career in perspective, and trace the evolution of his key ideas and innovations. The book organizes more than 250 of Welch's most popular concepts and tools into an accessible and ultimately indispensable look. This alphabetically arranged, encyclopedic reference provides: -
An in-depth look at the methods that Welch used to turn GE into the world's most valuable corporation.
Analysis and perspective on Welch's historic and immensely successful career.
A guided tour of the language and strategies of Jack Welch, each of Welch's key management ideas and their significance in GE's rebirth and an in-depth treatment and evaluation of those.
A special focus on some of Welch's breakthrough concepts like "Six Sigma" and also for easy access cross-reference and highlighting of key concepts and ideas by the icon "6 Sigma".
Some examples of Welch's prescient wisdom and insights to address new problems in any organization regardless of its size in today's demanding global environment.
A chronological order of Welch's leadership thinking by mentioning dates, places wherever possible and thereby tracing his the evolution of a leader - transformation of his strategies from grass roots to company-wide innovations.
THE AUTHOR
The author Jeffrey A. Krames is publisher and editor-in-chief of McGrow-Hill's trade divisions. The editor of four books on Jack Welch, including the national bestseller Jack Welch and The GE Way, Krames has written for The New York Times, The Wall Street Journal, Barron's, and other books. He ahs appeared on CNN and PBS and been quoted in Times, Newsweek, Business Week and other periodicals.
WELCH'S LEADERSHIP REVOLUTION IN THE EYES OF KRAMES
When Welch became CEO, he had two strategic choices before him - either to follow prevailing scientific approach of management - pioneered by Frederick Taylor or to go for complete restructuring. Welch chose the latter to free GE from red-tapism and age-old bureaucracy. He found bureaucracy the most prominent enemy of productivity. In the pre-Welch years of 1960s and 70s, American corporations were operated more like exclusive clubs than democratized work places. Workers used to work and managers manage but there was hardly any communication between them. But Welch knew that involving everyone is the key to enhancing productivity and also ideas and intellect rule over hierarchy and tradition. Hence he promoted the idea of "Boundaryless". He sought to topple every barrier - horizontal or internal (those between functional areas), external (those between GE and its customers and suppliers), vertical (hierarchical) and geographic (between different countries in terms of tradition and cultural aspects). Boundary less is probably the best way to describe Welch's contribution to the field of leadership. Delayering the management structure became one of the key strategies of his Hardware Revolution - his first effort to make GE an agile competitor. He laid off more than 150000 workers and sold some of GE's businesses, which had been around for years. These earned him the name of "Neutron Jack" after the infamous neutron bomb that destroys people but leaves buildings intact.
But Welch's strategic vision was to transform GE from a mere conglomerate to a well-structured multi-business organization. Thus the formulated strategies like "Number One, Number Two", "Fix, Close or Sell" and "Three Circles". In 1981 he declared that those businesses, which are not the number one or number two or have no potential of being that in near future in their respective business segments, should be fixed, closed or sold. He also narrowed down GE's 350 SBUs to 3 Circles - Core, Technology and Services and said that all of GE's businesses must fit into these three circles else those will be sold off.
After his hardware phase morale at GE suffered a major blow. So to instill the self-confidence of the employees Welch started his software phase. He started this phase with Work-Out programme - the objective was to turn the hierarchy of GE upside down. Goals of this programme were to build trust and empower employees, which was very necessary to bring back confidence among them, and also to wipe out bureaucracy. In this programme managers were bound to listen to workers. Welch believed there is no hierarchy or tradition required for giving new ideas - anybody in the organization can come up with innovative ideas. Welch called them "A Ideas" and those capable of giving such ideas "A Leaders". He stated - A leaders should possess 4 leadership traits: Energy, Energizer (ability to motivate others), Edge (competitive advantage and right skills and expertise) and execution (ability to complete the task effectively).
Welch believed GE's core competency is not in achieving double-digit growth but in development if people because only great people can make things happen. Consistency has been a Jack Welch virtue. He not only outlined a vision for the company, also described in depth the way a GE employee ought to behave and he himself lived that behaviour to set an example of leadership. GE's model was consistent across its vast array if business, across all the countries and over the years under Welch's leadership.
He set some values like empowering employees, culture of a learning organization and a boundary less structure where informality and simplicity rules. Welch deeply incorporated these values into the fabric of GE and insisted these values should be followed across the organization irrespective of the place and time. He also wanted all A leaders to follow live these values - otherwise he simply clarified those managers have no place in GE. Even newly occupied firms had to undergo "GEification" i.e. integrating these values into their organizational set-up.
Welch had a great passion for learning and he transformed GE into a learning organization. He did not believe in punishing mistakes and failures. He wiped out the NIH (not invented here) idea practiced in GE. This arrogance prevented GE from taking other's ideas just because it is invented outside the company. Welch said people should always be open to better ideas anywhere anytime. He even invited other CEOs to address his managers.
His globalization strategy had 3 phases: export products, set up plants abroad and set up R & D units abroad and hire local talents.
Welch's vision was to make GE the most competitive enterprise on the planet and he stressed that all leaders (he preferred managers to address as leaders) must articulate a vision, set a goal and try hard to make that a reality - also vision should be simple, customer-focused and enhance self-confidence. So he started the legendary Six-Sigma process - a quality improvement initiative of producing error-free products and processes 99.9997% of the time i.e. fewer than 4 mistakes per million. This later turned to be one of the world's most practiced quality improvement programme.
He also started the process of digitization (e-Initiative) of the entire company encompassing all of GE's businesses to increase speed as he believed speed and quality are the most competitive differentiators. This e-Business initiative saved over $I billion in operating margin of GE in 2001 and $1.5 billion in cost savings. Also it helped GE to directly reach its customers without any intermediary and thereby increasing the potential of customer satisfaction.
Also Welch built more shareholders' wealth than any other corporate chief in history - from $13 billion in 1980 to $600 billion in 2000. His willingness to share the wealth of the company with a large number of employees increased the number of employees participating in the stock option plan from a few in 1980 to 30000 in 2000.
Rigorous succession planning was one of the driving factors behind GE's success. Welch started searching for his successor 6 years prior to his retirement and in November, 2000 he finally named his successor Jeff Immelt, the head of GE Medical Systems, who took over him in September, 2001.
By maintaining a consistent vision (number one - number two, global growth etc.) along with a consistent behavioral model (GE values), Welch succeeded on creating one of the world's most competitive enterprises. He also showed how learning can lead to self-actualization and how performance can be enhanced by free flow of ideas and best practices. With each phase built on the one preceding it, e.g. Work-Out was necessary for boundaryless and Six-Sigma paved the way for e-Initiative, Welch elevated the organization, transforming a century-old enterprise to a global powerhouse where ideas and intellect ruled.
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