Read an Excerpt
29 Leadership Secrets From Jack Welch
Abridged from Get Better or Get Beaten
By ROBERT SLATER The McGraw-Hill Companies, Inc.
Copyright © 2003McGraw-Hill, Inc.
All rights reserved.
ISBN: 978-0-07-140937-7
Excerpt
CHAPTER 1
LEADERSHIP SECRET 1 HARNESS THE POWER OF CHANGE
FROM THE FILES OF 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.
Is there a secret formula for succeeding in business? Probably not. But it makes sense to study a master—the man widely regarded as the ablest business leader of the modern era. And that person is Jack Welch, the recently retired CEO and chairman of General Electric.
"Perhaps the most admired CEO of his generation," Fortune magazine said of Welch in its May 1, 2000, edition.
How did Welch earn this kind of praise?
BRINGING IN BIG NUMBERS
When he took over at General Electric in 1981, the company had sales of "only" $25 billion. In 1999, GE's sales reached nearly $112 billion. Its profits in 1981 were $1.5 billion; Welch grew the bottom line to nearly $11 billion in 1999.
Welch wasn't just "doing something right." To hit those kinds of numbers, he did many things right. He had great ideas, and he implemented them.
In the balance of this book, we spell out those ideas in detail. Yes, Welch led a huge enterprise with 340,000 employees, but we believe that his ideas can be put to work in organizations of all sizes.
Of all of Jack Welch's ideas, none carries more weight than this: Change, before it's too late!
Change is easy, right? The boss makes a decision, and employees implement it—right?
If you're in business, you know that change almost never works like that. In fact, it can be the most difficult thing in the world. Welch understood this fact, and yet he pushed for change almost from the minute he took over at GE in the spring of 1981.
CHANGE WAS EVERYWHERE
Change was rampant in the early 1980s. Inflation was raging, and global competitors were capturing unprecedented market shares.
Welch understood the challenges his company faced:
It was a reminder that we'd better get a lot better, faster.
So I guess my message in our company was, "The game is going to change, and change drastically." And we had to get a plan, a program together, to deal with a decade that was totally different.
What did this mean for GE?
New products, a different business environment every day, and a company within which every employee had to embrace change.
MAKE EACH DAY YOUR FIRST DAY ON THE JOB
Welch loved to tell GE executives to start their day as if it were their first day on the job.
In other words, always think fresh thoughts. Make it a habit to think about your business. Don't rest on your laurels.
Make whatever changes are necessary to improve things. Reexamine your agenda, and rewrite what needs to be rewritten.
To many both inside and outside the company, it appeared that Welch could have left well enough alone. After all, GE was a model corporation, right?
Welch knew better:
I could see a lot of [GE] businesses becoming ... lethargic. American business was inwardly focused on the bureaucracy.
[That bureaucracy] was right for its time, but the times were changing rapidly. Change was occurring at a much faster pace than business was reacting to it.
THE GENESIS OF "NUMBER ONE, NUMBER TWO"
Welch responded by coming up with a new strategy for GE's businesses. From then on, he announced, those businesses would have to be either number one or number two in their market. If they couldn't hit that high standard, they'd be shut down or sold off.
So Welch wasn't just asking for changes at the margins. The "number one, number two" standard entailed many risks. But if successful, it would position GE for double-digit growth for years to come.
This was only a hint of things to come. Throughout Welch's tenure at GE, he continued to embrace change.
For instance, on December 12, 1985, GE announced plans to purchase communications giant RCA for $6.28 billion.
It was the largest nonoil merger ever. General Electric then ranked ninth on the list of America's largest industrial firms. RCA ranked second among the nation's service firms. Together, they formed a corporate powerhouse with sales of $40 billion, placing it seventh on the Fortune 500.
The purchase represented a sea change for GE. Throughout much of its history, the company had a tradition of growing from within. Welch ignored that tradition. He intended to push General Electric's highest growth businesses and do whatever it took to win.
EMPLOYEES HAVE GOOD IDEAS TOO
At the same time, Welch knew that there were good ideas inside the shop as well. In 1989, he launched an initiative that he called Work-Out, which was an ambitious 10-year program to harness the brains of his employees.
In Welch's words, Work-Out was intended to help people stop:
wrestling with the boundaries, the absurdities, that grow in large organizations. We're all familiar with those absurdities: too many approvals, duplication, pomposity, waste.
Change worked. By the 1990s, GE had emerged as the strongest company in America. Yet even that record of achievement did not keep Welch from exploring the next wave of change. In 1995, he took a bold new step and launched a companywide initiative to improve the quality of General Electric's products and processes.
Why? Welch had grown convinced that GE's quality standards simply weren't high enough, even though GE had always been, in his words, a "quality company." So why not stand pat? His answer:
We want to be more than that. 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 their only real value choice.
An openness to change.
This is Jack Welch's key business strategy:
Change, before it's too late!
WELCH RULES
* Accept change. Business leaders who treat change like the enemy will fail at their jobs. Change is the one constant, and successful business leaders must be able to read the ever-changing business environment.
* Let your employees know that change never ends. Teach your colleagues to see change as an opportunity—a challenge that can be met through hard work and smarts.
* Be ready to rewrite your agenda. Welch always encouraged his managers and employees to be prepared to reexamine their agenda and to make changes when necessary.
CHAPTER 2
LEADERSHIP SECRET 2 FACE REALITY!
FROM THE FILES OF JACK WELCH
The art of leading comes down to one thing: facing reality, and then acting decisively and quickly on that reality.
Jack Welch's goal was to transform GE's businesses into the best in the world. To get there, he devised a strategy called Face Reality.
Welch just couldn't get enough of "facing reality":
It may sound simple, but getting any organization or group of people to see the world the way it is and not the way they wish it were or hope it will be is not as easy as it sounds. We have to permeate every mind in the company with an attitude, with an atmosphere that allows people—i
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Excerpted from 29 Leadership Secrets From Jack Welch by ROBERT SLATER. Copyright © 2003 by McGraw-Hill, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
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