Nothing succeeds like success. When Jack Welch took over as chairman and CEO of GE, Wall Street Journal termed him as ‘Jack Who’. When he retired in September 2001, he was rated as one of the two greatest corporate leaders of the 20th century. The other one is Alfred Sloan, the chairman of General Motors.
Jack Management Beliefs
Jack has often discussed some of the management ideas that worked for him. His management philosophy must have emerged out of these beliefs.
Integrity: This was a quality that he valued greatly. He had no two agendas. There was only one way, the straight way, for him. By maintaining integrity, he could be a good catholic as well as businessman.
Informality: Bureaucracy strangles, informality liberates. Creating an informal atmosphere is a competitive advantage. It is more than observing superficial rituals like using first names or a casual dress at work place. It is about making sure that everyone counts. Things that are important in a business, whether it is a nuclear power plant or a corner grocery store, are the same : people, quality, service and cash flow.
People: Getting the right people in the right jobs is a lot more important than developing a strategy. One can have the greatest strategies in the world. But, without the right leaders to develop and pursue them, they would remain as nice plans that could at best produce only mediocre results. Getting every employee’s mind into the game is the job of the CEO. The organization takes its cue from the person at the top who sets the tone. The job of CEO according to Jack is 75% about people and 25 % about other things.
Passion: Great organizations can ignite passion. It is one characteristic shared by all winners. Making institutions successful is all about passion focus and total commitment to them.
Celebrations: Celebrations were a great way to energise an organization. Jack was always looking for ways to celebrate even the smallest victories.
Continuous appraisals: Appraisal is a continuous process. He always wanted everyone to know, where he stand. It is also necessary to align rewards with measurements. 360 degree evaluations take into account the views of subordinates and peers as well.
Differentiation: Differentiation builds and develops great organizations. In manufacturing one avoids variance but with people, variance holds the key. GE builds great people, who then build great products and services. Differentiation was a basic part of Jack’s management style.
Balancing Act: It considers management as a great balancing act. One cannot grow long-term, if it cannot survive short-term balancing. Long-term with short-term is what management should be concerned about.
Speed: He rarely regretted acting, but often regretted not acting fast enough. Contrary to reputation, Jack felt that he was too cautious. He waited for too long to get rid of managers who were not performing. He was hesitant with some acquisitions, slow to embrace the internet and was timid to blow up all the rituals of a bureaucracy. He, however, reorganized always that speed is the essence of business.
Change: GE has become an organistaion that relished change. When the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight. A business that is performing well cannot afford to maintain status-quo.
Learning organistaion: Business is a trail and error process. It is not an absolute science. Mistakes are made and without them one cannot learn and make progress. Punishing failures would ensure that no one dares. Jack made large investments at GE’s Ortonville Management Development Centre with focus on leadership development.
Communication: It is a vital part of leadership’s role. He not only talked, but also listened. He managed by moving about and spent considerable amount of time in the field with the GE businesses. Time and money invested in communicating with employees is one of the best investments in corporate performance.
Customer satisfaction: One of the most important things that one needs to measure in business is Customer Satisfaction. Before Jack turned things around, GE had the reputation of not being very customer oriented. He changed this concept and made GE customers’ delight / customer-oriented.
Managing tight, managing loose: He managed tight, when he had something worthwhile to contribute and managed loose, when he knew that he had little to offer.