Tag Archives: Jack Welch
Welch Left a Great Legacy in Management and Leadership
Among the most popular titles we presented at the First Friday Book Synopsis were those from Jack Welch. These were three best in his collection, and two of them were delivered by Randy Mayeux:
Winning: The Ultimate Business How-To Book (with Suzy Welch, HarperCollins Publishers, 1999)
Jack: Straight from the Gut (Hachette Book Group, 2003)
The Real-Life MBA: Your No-BS Guide to Winning the Game, Building a Team, and Growing Your Career (Suzy Welch, HarperCollins Publishers, 2015)
Welch lived between November 19, 1935 and March 1, 2020. For the 19 years when I taught Management, Welch was considered top of his game. You may remember that I was a corporate trainer for many years. But, how many people that Welch a was teacher in classroom while he was President and CEO? Many corporate officers did not even know had a training department, let alone teaching in one.
One of the best books about Welch is Control Your Destiny Or Someone Else Will: How Jack Welch is Making General Electric the World’s Most Competitive Corporation by Noel Tichy and Stratford Sherman (Doubleday, 1993).
As a professional, Welch was an American business executive, chemical engineer, and writer. He was chairman and CEO of General Electric (GE) between 1981 and 2001. When he retired from GE, he received a severance payment of $417 million, the largest such payment in business history. Welch greatest fan was Noel Tichy, was author of the first book we every presented the First Friday Book Synopsis, (The Leadership Engine with Eli Cohen, HarperBusiness, 2002). I heard Tichy several times in person.
When he started his run, skeptics wondered how much of a difference the Welch could make in a company that was huge, profitable, and more than 100 years old. To the surprise of many Welch pushed the company to double-digit growth during his two decades at the helm. During the 20 years he led the company, its market value grew from $12 billion to $410 billion.
Here are some of the major quotes from his books:
- “An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.”
- “Strong managers who make tough decisions to cut jobs provide the only true job security in today’s world. Weak managers are the problem. Weak managers destroy jobs.”
- “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”
- “Giving people self-confidence is by far the most important thing that I can do. Because then they will act.”
- “If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it you almost don’t have to manage them.”
- “The essence of competitiveness is liberated when we make people believe that what they think and do is important – and then get out of their way while they do it.”
- “I’ve learned that mistakes can often be as good a teacher as success.”
- “Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while.”
- “Face reality as it is, not as it was or as you wish it to be.”
- “Be candid with everyone.”
To attract the right followers, Welch instituted a strategy that earned him the title of “Neutron Jack.” Welch insisted that all of GE’s divisions be market leaders. ″Fix it, close it or sell it,” he was fond of saying. He had GE cut all businesses in which the company could not dominate the market in first or second positions. He had managers fire the bottom 10% of GE employees, and he fired the bottom 10% of management. Welch’s housecleaning cleared away layers of bureaucracy, and made way for a quicker flow of ideas. The new commitment to competition came with large rewards, especially as stock option grants increased in value and GE continued to grow rapidly. GE soon became one of the most coveted places to work and attracted the best in the world
Fortune magazine once called him “manager of the century.” His books are well worth re-reading. He gave great insight about management and leadership, in a way that no else has ever duplicated.
Another Duo Welch Book Hits the Charts on April 15 – But Ethics?
We’re less than a month away from the release of Jack and Suzy Welch‘s newest work, The Real Life MBA: Your No-BS Guide to Winning the Game, Building a Team, and 
Growing Your Career (Harper Business, 2015). It is a certain best-seller, and pre-orders for the book are rocking the online outlets. Considering their personal backgrounds, perhaps you join me in being perplexed that even before its release, the book ranks #11 in the Amazon.com best-selling list in Business Ethics.
“Say what?” If you don’t know the story, here is a brief account. Suffice it to say that much more detail is available to you through the Internet. Jack’s second wife, Jane Beasley, found out about an affair between Suzy Wetlaufer and Welch. At the time, Suzy was editor-in-chief of the Harvard Business Review. Beasley delivered this information to the publication, and Wetlaufer was forced to resign in early 2002 after admitting to having been involved in an affair with Welch while preparing an interview with him for HBR. Personal and professional ethics? This did not turn out too badly for Beasley. While Welch had crafted a prenupital agreement, she had insisted on a ten-year time limit for its enforceability, and therefore, left the marriage with around $180 million of Welch’s money. That interview was never published. Suzy and Jack married in 2004.
This is not their first co-authored book. Randy Mayeux presented their first one, Winning (Harper Business, 2005) at the First Friday Book Synopsis. It reached # 1 on the New York Times and Wall Street Journal business best-selling lists. We did not present their next co-authored work, Winning: The Answers: Confronting 74 of the Toughest Questions in Business Today (Harper Business, 2006).
They both have another single-authored book. Randy presented a synopsis of Jack: Straight from the Gut (Business Plus, 2003). In 2010, Suzy wrote 10-10-10: A Fast and Powerful Way to Get Unstuck in Love, at Work, and with Your Family (Scribner). Randy gave that synopsis to several of our Creative Communication Network clients. I remember that audiences we delivered that synopsis to were not exactly thrilled at the quality of information transferred. In fact, at the Fort Worth Club, our event planner remarked that she wished she would have selected another book. Maybe her reputation backfired on that one. Of course, she didn’t write that one way to get unstuck is to have an affair with a famous married man. It certainly worked for her.
Note that both of these authors are very competent and successful. History will likely write Jack as the most successful CEO in American history. His style and substance led General Electric to a fast and furious climb to the top of elite and powerful businesses. All the labels, such as “Neutron Jack,” are applicable. His decisions were profound and effective. And, he believed in lifelong learning and professional development, even teaching courses on-site at the GE Learning Center. Many CEO’s don’t even know their company has a learning center, let alone take the time to go teach in it. Suzy’s role at one of the most prestigious business publications gave her strong credibility, as did her work experience at Bain.
Considering their reputation, most likely, this one will also fly to the top. It is not out of the question that you might hear a synopsis of this at our event. In fact, many of our regular attendees may push us very hard to present it. It will be exciting to see what the sub-topics will be from the Table of Contents. Only time will tell whether this one is heavier on style than substance. The title alone is appealing.
But, ethics? Is this really the best resource?
Talent Masters is the Choice for the September FFBS
I know that we are still working on the August 1 First Friday Book Synopsis with two excellent books and our bonus program, but I am already looking forward to my September presentation. It has excellent reviews and plenty of strong publicity, including one by our blogging partner, Bob Morris. You can read his review published on this blog by clicking here.
The Talent Masters: Why Smart Leaders Put People Before Numbers
By Bill Conaty and Ram Charan (New York: Crown Business)
Here is a summary of the book from Amazon.com, and a review published in the Wall Street Journal.
From Amazon.com:
If talent is the leading indicator of whether a business is up or down, a success or a failure (and it is) . . . do you know how to accurately judge raw human talent? Understand a person’s unique combination of traits? Develop that talent? Convert what supposedly are “soft” subjective judgments about people into objective criteria that are as specific, verifiable, and concrete as the contents of a financial statement?
The talent masters do. They put people before numbers for the simple reason that it is talent that delivers the numbers. Success comes from those who are able to extract meaning from events and the forces affecting a business, and are able to look at the world and assess the risks to take and the risks to avoid.
The Talent Masters itself stems from a unique combination of talent: During a forty-year career at General Electric, Bill Conaty worked closely with CEOs Jack Welch and Jeff Immelt to build that company’s worldrenowned talent machine. Ram Charan is the legendary advisor to companies around the world. Together they use their unparalleled experience and insight to write the definitive book on talent—a breakthrough in how to take a business to the next level.
Here is the book review published in the Wall Street Journal, December 8, 2010, p. A21
SUPERVISING SUCCESS
By ALAN MURRAY
A decade after Jack Welch stepped down as chief executive of General Electric, he still commands remarkable respect as a management guru. The company he once led has lost its magic, the business processes he developed to battle bureaucracy have become bureaucratic themselves, and many of the “graduates” of the Jack Welch school have since stumbled—think Bob Nardelli at Home Depot or Jim McNerney at Boeing. (Has anyone seen that Dreamliner yet?)
Yet Mr. Welch and the management mythology surrounding him continue, untarnished. “The Talent Masters” is the latest celebration of the Welch way. It’s written by Bill Conaty, the recently retired senior vice president for human resources at GE, and Ram Charan, the business adviser and author who often collaborates on books with ex-CEOs.
“The Talent Masters” rests on three principles that characterize the Welch approach to management: (1) A focus on talent development. Mr. Welch and the other “talent masters” in the book—we also hear from folks at companies including Procter & Gamble and Novartis—claim that they spend more than a third of their time developing their people. (2) Differentiation. Talent masters create a meritocracy by constantly evaluating their people—a process which, in Mr. Welch’s case, was derided by critics as “rank and yank.” (3) Candor. This is the ultimate Welch trademark: ruthless honesty in evaluating the performance of people and businesses.
By now the book’s principle-trilogy is familiar.
But the authors add to the Welchian wisdom by documenting some interesting examples. For instance, we learn about the day in 2000 when Larry Johnston, head of GE’s appliance business, flew to corporate headquarters in Fairfield, Conn., to tell his bosses that he was leaving to head up Albertsons, the supermarket chain. The news was a surprise to
Mr. Conaty, to Jeff Immelt—who was then making a transition to the CEO job—and to Mr. Welch.
All three tried to talk Mr. Johnston into changing his mind. But after determining that their effort was futile, the executives turned their attention to succession. Within a half-day they had agreed on who would replace Mr. Johnston and on who would fill three other slots down the chain of command. The quick action was possible, we’re told, only because the three men had been heavily involved in the continuous evaluation of the company’s top talent.
The authors compare GE’s rapid-fire performance in replacing Mr. Johnston with what happened recently at Hewlett Packard, when Mark Hurd was forced to step down after indiscretions involving a marketing consultant. The company, the book says, came “unhinged.” For the third time in little more than a decade, the HP board felt compelled to pick a chief executive from the outside—an implicit acknowledgment of failed succession planning. (Mr. Welch seems almost personally offended by such corporate inattention: The HP board, he told me in an interview before the World Business Forum earlier this year, has “not done one of the primary jobs of a board, which is to prepare the next generation of leadership.” Asked if he knew any of the HP board members personally, Mr. Welch said: “I wouldn’t admit it if I did.”)
Messrs. Conaty and Charan also show the forgiving side of Mr. Welch’s GE. They tell the story of Mark Little, who in 1995 was promoted to vice president of engineering at the company’s Power Systems group. Following his appointment, the group missed its numbers three times in a row, and Mr. Little was demoted. He suspected that his career at GE was over.
Instead, executives there worked with Mr. Little to assure him that he still had a future and to help him rebuild his career in a position that made better use of his talents. Today he is the senior vice president in charge of the corporate R&D center, and one of the company’s top 25 executives.
The book begins with GE-related examples, but some of its most arresting stories come from outside the company. A particularly interesting chapter involves Hindustan Unilever, Unilever’s $3.5 billion Indian subsidiary. The company routinely evaluates candidates for management jobs by putting several applicants together to discuss a specific business issue in a group. This allows the company to see how they interact with each other and who has leadership potential.
Another instructive anecdote comes from Adrian Dillon, Skype’s chief financial officer. Mr. Dillon tells of how, early in his management career, when he was working at Eaton Corp., he was accosted after a meeting by his boss, the company’s CFO. “That was a great meeting, but your problem is that you still think your job is to be the smartest guy in the room. It’s not,” the man told him. Instead, Mr. Dillon was told, his job was to “make everybody in the room think that they’re the smartest guy in the room. You’ve got to teach them what you know and what you do, not tell them.”
Overall, “The Talent Masters” offers a valuable window into the skills of talent development. And it makes a persuasive case, yet again, for the wisdom of the Welch way. But you do have to wonder whether, a decade after Mr. Welch’s retirement, it isn’t time to find a new icon for the rapidly evolving world of business management.
Mr. Murray is deputy managing editor of The Wall Street Journal and the author of “The Wall Street Journal Essential Guide to Management.”
What Hath Jack Welch Wrought? Maybe Differentiation Is Not All That Good After All – (Should there never be any jobs for the “mediocre?” – Then what?)
“Ah, but we can’t,” goes the prayer. “We can’t because we have responsibility, a responsibility to our employees, to our community. What will happen to them?” I got two words for that: Who cares?
{The fictional Lawrence Garfield (Larry the Liquidator), Other People’s Money – see the clip here}
————
A few nights ago, I was talking to the chief information/technology officer for a major company, with locations all over the country (and beyond). He told me that his job was this: to reduce the workforce. His goal is to cut every 100 workers down to 20. With technological strategies and innovation, he can do that – he is doing that. So, I asked him, but what about the 80 that are let go. He said, “I don’t care. That’s not my worry. My job is to get the workforce down.”
I said, “You should care. Because, ultimately, if every company does what you do, then your customer base will decrease – there will be no one to purchase your products.” Though he seemed to get that in some macro sense (barely), his focus is clear. He is doing what he was hired to do, overall economy be damned.
This problem is real, and big. I fully understand the concept that we have to make every worker as productive as possible, and every company needs to maximize profits in every way.
Except… the overall economy may have been healthier when companies “overpaid” for workers, letting “mediocre workers’ have a place to work, producing more income in the overall economy. A worker who is not as productive as others still is a customer in the rest of the economy. And if every company gets rid of those “bottom 10%,” then soon it becomes the “bottom 20%,” and the “bottom 30%,” and before you know it, your overall customer base for a functioning, growing economy shrivels up down to dangerous levels.
Welcome to 2011!
I don’t know who invented this “shrink the workforce” approach. But Jack Welch is known for the way he championed “differentiation.” It is an absolutely rational, good, smart approach. Get rid of the bottom 10%, as you build the skill levels and capabilities of the rest of your folks. Yes, get rid of the dead weight. Get more work out of fewer workers; workers are so expensive, after all. Your company will be better for it, your workers more productive.
This is from Winning by Welch:
Differentiation is about managers looking at the middle 70, identifying people with potential to move up, and cultivating them. Differentiation favors people who are energetic and extroverted and undervalues people who are shy and introverted, even if they are talented… The world generally favors people who are energetic and extroverted. In business, energetic and extroverted people generally do better, but results speak for themselves, loud and clear.
Differentiation – Cruel and Darwinian? Try fair and effective.
And this is from a column by Jack Welch (read the column here):
Bottom 10%
As for the bottom 10 percent in differentiation, there is no sugar coating this—they have to go. That’s more easily said than done; It’s awful to fire people—I even hate that word. But if you have a candid organization with clear performance expectations and a performance evaluation process—a big if, obviously, but that should be everyone’s goal—then people in the bottom 10 percent generally know who they are. When you tell them, they usually leave before you ask them to.
No one wants to be in an organization where they aren’t wanted. One of the best things about differentiation is that people in the bottom 10 percent of organizations very often go on to successful careers at companies and in pursuits where they truly belong and where they can excel.I learned it on the playground
That’s how differentiation works in a nutshell. People sometimes ask where I came up with the idea. My answer is, I didn’t invent differentiation! I learned it on the playground when I was a kid.
When we were making a baseball team, the best players always got picked first, the fair players were put in the easy positions, usually second base or right field, and the least athletic ones had to watch from the sidelines. Everyone knew where he stood.
There may be times when I want Jack Welch to run my company. But I’m not sure a world full of Jack Welches would be good for our economy.
Think back – over your whole life, you have had waiters/waitresses who were less than stellar, retail clerks who were a far cry from the best, and companies had so many workers who were not quite pulling their weight. They were… mediocre. And, yes, it drives me crazy when I receive “customer service” from a mediocre worker. I have thought, “I would fire that person.” But, what if all of those mediocre workers had nowhere to work?
Not every one was an “A” student (should we kick the “C” students, the bottom 10%, out of school?); not everyone was the starter on the football team; not everyone was the stand-out.
I think we ought to help everyone get “better” at their job. But I think that an economy that only has jobs for the best has a shrinking pool of workers, and then, a shrinking pool of customers. And then, you’ve got real trouble in river city.
If our economy does not give everyone a place to make some money, even those doing a less than stellar job, then we are destined to spiral down. This may be the hidden price-tag of the search for excellence.
Maybe it’s time to, if not reward, at least make a place for, mediocrity.
Jeffrey Immelt De-emphasizes “Traders,” Rediscovers “Builders”
Here’s the title of the article: G.E. Goes With What It Knows: Making Stuff by Steve Lohr (New York Times). The title really does say it all. And the fact that Jeffrey Immelt is understanding this, and acting on it, is significant.
Here’s the issue: should our best and our brightest make stuff, of should they move money around? Richard Florida, in his terrific book The Great Reset, summarized the problem this way:
Here’s the issue: “traders” (making money by trading things) vs. “builders” (real assets in the real economy).
The role of finance changed from being, in the words of William Black, a “servant” of the economy to a “predator.” Instead of supporting the real wealth producing parts of the economy, (the finance sector) has become a parasite on them.
…builders need to take their preeminent position back from the traders for the economy of the future to flourish.
(I blogged about this here).
(Fred R. Conrad/The New York Times) Jeffrey Immelt, C.E.O. since 2000, has pared down General Electric to rely less on financial wizardry in its lending unit and more on physical products from the manufacturing divisions.
Now it sounds like Mr. Immelt gets this, and says that our entire country needs to get this also. Here are some paragraphs from the article about Mr. Immelt and G.E.:
Perhaps no company outside of the banking sector was hit as hard by the financial crisis as G.E., certainly none that seemed healthy before the economic tailspin. Its big finance arm, GE Capital, long a cash machine that bolstered the mother ship’s bottom line, became an albatross, threatening to pull down the entire enterprise. G.E. cut its dividend for the first time since the Great Depression, lost its triple-A credit rating and hastily arranged a $3 billion investment from the billionaire Warren E. Buffett.
Having skirted disaster, G.E. is recovering gradually these days. Its finance unit is on the mend, with the size of its debts and troubled loans trending downward. Mind you, middling recoveries are a relative matter at G.E. After all, the company remains a colossus on track to deliver profits of more than $10 billion on sales of about $150 billion this year. But investors are used to getting more from G.E., which earned $22 billion on revenue of $173 billion in 2007.
So G.E. has revamped its strategy in the wake of the financial crisis. Its heritage of industrial innovation reaches back to Thomas Edison and the incandescent light bulb, and with that legacy in mind, G.E. is going back to basics. The company, Mr. Immelt insists, must rely more on making physical products and less on financial engineering — a path that, he insists, is also necessary for the American economy as a whole.
Mr. Immelt candidly admits that G.E. was seduced by GE Capital’s financial promise — the lure of rapid-fire money-making unencumbered by the long-range planning, costs and headaches that go into producing heavy-duty material goods. Other industrial corporations were enthralled with finance, of course, but none as much as G.E., which became the nation’s largest nonbank financial company.
So, after Jack Welch championed G.E.’s journey into finance, Mr. Immelt is calling for G.E. to get back to focusing on “making stuff” — “a path that, he insists, is also necessary for the American economy as a whole.”
Yes it is! We need far more “builders,” and can probably do quite nicely with far fewer “traders.” We really do need to “rely more on making physical products and less on financial engineering.”
It Really Does All Start Here — The Right People Make All The Difference
Many years ago, I had a teacher – a very, very smart teacher – who said that if you read something in one place, pay a little attention. But if you read it over and over again from a number of sources, pay a whole lot of attention!
Here’s something you can read in countless business books. It is repeated by enough authors in so many books that I think it is safe to say — be sure to get this one right. Pay a lot of attention to this! Here’s the lesson:
Hire the right people!
How many stories do you know about inefficient, unsuccessful, stagnant, even demoralizing workers? Knowing that making the right hire is important is…well, common knowledge. Actually making the right hire – this is the hard part.
I was thinking about this and remembered just how clearly Jack Welch expressed this in Winning. Here are some key quotes:
Hiring good people is hard. Hiring great people is brutally hard. And yet nothing matters more in winning than getting the right people on the field. All the clever strategies and advanced technologies in the world are nowhere near as effective without great people to put them to work.
Effective people know when to stop assessing and make a tough call, even without total information. Little is worse than a manager who can’t cut bait.
If you’ve hired the right people, they will want to grow. They will be bursting with the desire to learn and do more… Good people never think they have reached the top of their game. But they’re dying to get there. A company that manages people well helps make that happen… It makes sure that training is seen as a reward for performance, not a sop for time served.
Hiring the right people, investing in their development, rewarding them with more training and more challenges – this is the path to business success.
Look around you – are you hiring the right people?
Look at yourself – were you the “right hire?”
Let’s put it this way. Making the right hire may not absolutely guarantee business success. But it comes close.
Making the wrong hire – this is a sure fire path to business disappointment.
