Model of Business Leadership Dr Jack Welch

• I didn't start with a morale problem; I created it - Jack Welch, Former Chairman & CEO, GE, USA.

• If you're looking up at me, you’ve got your ass pointed at the customer---- Jack Welch.

• The three most important things you must measure are customer satisfaction, employee satisfaction and cash flow--- Jack Welch.

• Most strong leaders will evoke fear rather than awe because they have to take tough actions and decisions and that is sometimes necessary. One has to fight various forces at the top. The top of the pyramid is not a place for a popularity contest - Madhavan Gopalachary.

• Only people who don't work make no mistakes - Madhavan Gopalachary.

Introduction:

Amongst all the modern business managers, Dr. Jack Welch is the most famous and well known business leader. He is a legend. Dr. Welch holds a Doctorate in Chemical Engineering and joined GE in the Engineering Plastics division more than 40 years ago. In his book 'Winning' he has admitted that he wanted to leave GE to join a Chemicals company in Illinois after a year or so and had resigned. He was convinced to stay back, offered a raise by GE and the rest is history the legends are made of.

Dr. Jack Welch:

On his way to the top in GE, he built a highly successful USD 2 billion engineering plastics business and then turned around the ailing medical diagnostics business. As the Vice Chairman of GE, he transformed GE Capital into a financial powerhouse. He became Chairman & CEO of GE around 1980. His initial focus was to improve the earnings and he was very aggressive in cutting costs and pruning weak businesses or divisions of GE. Between 1981 to 1986, he eliminated 130,000 jobs or 25% of the workforce. Throughout his career, he is credited to have eliminated around 250,000 jobs. That is some record that would be hard to beat. These actions created an atmosphere of insecurity, low morale and distrust in GE. In his own words he said, 'I didn't start with a morale problem, I created it'.

GE is a behemoth and has a very diversified business right from Industrial Turbines to Aircraft Engines to Locomotives to Financial services to Medical diagnostics to Appliances to Television broadcasting. In those days, it was literally an 800 pound Centipede with thousands of legs, each not knowing what the other leg was up to. He believed that in the absence of a crisis, the company should be shocked out of its complacency. The only way to do so was by eliminating the jobs and awakening the giant from slumber. He acquired the nick name of 'Neutron Jack' in reference to the Neutron Bomb, which destroys all animate things but leaves all inanimate objects intact. The 'Fortune' magazine listed him as the one of the 10 toughest bosses to work for in USA. Needless to state that such actions will evoke strong criticism, opposition and hostility. It needs great courage and conviction to take such actions and then stand up to the opposition. Dr. Jack Welch had more then plenty of it.

In 1986, he came out with a vision for GE that either it should be the number 1 or 2 in any business or get out of it. He grouped GE businesses in three areas: Core, Services and High technology and divested such businesses he felt were outside these three areas. He made some acquisitions like RCA and Employee Reinsurance Company taking into account the synergy that existed then. His initial focus, apart from cost cutting, was fixing the 'hardware'. From 1987, he concentrated on the 'software' by which he meant people. He achieved productivity through bottom-up initiatives of employees.

Dr. Welch believed that the role of the leader is to create a vision, articulate it, own it passionately and drive its implementation relentlessly. He believed in 'openness' and 'candor'. He said 'tell people the truth because the people know it anyway'. He was a charismatic leader and often ignored the formal channels of communications. He was a bureaucracy basher. He also believed in 'systems' approach. He simplified the complex organizational structure of GE and its reporting systems. Reports were to be strictly one page with the necessary numbers and prose. He initiated the famous 'Workouts' which was essentially removing the bad work habits most large organizations tend to acquire over a period of time. Bureaucracy is directly proportional to the size of the organization.

Reactions to his leadership style are varied. Dr. Robert Pascale, who carried out considerable amount of research and study on great business leaders, says in his book 'Managing on the Edge' that people who knew him well and were close to him found him, courageous, sincere and dedicated to GE's cause. Others, found his 'aggressive', 'steamroller' style repugnant. From a distant third party view, he seemed overbearing, domineering and ruthless in execution.

In the later part of his career, he became aware of the criticism and set about building what he called as 'GE Values'. He said that the businesses had to become lean, agile and creative. He wanted the employees to take ownership and rewarded them suitably for the risk and performance. He wanted things to be simple, openness, to have integrity and show respect for individuals. He did believe in 'empowerment'. However, according to Pascale, he will always remain in business listings as a person known for his propensity to muscle his way through any opposition. Unfortunately, it is an image problem. There is nothing wrong in being aggressive and tough. Leaders must be fair and just apart from that. However, when one shakes an apple tree vigorously, a few good apples will also fall along with the rotten ones. It is an occupational hazard and the shaker cannot be blamed in such situations. Dr. Welch was a mover and shaker. He made GE one of the top, most admired and valuable companies and it occupies an exalted position in the business world. Whatever the academics, critics, researchers and management scholars may say, they can't deny that his consistent results over four decades speak for themselves. Dr. Welch has proved that a great crisis manager can also be a great growth manager. Please see my article titled 'Leadership examples from real life and history'.

The great Chinese philosopher Confucius said that leaders must evoke awe and not fear. But most strong leaders will evoke fear rather than awe, because they have to take tough actions and decisions and that is sometimes necessary. One has to fight various forces at the top. The top of the pyramid is not a place for a popularity contest. It is also very lonely at the top. People must know that it is difficult to manage and lead at that level when everybody is taking potshots at you or testing you or waiting for you to make a slip or when the organization slips into a morass of corruption or inefficiency. Self Confidence, Aggressiveness and Ruthlessness are required in such situations. Many forget the old saying 'Uneasy lies the head that wears a crown'. The thing leaders must be careful and cautious about is that ruthlessness should not become a force of habit and must be situation specific. Tough situations call for tough decisions and that needs tough leaders. At the same time such leaders should be flexible, soft and pliant inside beneath the tough exterior. All the required qualities have to be balanced in the right proportions. It is not easy and there are bound to be some mistakes. Only people who don't work make no mistakes. People have to be judged by the overall results.

© Copyright, Written on May 02, 2008 . Without prejudice. All rights reserved

Model of Business Leadership Dr Jack Welch - To learn more about this author, visit Madhavan T Gopalachary's Website.

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