Jack Welch Leadership Secrets

29 LEADERSHIP SECRETS FROM JACK WELCH

PART I

The Visionary Leader: Management Tactics for Gaining the Competitive Edge

1. Harness the Power of Change

· Change before it's too late!

· 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.

· Change is an opportunity that can be met with hard work and smarts.

· Be ready to rewrite your agenda and to make changes when necessary.

2. Face Reality

· The art of leading comes down to one thing: facing reality.

· Face reality. Business leader's who don't are doomed to failure.

· Act on reality quickly - facing reality is not enough - adapt business strategies to reflect reality.

· Face reality, and you may turn a bad situation into a good one.

· Early 80's reality - Restructure - GE would need to devote all its resources to its strongest businesses

· Mid 80's reality - Acquire RCA - GE needed the acquisition to push high tech growth.

· Late 80's reality - Work Out Program - GE Employees needed a voice in running the company.

· Mid 90's realty - Six Sigma Quality - GE's quality programs were just not working.

· Late 90's reality - Internet - E-business is not the thing of the future, it's here!

· Face Realty, Adjust to Reality, Move Quickly

3. Managing Less is Managing Better

· Emphasize vision, not supervision.

· Managing less lets managers think big thoughts and come up with new ideas to benefit the business.

· Employees don't need constant supervision.

· Instill confidence. Treat employees with respect.

4. Create a Vision and Then Get Out of the Way

· Business is simple. Complications arise when people are cut off from vital information.

· As we became leaner, we found ourselves communicating better, with fewer filters and interpreters.

· To get critical information a manager must ask five key questions:

1-What does your global competitive environment look like?

2-In the last three years, what have your competitors done?

3-In the same period, what have you done to them?

4-How might they attack you in the future?

5-What are your plans to leapfrog them?

· Managing is allocating people and resources, put the right people in the right job, give them what they need, and then get out of the way.

· Mangers lead with vision. Managers must persuade other to implement through the force of vision.

5. Don't Pursue a Central Idea; Instead, Set Only a Few Clear, General Goals as Business Strategies

· Don't get bogged down in details. Lay out your goals and adjust to changing realities as you go.

· Set out a general framework for your team. Don't try to set a detailed game plan for every situation.

· Create values that are consistent with the company vision. Values should reflect the vision, culture, and goals of the organization.

· Make sure there is room to maneuver. Core values should be constant, but strategies change.

6. Nurture Employees Who Share the Company Values

· Sharing the company values as well as meeting the numbers mean job security; not meeting the numbers only.

· Always get the best people, if you don't, you're shortchanging yourself.

· You've got to be comfortable with the world's brightest people on your team.

· Types of managers: A-Delivers on commitments and subscribes to company values; B-Does not meet commitments and does not share values; C-Misses commitments but shares the values; D-Delivers on commitments but does not share the values.

· Nurture, empower and reward A's, fire B's, give one chance at reassignment, then fire C's, fire D's.

PART II

Igniting a Revolution: Strategies for Dealing With Change

7. Keep Watch for Ways to Create Opportunities and to Become More Competitive

· Don't stick your head in the sand. Keep a close tab on those key variables that create opportunities and challenges for your business.

· See things for what they are. Allocate resources to market-leading businesses, fix ailing companies, and jettison those that are not competitive.

· Begin with a vision. Nothing changes without a clear vision of where change is supposed to lead. The boldest vision may be the best vision.

8. Be Number One or Number Two and Keep Redefining Your Market

· Develop market-leading businesses. Number one and number two businesses can withstand market downturns, but laggards fall further behind when times get tough.

· Define markets broadly. Don't make the mistake of defining markets so narrowly that you shut yourself out of growing market segments.

9. Downsize, Before It's Too Late!

· Even in good times, regularly review expenses and head counts. Don't assume that because all is well at the moment that it will stay that way (and are you sure all is well?).

· CEO's should not run companies as if they were popularity contests. Do what you know is right for the long-term health of the organization.

· Tough actions today may prevent far more complicated problems later

10. Use Acquisitions to Make the Quantum Leap

· Go for the quantum leap, even if it goes against company culture.

· Think outside the box.

· Keep hunting for the little opportunities. The big, bold moves need to be a part of a patient, systematic approach to mergers and acquisitions.

11. Learning Culture #1: Use Boundarylessness and Empowerment to Nurture a Learning Culture

· The "Boundaryless Organization" is delayered, purged of NIH, sharing ideas and looking for better ideas.

· Learning organizations have an edge, and learning translates into actions, and actions spark productivity.

· Emphasize idea sharing inside the company.

· Find and implement the best ideas, no matter where they come from.

· Make sure that great ideas are followed by implementation.

12. Learning Culture #2: Inculcate the Best Ideas into the Business, No Matter Where They Come From

· Make searching for new ideas a priority of every employee.

· Hold idea-sharing meetings on a regular basis.

· Reward employees or sharing knowledge.

· The three ingredients of success: build a good team; share ideas across businesses; give them resources.

· Keep learning, from a colleague, and especially from a competitor.

· An organization ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage.

· GE did not invent 6-sigma (Motorola pioneered it) and GE wasn't even the next big company to get on board (AlliedSignal was an early adopter), but GE watched 6-Sigma and then adopted it.

13. The Big Winners in the 21st Century will be Global

· Make sure your domestic base is solid before venturing abroad.

· Businesses, not companies, are global.

· Think globally and locally. To compete in the global economy, companies must develop a distinct strategy for each international market.

· The are phases to globalization - exporting first, then local production, then local sourcing.

PART III

Removing the Boss Element: Productivity Secrets for Creating the Boundaryless Organization

14. Delayer: Get Rid of the Fat!

· Get rid of any management layers that do not add value.

· If improving communication with the factory floor means "lose layers," then lose them.

· Don't let emotions get in the way of delayering - make the call based on objective criteria, not relationships.

· Cutting executive jobs can be one of the most difficult decisions a manager has to make.

· Delayering sets an example to the whole company about becoming lean and agile.

· Some people who look good in a big bureaucracy look silly when you leave them alone.

· Delayering requires a certain resolve - it's one thing to lay off a distant factory worker and quite another to ax your buddy in the next office.

15. Spark Productivity Through the "S" Secrets (Speed, Simplicity, and Self-Confidence)

· It takes enormous confidence to be simple; bureaucracy is terrified by speed and hates simplicity.

· Speed for an engineer is clean, functional designs with fewer parts.

· Speed for manufacturing is judging a process not by how sophisticated it is, but how understandable it is to those who must make it work.

· Speed to marketing means clear messages and clean proposals to consumers and industrial customers.

· Simple messages travel faster, simpler designs reach the market faster, and the elimination of clutter allows faster decision-making.

· Self-confident leaders produce simple plans, speak simply, and propose big, clear targets.

· Establish systems that foster self-confidence. Help people understand how their efforts are helping the company to succeed.

· Find ways to let people take risks and win.

16. Act Like a Small Company

· Structure for smallness (delayer).

· Remove anything that slows the company - remove layers, boundaries, approvals.

· Check reality: do you know your customers and do your customers know you? If not, get to work!

· Small companies communicate better, move faster, have fewer layers, less camouflage, waste less, and the leaders show up very clearly on the screen.

· Small companies need everyone, reward everyone, and reward or remove people based on their contribution to winning.

· Small companies dream big dreams and set the bar high; increments & fractions don't interest them.

17. Remove the Boundaries

· Anything that disrupts communication between departments and employees or between employees and outside constituents is bad.

· Involve everyone.

· The boundaryless company removes barriers between functions, levels, locations and reaches out to important suppliers to make them part of a single process.

· Replace hierarchies with cross-functional teams, managers with business leaders.

· Instead of having workers who are told what to do, have workers who decide what to do.

· If you're turf-oriented, self-centered, don't share with people, and are not searching for ideas, then you don't belong here.

· Being boundaryless allows us to jab on another and have fun.

18. Unleash the Energy of Your Workers

· Unleash productivity by involving everyone.

· Make sure everyone knows how important his or her contribution is to the overall effort.

· Turn workers into owners. Owners - literal and figurative - have a far greater stake in the business.

· Have patience - attitudes don't change overnight.

· Unleash the energy and intelligence and raw, ornery self-confidence of the American worker, who is still by far the most productive and innovative in the world.

19. Listen to the People Who Actually Do the Work

· Enable people to speak out freely and candidly, without fear of penalty.

· Develop trust among employees.

· Eliminate unnecessary work.

· Spread the company culture.

· Allow employees to be in a position to make suggestions to their bosses face-to-face.

· When possible, give employees a reply on the spot.

20. Go Before Your Workers and Answer All Their Questions

· Search out practices that have stopped making sense (every company has them).

· Nourish dignity. "The most important thing a leader does is treasure and nourish the voice and dignity of every person" - Jack Welsh.

· The people who are closest to the work really do know it better.

PART VI

Next Generation Leadership: Initiatives for Driving and Sustaining Double-Digit Growth

21. Stretch: Exceed You Goals as Often as You Can

· Stretch begins with the definition of performance targets that are within a company's capabilities.

· The second aspect involves setting those sights much higher toward goals that seem beyond reach, requiring an almost superhuman effort to achieve.

· Even when the "impossible" goal was not met, we inevitably wind up doing much better than we would have done.

· Stretch has risks - like making bad decisions to meet stretch goals for the sake of meeting the goal.

· Instill in your employees the idea that they should go beyond ordinary goals.

· Being a Six Sigma company by 2000 was the most difficult stretch goal GE ever undertook.

22. Make Quality a Top Priority

· Tackle quality head on. Don't rely on other initiatives or strategies to tackle the problem of quality.

· Use quality to make sure that your products are your customers' only actual value choice.

· Quality can be just as important as price, features, and so on.

· Six Sigma is more than a GE initiative, it's a corporate mantra - a battle cry.

23. Make Quality the Job of Every Employee

· Six Sigma, if successful at GE, will be the biggest opportunity for growth, increased profitability, and individual employee satisfaction in the history of the company.

· To reach six sigma, GE needed to reduce its defect rates 10,000 times - very little of this required invention. We have taken a proven methodology, adapted it to a boundaryless culture, and are providing our teams every resource they will need to win.

· You've got to be lunatics about this subject. You've go to be passionate lunatics about the quality issue. You've got to be out on the fringe of demand, and pressure and push to make this happen - it has to be central to everything you do everyday.

· The drive for quality is not some GE drive. The only reason for the quality is to make your customers more competitive - it has nothing to do with what you want.

· Quality is the next act of productivity - out of quality you eliminate reworking.

· Quality is the next step in the learning process - getting rid of layers and fat, and involving everyone.

· Link compensation to quality performance.

24. Make Sure Everyone Understands How Six Sigma Works

· GE's Six Sigma Process: Measure; Analyze; Improve; Control. Understanding each step takes one month - 3 days of training, 3 weeks of doing, 1 day of review.

· GE's Six Sigma Players: Champions (senior managers who define, approve, and fund projects); Master Black Belts (full time teachers with heavy quantitative and leadership skills - mentors of Black Belts); Black Belts (full time quality executives who report to Champions); Green Belts (non full-time members of Black Belt project teams who work at other jobs)

· GE's Six Sigma Measures: Customer Satisfaction; Cost of Poor Quality; Supplier Quality; Internal Performance; Design for Manufacturability.

· Quality-mindedness is critical to our success - we will neither accept nor keep anyone without a quality mindset.

· "It has been remarked that we are a bit 'unbalanced' on the subject. That's a fair comment, we are." -Jack Welch

25. Make Sure the Customer Feels Quality

· Customers must be brought into the process. Make sure hat your customers feel the results of our quality program as quickly as possible.

· Don't assume that the customer is as happy as you are. Monitor customer reaction to the initiative on a continuing basis.

· Keep the customer as the main focus. Make sure your employees are aware that the point is to satisfy customers.

· Customers feel the variance in your processes, thus at GE we measure the parameters of customers needs and processes and we work toward zero variability (e.g. reducing average shipping days from 29 to 17 is good, but if the variance is 4 to 20 days, the "20-day Customer" is not satisfied and is not sharing in the quality improvements).

26. Grow Your Service Business: It's The Wave of the Future

· "The market is bigger than we ever dreamt" - Jack Welch.

· GE profits on services are typically 50% higher than on manufacturing products.

· Think hard about the services that may be associated with your products. Is your company leaving money on the table by not pursuing aftermarket service opportunities.

· Think hard about services that are removed from your core product lines. GE Capital Services - far from the light-bulb trade! - has been an astounding success.

· Stay flexible. As you make the move into services, be aware that some of your long-standing ideas about your business may need to be adjusted.

27. Take Advantage of E-Business Opportunities

· Look for appropriate e-business opportunities. Web brochures are not enough. What products can you sell in cyberspace?

· Take advantage of the Web's efficiencies. E-business, with its minimal transaction costs, can be highly profitable.

· Elimination of human error in the order-fulfillment process can further enhance profitability.

· Initial GE websites were essentially on-line brochures. The "epiphany" occurred when Welch realized the "transaction" piece, that this was the business model to pursue, that the Internet could provide a revenue stream.

28. Make Existing Businesses Internet Ready - Don't Assume That New Business Models Are the Answer

· Welch's Internet vision boiled down to three imperatives:

1- Keep upgrading people and retaining Internet-skilled talent.

2- Figure out how to leverage information technology to create a competitive advantage for your businesses that customers can see and feel.

3- Leverage information technology to support internal business processes.

· Adapt your business model to the Internet. Don't worry that your business model will not work on the Internet.

· Think "Web enabled" rather than "web threatened." Your goal should be existing products and processes on-line rather than attempting to build up from zero.

· Think inside and outside. On the Internet, as in most aspects of business, the two key challenges are (a) to develop great people inside and (b) to present a compelling value proposition to the customer.

29. Use E-Business to Put the Final Nail in Bureaucracy

· Manage in Internet time, using the latest technologies. The Internet, in combination with intranets, allows managers to communicate instantly with employees.

· Reinvent the company to compete in Internet time. Think in terms of days and weeks rather than years. Exploiting Internet time will change the fundamentals of your business.

· Build on strengths. Success on the Internet in part grows out of being a fundamentally strong company.

· In the end, all of this going on at GE is about using this transformational new technology to better serve customers and to be so good and so fast we become the global supplier of choice.

About Jack Welch and GE:

· GE chairman and CEO for 20 years and 5 months.

· His memoirs Jack: Straight from the Gut was on the bestseller list for 6 months.

· Welch has an earned doctorate in chemical engineering from the University of Illinois (1960).

· Many call Welch the greatest CEO of the era.

· Welch retired in 2001; GE revenues that year were $125.9B and earnings of $14.1B.

· In 2001, Fortune magazine named GE "Most Admired Company" for the 5th year in a row.

· From 1998 to 2000, Fortune magazine selected GE as "America's Greatest Wealth Creator."

· In 2001, Financial Times picked GE as the "World's Most Respected Company" for the 4th time.

· In 2001, GE had 6000 Six Sigma projects underway.

· In 2001, e-business at GE generated $19B of incremental cost savings.

· In 2001, GE's services initiative had grown to $19B of GE's revenues.

· The "soft stuff", GE values, being instilled, were uppermost to Welch.

· GE renamed the Crotonville (N.Y.) management institute the John F. Welch Learning Center.