Jack Welch was born on 19th November,1935 in Salem, Massachusetts, USA. He was the only child born to his parents. An avid sports enthusiast as a child, he credits the lessons he learned in a scrappy place called the “pit” with forging his leadership skills. He later graduated from The University Of Massachusetts at Amherst, and after graduation went on to the University Of Jelinois, where he received a Master’s degree and a Doctrate in Chemical Engineering.
JACK WELCH AT GENERAL ELECTRIC
In 1960, Jack Welch joined General Electrics in the Plastics Division in Pittsfield, Massachusetts, USA, where he formed his leadership ideas. He earned a descent salary of 10500 US dollars. Despite working in a very exciting and fast paced environment, but because of too much bureaucracy prevailing in the organisation, he almost quit the job in 1961. But as he received an increase in the salary to 11500 US dollars he removed the resignation thought.
Because of his good work in 8 years, in 1968, Jack Welch was made the company’s youngest General Manager at the age of 33.
In 1980, General Electric announced the name of it’s 8th Chief Executive Officer : 45 year old – John Francis Welch (Jack Welch).
Giving Birth To A New Paradigm
In his 20 years of work at the C.E.O level, he launched several sweeping initiatives that affected every aspect of General Electric’s origin.
PRINCIPLES OF JACK WELCH AT GENERAL ELECTRIC
1. Act like a leader, not like a manager
2• Embrace change, Don’t fear it:
Jack Welch, the tomorrow driven leader loved change.
Change keeps everyone alert and on their toes. It’s a big part of the reality of business. Take the business environment – it is constantly changing: new competitors, products. Any business that ignores this fact is doomed to collapse. Jack Welch never stopped re-arranging the G.E. agenda. The goal may be the same, never ending growth but he said that the tools and methods were constantly changing. He encouraged his colleagues to never stop thinking about the need for change. Only through change- “massive change” could G.E. win and Jack Welch firmly believed in winning.
In 1995, Welch took a bold step, launching a company wide initiative to improve the quality of G.E.’s product and processes.
On December 12, 1995, G.E. purchased RCA, the communication giant, which includes the NBC Telecommunication Network, together found a new corporate power, placing it 7th in Fortune 500.In June1987, G.E. merged with Thompson SA in Electricals division.
Stop managing, start leading and cultivate managers:
He disliked the notion of management. Most managers in his view over- managed. Those who over managed helped to create a bureaucratic environment, which according to Welch, kills large companies. He decided that G.E.’s leaders had to change their management styles i.e. too much controlling and monitoring .The only way to last at G.E. was to get on board, to become a lean leader, to adapt oneself to the company’s value and culture.
Face reality and then act decisively:
Welch believed that whether in business or in life, those who are able to acknowledge truth are usually successful. Most of Welch’s business philosophy is based on the simple premise that it is better to own up to reality than to bury one’s head in the sand.
In Oct 1981, six months after he became chairman and C.E.O, Welch wasted no time in spelling out his revolutionary plan for a new G.E. to 120 corporate offices of the company. In short G.E.’s employees were going to stare reality in the face and acknowledge it.
The first reality observed by Jack Welch was the rising competition from the foreign companies. So he thought critical to reduce the size of G.E.’s workforce and get rid of business that had been long a burden to the company and the first step he took was scrapping G.E.’s House-wares business.
Be simple, be consistent and hammer your message home:
Jack Welch has always believed in being simple, relentless consistency and follow up on everything. Welch’s consistency has indeed helped to revive General Electric and remake it into one of the most competitive companies.
Building the market- Leading Company:
Be No1 or No2 but don’t narrow your market:
To make General Electric more competitive, Jack Welch developed a strategy that required all G.E. businesses to be either 1st or 2nd in their field. He was convinced that inflation would become the most prominent enemy in 1980’s leading to slower worldwide growth. Therefore, he always insisted upon being the No1 or No2 leanest, lowest-cost worldwide producers of quality goods and services or have a technological edge.He always believed in the surprise move i.e. the bold play. He was confident that General Electric would prosper if he acquires and divests companies and remained focussed.
Fix, close or sell:
In the early 90’s, NBC Telecommunication Company, which was acquired by General Electric in the 80’s was facing very difficult to compete with the other US competitors, Welch decided to fix NBC with a series of quick and clever decisions. Jack Welch and the then President of NBC Mr. Bob Wright, decided to replace current managers with more business-minded entreprenual leaders. Once this was in place, both were confident that NBC could indeed be “fixed”.
Don’t focus on the numbers:
Jack Welch’s philosophy was that numbers aren’t the vision, numbers are the product and he never used to talk about numbers. The three measurements he believed to live by would be employee satisfaction, customer satisfaction and cash flow.
Sharing ideas across business:
Jack Welch said that G.E.’s core competency was sharing ideas across businesses, across what he called the boundary-less organisation and that the company viewed itself as a laboratories that shared ideas, financial resources and managers. Be an open learning organisation. An idea can be from any source. So, we will search the globe for ideas. We will share what we know from others to get what they know.
Forging the boundaryless organisation
Get rid of the managers, get rid of the bureaucracy:
When Jack Welch took over G.E. in early 80’s, it appeared to be one of the strongest companies in the USA. He wanted to make the company more competitive. At that time, no other American business leader was prepared to do what Jack Welch did. He became the pioneer of “Downsizing”. He believed that a vast, bloated bureaucracy had grown up at G.E. and it was chocking initiative and enthusiasm. Jack Welch successfully cut down G.E.’s vaunted bureaucracy.
Be lean and agile like a small company:
Jack Welch believed that to survive in an increasingly competitive environment, large companies like G.E. must stop behaving and thinking like large companies. They should get lean, agile and start thinking like a small company. At first, he dealt with those layers of management that he believed, were clogging the G.E. machine. Thus, he removed the entire 2nd and 3rd levels of management- the sectors and the groups.
The new arrangement proved very clean, simple and effective.After this arrangement, people in the organisation could communicate well. They move fast as they knew the penalties for hesitation in the market place.
Tear down the boundaries and use the brains of every worker:
Jack Welch felt that there were far too many boundaries within General Electric such as:
Management Layers ,Engineering and marketing people ,G.E. and its customers ,G.E. and the whole outside community
Boundarylessness, for Welch defines G.E. as an open, informal company whose employees can move swiftly and effortlessly and where they can connect to the outside world just as quickly and effectively.
In 1989 he designed a 10-year program called “WORK-OUT”, wherein workers were given freedom to share their views with their managers. Through this program, Jack Welch gave the employees the right and responsibility to come up with their own idea for solving problems. The main idea was to remove the “boss element” from G.E. The goal was to give everyone a say in the way the organisation was managed- to keep bosses from dictating every step in the decision making process. By getting more involvement on the side of the employees, Welch argued that they would be helping to strengthen G.E.’s businesses and healthy growing businesses were the best guarantee for job security.
Push Service and globalization for Double digit Growth
Jack Welch always thought of growing G.E.’s business. In the past, G.E.’s manufacturing business consisted of light bulbs, home appliances, etc, which were the primary growth engines. Jack Welch brought the growth of G.E. Capital Services and the acquisition of NBC Telecommunication Network into a new diversified company. G.E. Capital Services earned 4$billion in 1996 and NBC earned 95$ billion in 1996.
Jack Welch also brought growth in the financial services category as he made G.E. Capital from a small company into a company having 27 businesses out of which 19 had double digit growth. After this more than 60% of the revenues of General Electric came from services.
Jack Welch saw globalisation as a new reality and as a great opportunity for G.E. So in 1980, Jack Welch bought 2 strategic businesses, Plastics and Aircraft Engines to service the global market. Between 1985-95, revenues from overseas operation increased from 20% to 38% of total G.E.’s revenues. In 1987, he launched a global revolution when he acquired a French Company specialising in medical imaging “Thompson”.
Jack Welch knew that to grow at a double-digit rate, General Electric would have to make significant pushes in Europe & Japan. In the first half of 2000, G.E. became the first company to shatter the 600$ billion barrier before settling back at a level below 500$billion. In 1999, Welch launched the E-initiative business within General Electric which would soon be felt at every level in the company.
Drive quality through the organisation
In early 80’s and 90’s when G.E. bench marked itself with other companies like Motorola, Texas Instruments, H.P. and Xerox, it became clear that there was much room for improving quality of G.E. ’s products and services. He stressed on improving speed, productivity and getting employees and suppliers more involved in the company.
In 1995, Jack Welch empowered the concept of “SIXTH SIGMA”. He put in place another initiative that would transform the company. Products and Services was G.E.’s crusade to generate revenues from the consumers. Within 5 years of empowering “SIXTH SIGMA” in the company it’s revenues from services doubled, nearly reaching 17$ billion in 2000.
Jack Welch adapted “Sixth Sigma” within the company to achieve quality improvement in business processes which in turn entails the formation of a project team.
His 4 step process for achieving this was called as “MAIC” which included :
1. Measure|2. Analyse|3. Improve|4. Control
MESSAGES TO BUSINESS LEADERS
1. Business is simple.
2. Don’t make it overly complicated.
3. Face reality.
4. Don’t be afraid of change.
5. Fight bureaucracy.
6. Use the brains of your workers.
7. Discover who has the best ideas and put those ideas into practice.
It is the last message i.e. the management secret that Jack Welch captivates the most today i.e. Learn, Learn, Learn and Keep Learning.
Jack Welch is America’s most role modeled idol. He is recognized as a guru of management. He had the zeal and the optimism of a winning football coach: exciting, remarkable, staggering and incredible. It was clear from the day he took the company that he planned to launch a revolution at G.E. He wasted no time in executing his plans.
He made General Electric leaner, tougher, more competitive with fewer people, fewer business units and fewer management. He lead a series of revolutions at General Electric, seeking to recast a highly bureaucratic, labour- intensive corporate giant into a highly productive machine that would function with the speed and simplicity of a small entrepreneurial company.
Leadership lessons of Jack Welch, America’s most successful C.E.O,
28th November 2006 From India, Delhi