The Jack Welch Lexicon of Leadership phần 5 pptx

Welch made customer satisfaction the key to determin-ing the success of GE’s Six Sigma program.. σσσσσσ Delayering: When Welch assumed the position of CEO, he saw the extent of GE’s vast

Customer-Centered Vision: What Jack Welch

expects all GE leaders to have Welch was always focused oncustomers, but that imperative was not always a part of thelist of GE values In 1999, after the GE CEO learned that somecustomers were not “feeling” the benefits of Six Sigma, Welchmade sure that GEers would learn a valuable lesson Afterdelivering a no-nonsense message to his senior managers, hemade sure that customers would never be forgotten The nextversion of GE’s list of nine values included three statementsthat prominently mentioned the customer (and being cus-tomer-focused)

Customer Satisfaction: One of the keys to the

com-pany’s success Welch made customer satisfaction central tomany of his key company-altering programs and initiatives.The most recent version of GE’s values mentions the cus-tomer in one-third of its value statements (including the toptwo) Welch made customer satisfaction the key to determin-ing the success of GE’s Six Sigma program Throughout histenure, he used the metaphor of “family grocery store” todescribe how a company should approach its customers Thesame principles apply to a $500 billion business: if the stuff

on a grocery store shelf is stale or not exactly right, customerswill not be happy In Welch’s view of the world, where “busi-ness is simple,” it should be no more complicated than that

Decimal Points: In explaining the concept of Stretch,

Welch told GE staffers to reach for the stars and not getcaught up in decimal points (they’re “a bore”) He urges allmanagers to set aggressive growth targets and to celebratewhen they get close By disdaining the decimal point anddriving Stretch throughout the company, Welch and GEachieved a remarkable string of record-setting years UnderWelch, double-digit growth was the cost of admission (see

also Budgets and Stretch and Stretch Goals).

Defect: What Six Sigma is designed to eliminate It is “any

instance or event in which the product or process fails to meet acustomer requirement.” In Welch’s view of the world, defectswere the enemy, since a defect often meant that a customerwould be disappointed By reducing the number of defects tofewer than four per million (Six Sigma quality), GE is able to bet-ter serve customers while saving the company time and money

Defect Measurement: An important step in Six

Sigma, it calculates the number of defects in a product orprocess Defects per unit (or DPU) is one common measure-ment Measurement in Six Sigma encompasses tracking andreducing the number of defects in a particular process

DFSS (Design for Six Sigma): A systematic method

employing tools, training, and measurement instrumental inproducing products that meet Six Sigma levels of quality.After the initial phase of Six Sigma, aimed at reducing vari-ance in GE’s internal operations, the company set its sights ondesign engineering

Copyright © 2002 by The McGraw-Hill Companies

Click here for terms of use.

DMADV (Define, Measure, Analyze,

Design, and Verify): A key acronym in the Six Sigma

quality program It is a five-phase methodology that helps toincorporate defect prevention into new designs

DMAIC (Define, Measure, Analyze,

Improve, Control): Pronounced “Deh-MAY-ihk,” it is

one of GE’s key Six Sigma improvement models The originalversion of the model had only four steps (Measure, Analyze,Improve, Control)

σσσσσσ

Delayering: When Welch assumed the position of CEO, he

saw the extent of GE’s vast bureaucracy There were morethan 500 senior managers, more than 100 vice presidents, andsome 25,000 managers There were strategic planners whohired vice presidents, and vice presidents who hired strategicplanners This was a marked departure from the GE Welchremembered from his early days in the plastics division One

of his early acts was to dismantle the bureaucracy To do that,

he would have to reduce the management layers that he feltwere killing the company “Every layer is a bad layer,” pro-claimed the GE chairman Removing entire layers of manage-ment was a defining aspect of Welch’s hardware revolution.Not only did he eliminate layers of management, he also dis-

mantled the walls that had separated key functions (for ple, marketing and manufacturing) within the company.

exam-THE ORIGINS OF DELAYERING

When Welch joined GE, he had no idea that the companywas awash in layers and bureaucracy He started in a smalllab in Pittsfield with only one other employee, and there was

no such thing as bureaucracy in such a small operation.Only later, after taking on additional responsibilities as gen-eral manager, did he begin to see all of the things that hewould battle as CEO—divisiveness, turf battles, red tape,slow decision making, etc Welch did not believe that busi-ness had to be like that He saw no reason why businesscould not be about passion and excitement and learning.The vast majority of his strategies and initiatives were

designed to inject his brand of fervor into the GE mix Theearly steps, including delayering, helped build the founda-tion for the learning organization GE would become in the1990s

THE SIGNIFICANCE OF DELAYERING

This became one of the key strategies in Welch’s “HardwareRevolution,” which was the first phase of his effort to remake

GE into an agile competitor When Welch became CEO, therewere 25,000 managers at GE and close to a dozen layersbetween the highest office and the factory floor Welch elimi-nated layers in an effort to create a boundaryless organiza-tion, unafraid of tinkering with GE’s century-old tradition ofhierarchy While many were outraged at Welch’s apparent dis-regard for GE’s sacred ways, the new CEO felt strongly that

GE would never become a global competitor unless its ture was flatter and the job of leading the businesses wasgiven to the people who actually ran them (Before delayering,strategic planners and other “span breakers” helped make the

struc-key decisions.) (See also Span Breakers.)

DELAYERING AND THE EFFECT ON MANAGERS

By giving more authority to individuals lower in the chy, Welch helped to build an atmosphere of trust and auton-omy While most managers responded by making better deci-sions and becoming more productive, delayering had theunforeseen effect of “exposing” those managers who did nothave the skills to lead Before Welch delayered, GE’s sprawlingbureaucracy obscured the abilities of GE’s managers Bydelayering, Welch found those managers who were in essence

hierar-“hiding” in the layers Welch had little use for managers who

could not live up to his standards (see also “A” Players).

Delayering lessons

1 Limit the number of layers in your organization Welch feels

there should be no more than five layers in an organization (and that’s in a large company) If your company has many more, there’s a good chance there’s more bureaucracy than there needs

to be.

2 Fire the strategic planners: Part of the thinking behind

delayer-ing was to push decision makdelayer-ing (includdelayer-ing the crucial function

of strategic thinking) into the hands of those managers running GE’s businesses That would be the only way to ensure that the organization was flexible and agile.

3 View delayering as a prerequisite to learning and ization: Ideas do not move easily in an organization weighed

self-actual-down by layer upon layer of approvals Without delayering, GE would not have had enough “openness” to create a learning cul- ture And without a boundaryless learning culture, there would have been no way for Welch to implement Six Sigma, the com- pany’s most important companywide initiative.

Destroy Your Business (DYB): At first, Welch did

not see the “relevance” or “magnitude” of the Internet But bylate 1998 “he was being hit on all sides with it,” as he put it.Once Welch recognized the magnitude of the Internet, he

feared that guerrilla dot-coms would come in and annihilateGE’s business models To stay one step ahead, Welch created

“Destroy Your Business” teams within every GE unit The role

of each cross-functional team (consisting of what GE called

“entrepreneurs”) was to analyze competitors and their ings, in order to figure out what the competition might do.The thought was to make sure the company had a handle onexactly what actions competitors might take in order to steal

offer-GE business and customers

In the second phase of DYB, the teams were asked to tell agement how they would change the existing GE model inresponse to any real threat This part of the plan was calledGYB (Grow Your Business), since its primary goal was tocome up with innovative ways to add new customers as well

man-as better serve current customers

Welch later admitted that DYB started off his Internet tive on the wrong track, and so he halted DYB The entrepre-neurs were secluded and not part of the rest of the company:

initia-“We originally thought we had to set up entrepreneurs in arate buildings, doing wild Web things apart from the main

sep-company” (see also GYB and e-Initiative).

Digitization: Another term Welch used to refer to GE’s

Internet initiative As part of GE’s e-Initiative, Welch mended that every process be digitized The GE CEO sees this

recom-as yet another important step in making the company frecom-asterand more agile In 2000, digitization helped the company sellmore than $8 billion of products and services via the Internet.Welch calculates that GE’s digitization of its processes willsave the company in excess of $1.5 billion in operating mar-

gin in 2001 (see also e-Initiative).

Diversity: One of the few areas that earned GE criticism was

the lack of diversity in the executive ranks However, Welch

took pride in the fact that by the end of his tenure the pany had made meaningful steps in bringing diversity to GE’sexecutive ranks In 2001 more than a quarter of GE’s top 3900executives were women and minorities, and more than $30billion of GE’s sales were derived from GE businesses thatwere headed by women and minority managers Still, that did

com-not quell the negative press reports (in 2000 the New York Times did a prominent story taking GE to task on this issue).

DNA of the Company: In describing the very essence

of GE (its knowledge fabric), Welch used the term “DNA.” Heproclaimed that two of his growth initiatives—Six Sigma (hismost sweeping companywide initiative) and the e-Initiative(Welch’s latest crusade)—transformed “the very DNA” of thecompany History will likely show that it was Jack Welch, GE’seighth CEO, who transformed the DNA of the company Bydismantling the apparatus of GE’s vast bureaucracy (e.g., lay-ers, approvals, waste), insisting that all GE businesses leadtheir markets, and by using a vast operating system to create alearning organization, Welch left an indelible mark on thecentury-old corporation Nor were Welch’s DNA-transform-ing ways limited to GE His management methods and leader-ship ideas have been studied—and emulated—by millionsaround the globe, helping to ensure Welch’s legacy as one ofthe most effective CEOs in history His ultimate contributionwas to demonstrate how a well-honed learning architecturecould lead to a self-actualized organization

Double-Digit Growth: Welch made double-digit growth

the cost of admission at GE In doing so, he set the standardthat most companies emulate In 2000, he credited GE’s dou-ble-digit gains to his four key growth initiatives: globalization,services, Six Sigma, and e-Business

Downsizing: In order to reinvent GE as a global competitor,

Welch reduced the number of GE workers by over 150,000 in

the early 1980s, as part of his hardware phase To make sure

GE was well-positioned for the future, he implemented hisThree Circles strategy, which held that all of GE’s businesseswould be either a core, technology, or service business As part

of the effort, Welch divested 117 of GE’s businesses that hefelt had no sustainable competitive advantage or could not benumber one or number two in their industries After layingoff those workers, the press gave Jack Welch the name hedespised: “Neutron Jack.” In early 2001, amid reports that GEmight lay off tens of thousands of workers after acquiringHoneywell, the press dusted off the old moniker once again

Driving It to the Ledger: This is the process that GE

used to describe the manner in which employees are givenaccess to vital information regarding the key financial levers

of the company By giving employees access to the mostimportant information, the assumption is that the companywill do a better job of moving those levers and improving thefinancial health of the corporation This process is anotherexample of Welch's learning organization in action It is avivid illustration of how Welch shared information andempowered workers to make decisions and assume ownership

of key processes

Drops: These were Work-Out topics that were difficult to deal

with and had a low potential payoff The rules of Work-Outcalled for these topics to be “dropped” from the discussion, sothat the session could devote itself to more productive issues

e-Boardroom: What GE calls their electronic

communica-tion methods (intranet and e-mail) for delivering tion across businesses and up and down the hierarchy

informa-Briefs: Although Welch still prefers handwritten notes to

e-mail, he sent e-briefs to keep employees throughout the world

up to speed on critical information This proved to be a farspeedier method than the method used in the past Before e-briefs, Welch would send videotaped messages to GE’s variousbusinesses The problem with that method, however, was thelength of time it took to get those messages to various GE seg-ments around the world With the Internet, communication

at GE became almost instantaneous

e-Culture: Within two years of its launch, GE’s e-Initiative

hit its stride, helping once again to transform the tion By 2000, Welch no longer regarded e-Business as anothercompany initiative; it was simply the way GE was supposed towork Welch said that GE’s new e-Culture would help fulfillhis vision for GE He always spoke of a fast organization thatacted more like a small company than a large bureaucracy Inthe new e-enabled world, Welch urged managers not to delay,since any hesitation could mean being locked out of a keymarket

organiza-e-Ecosystem: After implementing his e-Initiative in 1999,

Welch felt that the company was well-positioned to harnessthe new opportunities created by the Internet He called theInternet an “elixir” or “tonic” that would transform the com-pany forever The e-Ecosystem was a term created to refer to

Copyright © 2002 by The McGraw-Hill Companies

Click here for terms of use.

GE’s new digitally charged learning infrastructure In 2000,

InternetWeek named GE the e-Business of the year because of

the company’s e-Ecosystem

σσσσσσ

The e-Initiative (Welch also called it

“Digitization”): The fourth growth initiative and the

final Welch revolution Welch admits that at first he simply didnot see the Internet as a great transformer of businesses: “It did-n’t grab me with the intensity it should have.” He also said that

“two years from my retirement I was a Neanderthal [about theInternet], and now I’m gonzo.” But once he saw its power, hequickly became a convert “I just saw the power of it,” he said

“It will change every company’s culture.” In 2001, Welch saidthat e-Business represents the largest opportunity the companyhas ever seen He views the Internet as the “ultimate boundarybuster—the final nail in the coffin for bureaucracy at GE.”

Although Welch admitted that he did not get it at first, hisrhetoric suggests that he views e-Business as an initiative on apar with Six Sigma In 2001, he became a full-fledged fanatic,declaring that “e-Business is the elixir that came along andchanged the DNA of GE forever.” That language revealsWelch’s intensity and suggests that the e-Initiative wouldremain a primary focus of the company past Welch’s retire-ment in 2001

Welch explained why he was so committed to the e-Initiative.The new digital reality is far faster than the world that pre-ceded it In that arena, speed, one of Welch’s key imperatives, is

creating new opportunities If GE delayed, it risked “being cut out of [our] own market.” In 1999 and 2000, Welch hammered

the point home: “Digitization is transforming everything we

do, energizing every corner of the company, and making usfaster.” Thanks to the “elixir” that transformed the company,