The Jack Welch Lexicon of Leadership phần 9 pot

For example, by insisting that all businesses benumber one or number two in their markets, Welch wasdeclaring a revolution against GE’s century old heritage.Throughout his tenure Welch s

Rationalization: The term used to describe how Welch

streamlined many GE businesses (Usually this meant ing the size of the payrolls.)

reduc-Rattlers: These are what GE called the more recognizable

problems at a Work-Out session, such as eliminating a formthat required multiple signatures for some reason that no onecould remember Unlike “pythons,” rattlers were far easier tofigure out

Reality: What every manager must face if they are going to

manage effectively Welch said that the art of managementcame down to facing reality and acting accordingly in the face

of that reality Time and again Welch showed his ability to size

up a situation and then devise a solution-oriented strategy or

initiative to deal with things as they really were (see also The Art of Managing).

Reality-Based Leadership: Throughout his 20 years

at the helm, Welch demonstrated a rare ability for seeingthings as they really were and a willingness to make the diffi-cult decisions demanded by the situation So many of Welch’ssignature strategies were sparked by his recognition of a par-ticular reality, problem, or weakness Work-Out, for example,was ignited by Welch’s discovery of a severe communicationgap between manager and employee (managers were not lis-tening to employees) In transforming GE, Welch did not havethe luxury of taking into account the feelings of GE insiders

or taking the pulse of the press After coming to grips with acertain reality, Welch would devise a strategy or initiative to

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deal with it and stand by stoically as criticism poured in Thathappened, for example, when Welch decided to sell off GE’sConsumer Business Division in the late 1980s (it was actually

a swap for a unit of a French company) One newspaperaccused the GE CEO of selling off an “American birthright,”not seeing the bigger picture of a number four or number fivebusiness that was in trouble

Rearchitecting: As part of Welch’s plan to create a new

and agile enterprise, he needed to blow up GE’s old ways,from its ancient bureaucracy to its centralized organization.Rearchitecting refers to the process of destroying the old anddesigning and building a new company In reinventing GE,Welch tore down what didn’t work and remade the companyinto a leaner, more agile organization

Relish Change: What every manager must do in order to

operate in today’s frenzied global marketplace It’s not enough

to accept change, says Welch Managers must relish it and ness its power Harnessing the power of change has alwaysbeen a prominent part of the GE values

har-Restructuring: One of Welch’s first strategies, it entailed

tearing down management layers and organizing for mum productivity Restructuring played a prominent role

maxi-during GE’s hardware phase (see also Hardware Revolution).

Reverse Mentoring (also called “Geek Mentoring,”

although Welch did not like this phrase): See GE e-Mentor Program.

Revolution: What Welch vowed to launch within days of

becoming GE’s eighth CEO Many of his signature programsand initiatives were indeed revolutions, as they signaled animportant shift in the way the company would operate in the

future Soon after taking over, Welch launched one revolutionafter another For example, by insisting that all businesses benumber one or number two in their markets, Welch wasdeclaring a revolution against GE’s century old heritage.Throughout his tenure Welch showed that he was never afraid

to take any action if he thought it would make GE a betterorganization

Rewards: Welch feels that aligning rewards with desired

behavior is one of the most important functions of a leader.This is why he tied 40 percent of the bonuses of senior man-

agers to results achieved with Six Sigma (see Bonuses and Six Sigma) Welch has spoken often of the importance of linking

reward systems and appraisal plans: “You’ve got to have areward system that reinforces your appraisal plan… If youdon’t… people can still con the appraisal.”

Root Cause Analysis: Another Six Sigma tool, root

cause analysis is used to discover the origins of mance with a process It is a visual technique for organizingand recording the causes of a problem Root cause analysishelps to define a problem, identify data requirements, identifycauses of the problem, and develop objectives for solutions

The Scientific Method: This management approach

called for the application of scientific methods to analyzework and complete production tasks efficiently It was themanagement method that was, in many ways, displaced at GEwhen Welch launched his many revolutions When Welchbecame CEO, the model of management that was in place hadessentially not changed in decades The scientific method,pioneered by Frederick Taylor in the early 1900s, treatedemployees like cogs in a machine whose primary function was

to perform tasks It was the organizational hierarchy that tated level of responsibility and one’s place in the corpora-tion For many years that model of management helpedsprawling corporations like General Motors (under Sloan)become more organized and better able to deal with their

dic-daunting size (see also Alfred Sloan and Bureaucracy).

By the late 1970s, however, the limits of that organizingmodel had become clear, as American corporations faltered inthe wake of a weak economy and increasing global competi-tion A new way of management thinking was needed, andJack Welch was the first major CEO to recognize it Welchchanged the paradigm, encouraging workers to speak out andcontribute to decision making With delayering and other actsdesigned to simplify the organization, he helped dismantlethe bureaucracy that had grown into the fabric of GE Withhis software phase, he sowed the seeds of a boundarylessorganization, which helped usher in a new self-actualizedorganization in which learning and ideas presided over hier-archy and convention

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Under Welch, more than 80 percent of GE workers believedthat their ideas were important to management (according tothe annual GE survey) Under Taylorism and the scientificmethod, that number would have likely not exceeded 10 per-cent That represented a huge departure from the way workersregarded management—and the workplace—prior to hisappointment.

THE SIGNIFICANCE OF DISPLACING

THE SCIENTIFIC METHOD

One enduring aspect of Welch’s legacy is likely to be how hisideas and methods helped eradicate many ideas associatedwith the scientific method of management The evolution ofWelch’s thinking, and the strategies and initiatives he fash-ioned in his quest to transform GE, helped stamp out

Taylorism at GE With each new phase, Welch put more andmore distance between the old ways (workers as cogs in amachine) and his new vision for an organization fueled byintellect and learning By making thought and ideas the cen-terpiece of the corporation, Welch created a new leadershipideal for other companies to emulate

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Service Initiative (see also Product Services): One of the

keys to reinventing GE When Welch took over, GE was largely

a manufacturing company Welch stressed service over facturing, sparking GE's transformation into a global serviceprovider, which helped fuel the company's double-digitgrowth Welch expressed his vision for GE as “a global servicecompany that also sells high quality products.” In 1980, serv-ice contributed only 15 percent of GE’s revenues In 2000,services (financial, information, and product services) deliv-ered 70 percent of the company’s revenues One of the drivingengines of that growth has been GE Capital Services, the

manu-financial services business that delivered about half of GE’srevenues in 2000 ($66 billion).

When launching the product services initiative in 1995, Welchstressed the importance of maintaining the quality of GE’sproducts Unless GE produced cutting-edge products of thehighest quality, its service business would suffer Perhaps,then, it was no coincidence that Welch embarked on the qual-ity initiative the same year as launching the product servicesinitiative It is the only instance of Welch launching two keyinitiatives in the same year

Service/Responsiveness Added: In the 1980s,

GE Plastics (the unit in which Welch got his start in 1960)viewed “service/responsiveness added” as a source of compet-itive advantage This construct fused several of GE’s themes,including attitude and commitment, service and support sys-tems (training, computer systems, etc.)

Session C: The demanding annual management appraisal

and succession planning reviews were called Session C

Involving thousands of managers from around the world,Session C is an exacting and lengthy review process (or self-assessment phase) that involves several steps over severalmonths Welch visits all of GE’s businesses and meets withsenior managers to discuss the achievements and needs of alltop tier managers It is Session C that determines who getspromoted, who receives stock options, etc

Shackles: What Welch said he wanted “to remove from the

feet” of GE employees Anything that held people down was

to be done away with In the 1980s, after implementing hishardware phase of restructuring, downsizing, and delayering,Welch worked to build back the confidence of the GE sur-vivors (those who had kept their jobs after downsizing and

“fix, close, or sell”) Welch launched his Work-Out initiative

in order to free employees and break down bureaucracy

Shareholder Wealth (or Share Owner

Wealth): Jack Welch created more shareholder wealth than

any CEO in history Since he assumed control of the company

in 1981, GE stock has climbed more than 3000 percent at anannual average compounded growth rate of 23 percent (com-pared with 896 percent and 12.2 percent respectively for theS&P 500) Put another way, GE was worth $13 billion in mar-ket capitalization in 1981 In 2000, GE became the first com-pany ever to break the $600 billion barrier (before falling backbelow $500 billion in 2001) Welch takes great pride in the factthat GE’s largest shareholder is its employees In 2001, Welchsaid GE employees owned some $35 billion in stock (and thatgroup includes hourly workers as well)

Silos: When Welch took over, he worked to eliminate GE’s

silo-like structure and closed mentality Each department acted as

an independent “silo”: manufacturing did not talk to sales,marketing did not talk to engineers, etc With programs andinitiatives like Work-Out and boundaryless, Welch worked tobreak down the walls that separated different groups within

GE Only by freeing people, Welch determined, would GEhave the chance to become a world class competitor

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Simplicity: The tenet that “business is simple” is one of

Welch’s most fundamental beliefs After all, “this isn’t rocketscience,” insisted the GE chairman in the 1980s To further hispoint, Welch has said that if you gave the same information to

a group of business people, they would likely come up withthe same answer to any problem put before them Simplicityand informality have been constants throughout Welch’syears, and he has frequently spoken about the importance of

these two qualities He has said that simplicity requires mous self-confidence.” Simplicity and confidence are essential

“enor-in a learn“enor-ing organization, and many of Welch’s signatureprograms were aimed at instilling confidence while simplify-ing the organization

THE ORIGINS OF SIMPLICITY

The origins of Welch’s yearning for simplicity can be tracedback to his first days at GE in 1960 He explains that he started

in a place in GE in which he was “like the only employee.”Certainly things are simpler when you are a part of a smallteam with no bureaucracy Welch loved those early days inplastics and strove to instill that sense of excitement into therest of the company From his first days as CEO, he stressed theimportance of simplicity and worked to instill that trait intothe fabric of the company The hardware phase was chock full

of Welch actions that simplified the company: his ThreeCircles strategy focused all of GE’s businesses into three areas(Core, Technology, and Service) Delayering simplified theorganizational structure By eliminating strategic planners andremoving several needless layers of management, Welch made

GE a simpler and more straightforward place

SIMPLICITY AND THE WELCH INITIATIVES

Simplicity played a role in at least one of Welch’s major panywide initiatives The central idea that drove GE’s Work-Out program was to make the company a simpler place Byeliminating tedious and unnecessary work and procedures,

com-GE streamlined its operations while boosting the level of trustand self-confidence in the organization

Simplicity lessons

1 Never stop simplifying: Most organizations are too complicated

and would likely benefit from a simplicity make-over.

Convoluted forms, archaic processes, and overly complex

proce-dures slow companies down Consider putting together a task force to tackle this important issue.

2 Start Work-Out at your company: Work-Out played a vital role

in eliminating many of the most ludicrous procedures at GE Consider holding Work-Out sessions in order to eradicate need- lessly complex practices and procedures.

3 Simplify the organizational structure: When Welch took over,

GE was drowning in layers of management, antiquated tions, and a bloated bureaucracy Welch simplified the organiza- tion by focusing it around three key areas and eliminating departments and layers These streamlining efforts helped make

tradi-GE a far more productive organization.

Simplification: In the mid-1990s, Welch launched another

companywide initiative called simplification Although it

never caught on like his other initiatives (such as Work-Out),

it represented an important ideal Welch’s goal was to complicate everything we do and make at GE.” This entailedmany types of boundaryless-type behavior, such as simplify-ing all communications and eliminating confusing jargoninside GE’s walls Engineers would produce simpler designswith less confusing charts, and presentations to customerswould be simpler Welch felt that simplification would deliversignificant benefits to the company, including increased speedand enhanced quality One of the reasons this initiative didnot endure as a centerpiece initiative was its timing It waslaunched in 1994, the year before Six Sigma became Welch’sobsession

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Six Sigma: Welch’s quality revolution and the most

sweep-ing of all GE initiatives He considers it a “badge of honor”that GE learned Six Sigma from Motorola, although theimplementation of the program was vintage Welch: “The

used to measure customer satisfaction on a 1 to 5 scale (See also

CTQ and Outside-In Perspective.)

5 Align managers’ bonuses and other benefits to results ated with Six Sigma: At GE, Six Sigma training and fluency is a

associ-key issue in hiring and promoting and has also become a associ-key component of the incentive program Welch made 40 percent of the bonuses of his top managers (7000 in number) dependent

on results achieved with Six Sigma Welch has always spoken of the importance of making sure that executive incentive pro- grams were linked to the results the company sought.

Six Sigma Benefits: These include reductions in costs,

defects, and cycle time, as well as improvements in ity, market-share growth, and product and service develop-ment All of these benefits may explain why Welch has

productiv-become a “passionate lunatic” about the quality movement

Six Sigma Coach: The technical expert who plays a

con-sultative role to Process Owners and Six Sigma improvementteams This individual establishes schedules, settles teamconflicts, analyzes data, and validates results The coach acts

as a consultant, helping to decide on people’s roles in ing out a Six Sigma project A Six Sigma coach often providesassistance on a number of other key matters, including com-municating with the project Sponsor and leadership group,dealing with resistance, estimating the potential and validat-ing results, and helping teams to promote and celebrate theirsuccesses Not to be confused with GE Six Sigma QualityCoach, the web-based support system

carry-Six Sigma Quality: Welch’s vision for GE, carry-Six Sigma

quality means near-perfection in products and quality Welchcalls Six Sigma quality “the greatest fulfillment engine everdevised.” GE traces the origins of Six Sigma to Work-Out, theprocess that opened GE’s culture in the 1980s That process