Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while. – Jack Welch

NEXT on our agenda in reviewing the topic of leadership, is to have a look at some of the philosophies, practices and performances of a few successful leaders in the business arena. Let me hastily warn you though — some leaders that have had successful careers have used some unorthodox and sometimes controversial practices.

For example, Jack Welch, whom we will start off with, had a seemingly weird evaluation style for his executives. Note that at one point General Electric was involved in 12 disparate businesses, and so the heads of those businesses were effectively senior CEOs in their own rights.

At the end of each year Welch would rank all his top managers against each other and categorise them into the top 20 per cent, the bottom 10 per cent and the middle 70 per cent. For the top 20 per cent, he would incentivise them with significant pay increases, praises, stock options and bonuses. The middle 70 per cent would benefit from coaching and other significant leadership development interventions, with the idea being to create a platform for them to get into the top 20 per cent.

The bottom 10% he would fire!

Now that is controversial! What happened after a while though was that GE became such a high performance organisation that at one point it was the most valuable company in the world. Not only that, they had such talented managers that other companies wanting a great manager knew they could get one from GE.

The 1998 article How Jack Welch Runs GE stated, “The company boasts what most headhunters believe to be the most talent-rich management bench in the world.”

Jack Welch – iconic leader of General Electric

Jack Welch’s autobiography Jack – Straight from the Gut, reveals a young man with a Phd in chemistry becoming the youngest chairman and CEO of GE in 1981. Over his 20-year tenure, he made GE the most valuable company in the world while increasing its market capitalisation by more than US$450 billion!

Another point that impressed me about Jack Welch was the percentage of his time (more than half), that he deliberately, consciously spent on people issues — developing, motivating and energising his people. This was demonstrated by him being a lecturer himself on GE’s leadership development programmes, and by him knowing the names and individual situations of his 1,000 top managers!

In the article, Twelve Lessons from Jack Welch’s Leadership Style, on the website vietnamworks.com, the author declared, “While most leaders talk a good game on leadership, he lived it.” For the MBA Forum, we will review a few of the 12 lessons:

Don’t tolerate bureaucracy, blow it up!

Bureaucracy can make the decision-making process of an organisation as speedy as flowing molasses! It clogs the organisation’s processes and reduces competitiveness. According to the article, “Bureaucracy can be the most stubborn disease, but we can simplify and remove complexity and formality to make a company more responsive and agile.”

Actually, in his early days Welch got the nickname Neutron Jack when he reduced GE staff from over 400,000 to about 300,000! That is one side effect of reducing bureaucracy! However you typically end up with a leaner, more efficient corporation. That is if structures and procedures are also changed.

Face reality, stop assuming

I worked once with a manager that was called Good News Mike. He did not like to hear bad news — so his staff was reluctant to inform him when things were not going well. Many of us do not like to face reality.

I remember once when I was very young and working for this organisation and the management team did not want to face the reality that the company had to make a radical change or it would be doomed.

Finally, the day came (shortly before the “ship” sank) when the managing director called a general staff meeting and started off like this, “Well the writing was always on the wall… and if you did not see the writing, you must have seen the wall!”

I have already spoken about ass/u/me! I nearly lost my job as a youngster after “assuming”, but my manager taught me how the word was spelt and what it meant! Nowadays I try not to do it!

Simplify things

Many Jamaicans hate maths, but one of its benefits is that it trains you to simplify! Many times we get in a tangle and actually make poor decisions because we view the problem as one single, unified, complex, complicated monster.

Break it apart!

By the way, do you know the real meaning of the word ‘analysis’? It “is the process of breaking a complex topic or substance into smaller parts in order to gain a better understanding of it” (Wikipedia). Welch worked diligently to simplify the workplace — even simplifying such things as meetings and memos.

Change – an opportunity, not a threat

The problem is, resistance to change still stubbornly clings to the people in organisations. Organisations therefore need to steadily change the culture so that people realise that change is here to stay!

General Electric was one of the first companies of its size which wholeheartedly took on the Six Sigma quality programme. I have spoken in the past about simple business process improvements. Six Sigma is much more structured and requires much more discipline.

Let me quote directly from GE — “Six Sigma is a highly disciplined process that helps us focus on developing and delivering near-perfect products and services” (www.ge.com/sixsigma/SixSigma.pdf). Rolling out this programme meant massive changes to how GE did its business. Under Welch’s philosophy of embracing change as an opportunity, GE became a success story of Six Sigma.

Lead by energising others, not managing by authority

Welch’s leadership style was to inspire others to want to perform. He did not believe in intimidation. When he had a key visionary message, he did not just tell it to his few top-level executives. He repeated it often, every chance he got, so that the message went deep into the hierarchy of his 300,000 GE employees.

Dr Kenroy Wedderburn, is an MBA part-time lecturer. Send your e-mails to drkwedderburn@gmail.com.