Tom's Tech Toys: Jack Welch

May 10, 2004

Jack Welch

Notes on Jack Welch's interview at the World Business Forum.

He is itching to do something, but prob not as CEO
Prob of finding CEOs of major corps is a failure of existing mgt on succession planning, and grooming talent
Strategy is leaders first, strategy second
Too many ceos get involved in the details of the biz - get promoted, but still do old job - shd focus more on people development, big picture
His job: get in the skin of everyone at the co, understand them
Have a few important initiatives, repeat over and over
Live with the people, every day
People are the whole game - get that right, everything else easy
More that 50% of his time evaluating people
He always walked factory floor, had lunch w the union leader
Get good people, measure them
5 e's: Energy, energize others, edge (make decisions), execute, emotion - care more about people
Winning is good, real good, greatest thing for this society, drives economy

Tipoff for failure of people: cared more about self than org
Size of office, pomposity, need for authority, all red flags

When he started, had oppty to see both great biz and crappy biz. Must feed the opportunities, starve or find homes for the crappy ones.

Biggest kick is seeing people succeed. Like raising kids. Huge rush, straight in the veins, people becoming successful.

Practice of getting rid of bottom 10%? Prob is lack of candor in orgs. Hardly anybody gets real between-the-eyes appraisals. Huge problem of false kindness - honest appraisal is the kindest thing to do.
With a candid appraisal system: top 20%, middle 70%, then bottom 10%. Hang on to top, tell mid how to get to top, but bottom 10 can't spend a lot of time on. Tell them they are there, and they will prob leave to find a better home.
Never pass an oppty to write down an appraisal with a bonus or event
Greatest and kindest thing is to let everyone know exactly where they stand.

If you don't share the beliefs of your org, get out. Being frustrated stinks.

He is working in nyc schools, principals leadership schools, getting principals to think of themselves as ceos. Some opposition from unions, but principals are great.

Preach every day: advantage of big co is can take big swings (risks) wo killing the co. Most big cos just manage their size, not use it. They are slower than startups, and most don't use their advantage of size and risk ability vs startups.

On R&D: 25% on pure research, 75% on improving existing prods. New ceo is doing more.

His theory on corp scandals: a few bad apples. Virtually all were cos that were new, or changed dramatically. So they didn't have the processes and culture to keep things in control.

Offshoring: opposing it is the dumbest argument ever put out. Protectionism is in vogue in election years. The US must remain competitive, numbers prove it. Remember Ross Perot and "giant sucking sound" in 91, never happened. Stopping 2 jobs from going overseas will kill 20 here.

360 evals work the first time, maybe second time. Then system falls apart, people get it. Ask yourself, do we have candor in this org? Does everyone know where they stand?

Nobody he ever asked to leave was surprised.

Mistakes he's made: record at picking people was at below 50% when he started, got up to 75-80%, but still a lot of failures. On biz, his system didn't work for kidder peabody, culture clash. Didn't buy a high tech company because he didn't want to explain to factory workers in Cleveland why SV engrs get twice as much.

Stock options are a wonderful way to differentiate. Another way to get candor into the org. Good news for those not getting opts: can go to mgr and ask how to become one of the best.

Who you put in to lead what is important is more important than any speeches. All emps can rank the mgrs better than you can, if a turkey is in charge everyone will ignore it. So six sigma was run by the best. Then options went to six sigma folks (made sure best were in the program).

Top 1 or 2 in every market, but biz units would narrow the markets to be #1. Solution: Don't have more than 10% share in any market - don't allow it. Expand the market for growth - this chg made growth jump from single digits to double.

When doing a 1-2 day bus review, use these charts:
What is compet field, and mkt share in it
What have done in last year to chg shape of chart
What are you scared of in next 12 mos, what can you do to ace them out
Eval management. Bring in six sigma managers to tell stories of quality. Could see 100 people. Take their ideas to the next plant.
Always look at the people directly and ask them questions.

Made his leaders teach. Had 3 week courses for several thousand emps per quarter. Bring in live examples of leaders from GE and use live biz models. Transfers lots of ideas and practices. At every quarterly mtg of top mgrs, agenda item of best generic idea to share.

How to create cultures: have beliefs, stick to them. Hierarchy is half luck, half practice. Don't care where you are, give people voice and dignity, you'll be okay, in any culture. Don't be a horse's ass.

He was always a sponge, learning from everyone. NIH is the worst disease. He learned from other ceos, eg sam walton. Every company is proud of what they do best. They will be thrilled to tell you all about it.

Posted by ts at May 10, 2004 11:30 AM

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