The success story of Jack Welch
"I've learned that mistakes can often be as good a teacher as success." -- Jack Welch
He is one of the world's most admired and influential business leaders. A business strategist with a great vision, his business philosophy is a lesson for businesses across the globe. Meet Jack Welch who served as chairman and CEO of General Electric (GE) from 1981-2001. He transformed an ailing organization into one of the world's best companies.
Jack Welch was born in 1935. He received his BS degree in chemical engineering from the University of Massachusetts in 1957 and his MS and PhD degrees in chemical engineering from the University of Illinois in 1960.
1960 was a turning point in Welch's career. He joined General Electric as a chemical engineer in its 'plastics' division at a salary of $10,500 annually. He was elected the company's youngest vice president in 1972 and was named vice chairman in 1979. In April 1981, he became the 8th chairman and chief executive officer of GE.
Under his leadership, GE converted every opportunity into a business success. He gave managers a free hand in taking the right decisions which lead to faster growth and higher profits. With Welch at the helm, the company streamlined operations, acquired new businesses and made sure that every business under the GE family was among the best.
In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion. In 2000, the year before he left, the revenues stood at $130 billion. The company went from a market value of $14 billion to one of more than $410 billion at the time of his retirement, making it the most valuable and largest company in the world.
Face reality as it is, not as it was or as you wish it to be." -- Jack Welch
The only child of his parents, Jack came from a working-class background in Salem, Massachusetts. His father was a railroad conductor. As a child, Jack suffered from a stuttering problem which bothered him. But his mother told him that it was because he is very clever.
It was his mother who inculcated in him leadership qualities and confidence to take on the world. "If I have any leadership style, a way of getting the best out of people," says Welch, "I owe it to my mother. She was the most influential person in my life. Grace Welch taught me the value of competition, just as she taught me the pleasure of winning and the need to take defeat in stride," Jack Welch says in his autobiography.
Jack Welch's autobiography, an international best seller -- Jack: Straight from the Gut -- gives an insight into the man who made GE one of top ranking companies in the world.
"Great people, not great strategies, are what made it all work." -- Jack Welch
From an engineer to the post of the company's CEO, it was a daunting task for Welch. He had once decided to quit the company as he expected a bigger pay hike. While many acclaimed his decisions to streamline operations, there were criticisms too.
Jack Welch was dubbed 'Neutron Jack' (in reference to the Neutron bomb) for wiping out the employees while leaving the buildings intact, but was named Manager of the Century by Fortune magazine.
Amid all this, Welch went ahead with his decisions. His main idea was to make GE 'a people company' where ideas reigned supreme. He put in place a 'boundary-less' system where people from all levels of the company could participate in innovation and problem solving.
Welch focused on four basic initiatives: globalization, services, six-Sigma, and e-business, according to his autobiography. He travelled around the world making deals work for GE. Welch made more than 600 acquisitions and moved into emerging markets. The services division grew from $8 billion in 1995 to $19 billion in 2001 under Welch's leadership.
"My main job was developing talent. I was a gardener providing water and other nourishment to our top 750 people. Of course, I had to pull out some weeds, too." -- Jack Welch
Removing the company from bureaucratic shackles, he decided that every division must strive to be the top in their respective markets or shut down. In a move that was criticised by many, he introduced a strict performance evaluation system.
He asked 4,000 managers in the company to review their staff annually. They were asked to identify the top 20 percent of staff who should be encouraged and rewarded. They were also asked to mark the 70 percent who were strong workers and lastly they were asked to list out those people whose performance needed to be improved or laid off.
'The 'vitality curve' became a model for building a 'people factory' with the greatest talent in any corporation,' says Welch in his autobiography.
Within five years, thousands of people lost their jobs and several units were shut down. While many detested his ruthless style of functioning, GE's success story was a subject of discussion among the business circles. He was acclaimed for a great management style that ensured the rise and growth of an ailing company.
# "Strong managers who make tough decisions to cut jobs provide the only true job security in today's world. Weak managers are the problem. Weak managers destroy jobs." -- Jack Welch An organisation's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.
# Welch professed the four E's of leadership for business success: Energy, Energize, Edge, and Execution.
# Business leaders must always be able to lead and inspire and show the path for other to follow.
# Either perform to your best or leave.
# Speed an indispensable ingredient of competitiveness.
# Managers should learn to become team players.
# Work must be fun. No one should do a job that they don't like or enjoy doing.
# Confidence spells success. A confident workforce is the backbone of a successful organisation.
# One need to be among the top to survive. Be either No.1 or 2 in the respective markets or close down.
# Only new ideas can help improve business. Focus on new ideas, he encouraged brainstorming of ideas from all sections.
# Always stick to simple messages and simpler designs which can capture the market easily.
# Change is crucial for any business. The willingness to change is a strength.
# Focus on building a great team and sharing ideas.
Source : rediff.com