Recommended
More Related Content
What's hot
What's hot (20)
Viewers also liked
Viewers also liked (20)
Similar to Leadership Lessons
Similar to Leadership Lessons (20)
Recently uploaded
Recently uploaded (20)
Leadership Lessons
- 1. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise Lessons from the legendary former CEO of GE, whose management innovations have made him the most influential CEO of his era © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
- 2. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise • GE Success Story: Flash Points • 25 Lessons from Jack Welch Lead More, Manage Less Build a Winning Organization Harness Your People for Competitive Advantage Build a Market-Leading Company © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
- 3. Management by Leadership: Success Story Jack Welch Welch’s Seven-Point Program for Management by Leadership 1000ventures.com GE Market Capitalization US$13 billion US$500 billion 2000 Jack Welch steps down as CEO of GE 1981 Jack Welch appointed as CEO of GE 1. Develop a vision for the business 2. Change the culture to achieve the vision 3. Flatten the organization 4. Eliminate bureaucracy 5. Empower individuals 6. Raise quality and efficiency 7. Eliminate boundaries
- 4. Leading Organizational Transformation Creating an Extraordinary Organization Leading Change through the GE's Organization Redesigning the role of the leader in the new economy: creating followers through communicating a vision, and establishing open, caring relations with every employee Creating an open, collaborative workplace where everyone's opinion is welcome Empowering senior executives to run far-flung businesses in entrepreneurial fashion Liberating the workforce; making everybody a participant through improving vertical communication and employee empowerment Welch’s prescription for winning in business 1. Speed 2. Simplicity 3. Self-confidence More information at 1000ventures.com: “Jack Welch – a Corporate Change Leader”
- 5. Jack Welch – Corporate Change Leader Welch’s Trademark Messages Business is simple. Don't make business overly complicated. Face reality, then act decisively. Don't be afraid of change. Change before you have to. Fight bureaucracy. Use the brains of your workers. Discover who has the best ideas, and put those ideas into practice. 1000ventures.com
- 6. Leadership Development at GE A Strategic Duty of All Senior Leaders GE Leadership Assessment Survey (LES): Characteristics 1. Vision 2. Customer / Quality Focus 3. Integrity 4. Accountability / Commitment 5. Communication / Influence 6. Shared Ownership 7. Team Builder / Empowerment 8. Knowledge / Expertise / Intellect 9. Initiative / Speed 10. Global Mind-set Four Essential Tasks 1. Recognize the importance of leadership to your business success 2. Have in place a specific process for developing leadership talent 3. Define leadership attributes behaviorally, for the benefit of future leaders 4. Use the leadership competencies stipulated in the Leadership Effectiveness Survey (LES) to integrate a number of management practices with the purpose of building quality of leadership. More information at 1000ventures.com: “GE’s Leadership Assessment Survey (LES)”
- 7. Shared Corporate Values GE Values Guide GE Leaders... Always with Unyielding Integrity: Have a Passion for Excellence and Hate Bureaucracy Are Open to Ideas from Anywhere... and Committed to Work-Out Live Quality... and Drive Cost and Speed for Competitive Advantage Have the Self-Confidence to Involve Everyone and Behave in a Boundaryless Fashion Create a Clear, Simple, Reality-Based Vision... and Communicate It to All Constituencies Have Enormous Energy and the Ability to Energize Others Stretch... Set Aggressive Goals... Reward Progress... Yet Understand Accountability and Commitment See Change as Opportunity... Not Threat Have Global Brains... and Build Diverse and Global Teams More information at 1000ventures.com: “Shared Values”
- 8. Lessons from Jack Welch The 4 E’s of Leadership Execution They are action-oriented, and are focused on getting results Energize They energize teams, and don't intimidate them Edge They have a competitive edge and a will to win Energy They have tremendous personal energy 1000ventures.com
- 9. “Shun the incremental and go for the leap“ Going for the leap • Diversification • Venture investing • Acquisitions GE Growth Strategies - Jack Welch Shining the incremental • Lean organization • GE Work-Out • Quality Management: Six Sigma More information at 1000ventures.com: “Sustainable Growth Strategies”
- 10. Strategy Formulation GE Multifactor Business Portfolio Matrix “Companies win when their managers make a clear and meaningful distinction between top- and bottom-performing businesses and people, when they cultivate the strong and cull the weak.” – Jack Welch 1000ventures.com Invest / Grow Invest / Grow Invest / Grow Selective Investment Harvest / Divest Harvest / Divest Harvest / Divest LOW MEDIUM HIGH Industry Attractiveness HIGH MEDIUM LOW Business Position Source: GE & McKinsey & Co. Selective Investment Selective Investment
- 11. Quality Management: Six Sigma Case in Point: Impact of Six Sigma Implementation at GE Results achieved over the first two years (1996-1998) 11% 13% 14% 17% Revenue increased Profits increased Earning per share increased Operating margins increased More information at 1000ventures.com: “Six Sigma”
- 12. Six Sigma Implementation at GE Making the Six Sigma Process Work Four MAIC Steps 1. Measure 2. Analyze 3. Improve 4. Control Five Corporate Measures 1. Customer Satisfaction 2. Cost of Poor Quality 3. Supplier Quality 4. Internal Performance 5. Design for Manufacturability Everyday Six Sigma Plant managers can use Six Sigma to reduce waste, improve product consistency, solve equipment problems or create capacity. Human resources managers can use it to reduce the cycle time for hiring employees. Regional sales managers can use it to improve forecast reliability, pricing strategies or pricing variation.
- 13. GE Work-Out Creating the Spirit of a Start-Up Firm in a Large Enterprise At GE, Work-Out "Town Meetings" gave the corporation access to an unlimited resource of imagination and energy of its talented employees. 1000ventures.com With Work-Out as part of its DNA, GE has become one of the most innovative, profitable, and admired companies on earth. Key Benefits of the Work-Out Reduces bureaucracy Empowers people Continuously reinvents ever-more- effective ways of doing business Work-Out’s Four Major Goals 1. Build trust 2. Empower employees 3. Eliminate unnecessary work 4. Create a new paradigm
- 14. GE Work-Out Seven Steps to Implement Work-Out 1. Chose the issues to be discussed. 2. Select the appropriate cross-functional team to tackle the problem. 3. Chose a "champion" who will see any Work-Out recommendation 1000ventures.com through to implementation. 4. Let the team meet for three days, drawing up recommendations to improve your company's processes. 5. Meet with managers, who make decisions on the spot about each recommendation. 6. Hold more meetings as required to pursue the implementation of the recommendations. 7. Keep the process going, with these and other issues and recommendations.
- 15. Corporate Investing in External Ventures No of Ventures Invested 0 300 GE Venture Strategies 600 1995 2000 2005 Nature of Venture Investments (2002) 15% 85% Strategic Value Investments Investments in Areas Unrelated to GE • Established in 1995, General Electric (GE) Equity, a business unit within GE Capital, invests around $1.5 billion annually in external ventures • GE Equity invests an average of $3 million to $5 million in each of companies, and it gets somewhere between 5 and 11% of each venture • 85% of investment are strategic value investments that help GE businesses grow and are done jointly with one of them More information at 1000ventures.com: “Corporate Venture Investing”
- 16. Corporate Venture Investing: GE Equity Success Factors Highly Disciplined Business Management System (BMS) • rigorous examination approach based on decision and probability theories checklist in the world of corporate venture investing 1000ventures.com Qualities of Top Managers Qualities of Top Managers Critical to Success Critical to Success • they are visionary leaders • they are visionary leaders aiming at building a world-class, aiming at building a world-class, global, private equity global, private equity organization organization • each of them is a • each of them is a remarkable hybrid of corporate executive and venture capitalist remarkable hybrid of corporate executive and venture capitalist • they practice and lead a • they practice and lead a highly disciplined approach to project selection and portfolio management highly disciplined approach to project selection and portfolio management Highly Disciplined Business Management System (BMS) • rigorous examination procedure procedure • systematic investment • systematic investment approach based on decision and probability theories • the most onerous due-diligence • the most onerous due-diligence checklist in the world of corporate venture investing • portfolio management system • portfolio management system
- 17. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise • GE Success Story: Flash Points • 25 Lessons from Jack Welch Lead More, Manage Less Build a Winning Organization Harness Your People for Competitive Advantage Build a Market-Leading Company © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
- 18. Management by Leadership 25 Lessons from Jack Welch 6. Energize others 7. Face reality 8. See change as an opportunity 9. Get good ideas from everywhere 10. Follow up 1000ventures.com LEAD MORE, MANAGE LESS 1. Lead 2. Manage less 3. Articulate your vision 4. Simplify 5. Get less formal BUILD A WINNING ORGANIZATION 11. Get rid of bureaucracy 12. Eliminate boundaries 13. Put values first 14. Cultivate leaders 15. Create learning culture HARNESS YOUR PEOPLE 16. Involve everybody 17. Make everybody a team player 18. Stretch 19. Instill confidence 20. Have fun BUILD THE MARKET-LEADING COMPANY 24. Live speed 25. Behave like a small company 21. Be number 1 or number 2 22. Live quality 23. Constantly focus on innovation
- 19. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise • GE Success Story: Flash Points • 25 Lessons from Jack Welch Lead More, Manage Less Build a Winning Organization Harness Your People for Competitive Advantage Build a Market-Leading Company © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
- 20. Lead More, Manage Less: Lesson 1 Lead Managers muddle – leaders inspire. Leaders are people who inspire with clear vision of how things can be done better. "What we are looking for are leaders at every level who can energize, excite and inspire rather than enervate, depress, and control." Managers muddle – leaders inspire. Leaders are people who inspire with clear vision of how things can be done better. "What we are looking for are leaders at every level who can energize, excite and inspire rather than enervate, depress, and control." Create a vision and then ignite your organization to make this vision a reality Focus on strategic issues Don't micromanage Involve everyone and welcome great ideas from everywhere Lead by example More information at 1000ventures.com: “Effective Leadership”
- 21. Lead More, Manage Less: Lesson 2 Manage Less "We are constantly amazed by how much people will do when they are not told what to do by management." In the new knowledge-driven economy, people should make their own decision. Managing less is managing better. Close supervision, control and bureaucracy kill the competitive spirit of the company. "Weak managers are the killers of business; they are the job killers. You can't manage self-confidence into people." "We are constantly amazed by how much people will do when they are not told what to do by management." In the new knowledge-driven economy, people should make their own decision. Managing less is managing better. Close supervision, control and bureaucracy kill the competitive spirit of the company. "Weak managers are the killers of business; they are the job killers. You can't manage self-confidence into people." Don't get bogged down in overmanaging Don't hold information close to your chest Inspire, empower, and get out of the way 1000ventures.com
- 22. Lead More, Manage Less: Lesson 3 Articulate Your Vision "Leaders inspire people with clear visions of how things can be done better." The best leader do not provide a step-by-step instruction manual for workers. The best leaders are those who come up with new idea, and articulate a vision that inspires others to act. "Leaders inspire people with clear visions of how things can be done better." The best leader do not provide a step-by-step instruction manual for workers. The best leaders are those who come up with new idea, and articulate a vision that inspires others to act. Create and project a clear vision Articulate a few clear stretch goals for your company Make sure you have the very best people to carry your vision out. More information at 1000ventures.com: “Vision, Mission, Goals”
- 23. Lead More, Manage Less: Lesson 4 Simplify 1000ventures.com Keeping things simple is one of the keys to business. Have the courage to be simple. Simplicity is practically an art form, with many definitions. "Simple messages travel faster, simpler designs reach the market faster and the elimination of clutter allows faster decision making." Keeping things simple is one of the keys to business. Have the courage to be simple. Simplicity is practically an art form, with many definitions. "Simple messages travel faster, simpler designs reach the market faster and the elimination of clutter allows faster decision making." Don't make business harder than it is Think simply to create a clear vision Make your messages simple Build self-confidence Simplify your workplace and communications Make meeting simpler
- 24. Lead More, Manage Less: Lesson 5 Get Less Formal 1000ventures.com "You must realize now how important it is to maintain the kind of corporate informality that encourages a training class to comfortably challenge the boss's pet ideas." "You must realize now how important it is to maintain the kind of corporate informality that encourages a training class to comfortably challenge the boss's pet ideas." Take the "Boss Element" our of your company Keep formality and rigidity out of the office Hold more informal meetings Find simple ways to loosen things up Brainstorm with bosses and colleagues frequently Organize a once-in-a-while informal get together
- 25. Lead More, Manage Less: Lesson 6 Energize Others 1000ventures.com Genuine leadership comes from the quality of your vision and your ability to spark others to extraordinary performance. Getting employees excited about their work is the key to being a great business leader. "We now know where productivity - real and limitless productivity - comes from. It comes from challenged, empowered, excited, rewarded teams of people." Genuine leadership comes from the quality of your vision and your ability to spark others to extraordinary performance. Getting employees excited about their work is the key to being a great business leader. "We now know where productivity - real and limitless productivity - comes from. It comes from challenged, empowered, excited, rewarded teams of people." Live action all day Allow employees more freedom Give employees more responsibility Never lead by intimidation Let people know how their efforts are helping your organization Send handwritten thank-you notes
- 26. Lead More, Manage Less: Lesson 7 Face Reality 1000ventures.com Face reality, then act decisively. Most mistakes that leaders make arise from not being willing to face reality and then acting on it. Facing reality often means saying and doing things that are not popular, but only by coming to grips with reality would things get better. Face reality, then act decisively. Most mistakes that leaders make arise from not being willing to face reality and then acting on it. Facing reality often means saying and doing things that are not popular, but only by coming to grips with reality would things get better. Accept the truth Own up the reality, don't bury your head in the sand See things as they are, not as you wish them to be Look at things with a fresh eye every day Look at your situation as an outsider Play scenarios
- 27. Lead More, Manage Less: Lesson 8 See Change as an Opportunity Change is a big part of the reality in business. "Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while... Keeping an eye out for change is both exhilarating and fun." Change is a big part of the reality in business. "Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while... Keeping an eye out for change is both exhilarating and fun." It's nonsense to fear change Adapt your management style Spark other to deal with change Deal with change in a proactive manner Defy tradition Think short-term and long-term change Reinvent your business constantly More information at 1000ventures.com: “Change Management”
- 28. Lead More, Manage Less: Lesson 9 Get Good Ideas from Everywhere 1000ventures.com New ideas are the lifeblood of business. "The operative assumption today is that someone, somewhere, has a better idea; and the operative compulsion is to find out who has that better idea, learn it, and put it into action - fast." New ideas are the lifeblood of business. "The operative assumption today is that someone, somewhere, has a better idea; and the operative compulsion is to find out who has that better idea, learn it, and put it into action - fast." Ideas can be from any source Cross-pollinate Develop a pervasive and insatiable thirst for good ideas Study competitors Plagiarize – it's legitimate
- 29. Lead More, Manage Less: Lesson 10 Follow Up 1000ventures.com Follow up on everything. Follow-up is one key measure of success for a business. Your follow-up business strategy will pave the way for your success. Follow up on everything. Follow-up is one key measure of success for a business. Your follow-up business strategy will pave the way for your success. Demonstrate relentless consistency in everything When you call a meeting, see if its goals are achieved Harp on a few key themes and repeat them over and over Expand your communication to reach a critical mass Be consistent – consistently!
- 30. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise • GE Success Story: Flash Points • 25 Lessons from Jack Welch Lead More, Manage Less Build a Winning Organization Harness Your People for Competitive Advantage Build a Market-Leading Company © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
- 31. Build a Winning Organization: Lesson 11 Get Rid of Bureaucracy 1000ventures.com The way to harness the power of your people is "to turn them loose, and get the management layers off their backs, the bureaucratic shackles off their feet and the functional barriers out of their way." The way to harness the power of your people is "to turn them loose, and get the management layers off their backs, the bureaucratic shackles off their feet and the functional barriers out of their way." Bureaucracy is the enemy. It hates change, is terrified by speed and hates simplicity Drop unnecessary work Delayer, create a flat responsive organization Cross-pollinate to make faster and better decisions Encourage employees to identify problems and come up with solutions Make your workplace more informal
- 32. Build a Winning Organization: Lesson 12 Eliminate Boundaries In order to make sure that people are free to reach for the impossible, you must remove anything that gets in their way. "Boundarylessness" describes an open organization free of bureaucracy and anything else that prevents the free flow of ideas, people, decisions, etc. Informality, fun and speed are the qualities found in a boundaryless organization. In order to make sure that people are free to reach for the impossible, you must remove anything that gets in their way. "Boundarylessness" describes an open organization free of bureaucracy and anything else that prevents the free flow of ideas, people, decisions, etc. Informality, fun and speed are the qualities found in a boundaryless organization. Eliminate boundaries between management layers Eliminate boundaries between people Seek out ideas from everyone Harness the power of diversity Never stop eliminating boundaries 1000ventures.com
- 33. Build a Winning Organization: Lesson 13 Put Values First 1000ventures.com Play up the "soft stuff" – the company's values and culture. Don't focus too much on the numbers. "Numbers aren't the vision; numbers are the products." Focus more on the softer values of building a team, sharing ideas, exciting others. Play up the "soft stuff" – the company's values and culture. Don't focus too much on the numbers. "Numbers aren't the vision; numbers are the products." Focus more on the softer values of building a team, sharing ideas, exciting others. Don't focus too much on numbers Let values rule Live values Emphasize your company's values and culture Part your company with those who don't live the values of your company
- 34. Build a Winning Organization: Lesson 14 Cultivate Leaders 1000ventures.com Building a leader pipeline is essential to the health of your company and it therefore is a strategic duty of the senior leader. Cultivate leaders who have the four E's of leadership: Energy, Energize, Edge, and Execution; leader who share values of your company and deliver on commitments. Building a leader pipeline is essential to the health of your company and it therefore is a strategic duty of the senior leader. Cultivate leaders who have the four E's of leadership: Energy, Energize, Edge, and Execution; leader who share values of your company and deliver on commitments. Build self-confidence Look for team players Look for coaches Help them build their cross-functional expertise Measure performance of the leader pipeline
- 35. Build a Winning Organization: Lesson 15 Create a Learning Culture 1000ventures.com Turn your company into a learning organization to spark free flow of communication and exchange of ideas. "The desire, and the ability, of an organization to continuously learn from any source, anywhere – and to rapidly convert this learning into action – is its ultimate competitive advantage." Turn your company into a learning organization to spark free flow of communication and exchange of ideas. "The desire, and the ability, of an organization to continuously learn from any source, anywhere – and to rapidly convert this learning into action – is its ultimate competitive advantage." Don't think that you or your company have all the answers Make intellect rule Make learning a top priority Create an operating system that drives knowledge and learning throughout the company Make important information easily available to everybody Create a culture where ideas are translated into action and results
- 36. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise • GE Success Story: Flash Points • 25 Lessons from Jack Welch Lead More, Manage Less Build a Winning Organization Harness Your People for Competitive Advantage Build a Market-Leading Company © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
- 37. Harness Your People for Competitive Advantage: Lesson 16 Involve Everyone 1000ventures.com Business is all about capturing intellect from every person. The way to engender enthusiasm it to allow employees far more freedom and far more responsibility. Business is all about capturing intellect from every person. The way to engender enthusiasm it to allow employees far more freedom and far more responsibility. Start with yourself Encourage people to take initiative Establish a meritocracy in your company Use the brains of every worker Create an atmosphere where workers feel free to speak out
- 38. Harness Your People for Competitive Advantage: Lesson 17 Make Everybody a Team Player Every leader has both a task to complete and a team to lead. Leaders must not only produce their personal best. The leader must work as the team member who gets the top results from the whole team. Managers should learn to become team players. Middle managers have to be team members and coaches. Take steps against those managers who wouldn't learn to become team players. Every leader has both a task to complete and a team to lead. Leaders must not only produce their personal best. The leader must work as the team member who gets the top results from the whole team. Managers should learn to become team players. Middle managers have to be team members and coaches. Take steps against those managers who wouldn't learn to become team players. Set up a shared and worthwhile goal Behave positively Help junior executives become future great leaders Build diverse cross-functional teams Facilitate cross-pollination of ideas Part your company with those who won't play as part of a team 1000ventures.com
- 39. Harness Your People for Competitive Advantage: Lesson 18 Stretch! 1000ventures.com Stretch is a goal or challenge that is significantly beyond the organization's current performance level. Stretch targets energize. "We have found that by reaching for what appears to be the impossible, we often actually do the impossible; and even when we don't quite make it, we inevitably wind up doing much better than we would have done." Stretch is a goal or challenge that is significantly beyond the organization's current performance level. Stretch targets energize. "We have found that by reaching for what appears to be the impossible, we often actually do the impossible; and even when we don't quite make it, we inevitably wind up doing much better than we would have done." Stretch your business strategy Stretch yourself Ask managers and employees to reach for their dreams Reward business leaders even for falling short of a stretched goal Don't abuse stretch – make sure that you do the right stuff Keep stretching
- 40. Harness Your People for Competitive Advantage: Lesson 19 Instill Confidence Create a truly confident workforce. Confidence is a vital ingredient of any learning organization. The prescription for winning is speed, simplicity, and self-confidence. Self-confident people are open to good ideas regardless of their source and are willing to share them. "Just as surely as speed flows from simplicity, simplicity is grounded in self-confidence." Create a truly confident workforce. Confidence is a vital ingredient of any learning organization. The prescription for winning is speed, simplicity, and self-confidence. Self-confident people are open to good ideas regardless of their source and are willing to share them. "Just as surely as speed flows from simplicity, simplicity is grounded in self-confidence." Encourage employees to look well ahead Turn people loose Simplify the workplace Provide training and coaching Let people know that you value their ideas Give people independence and resources Encourage people to take big swings 1000ventures.com
- 41. Harness Your People for Competitive Advantage: Lesson 20 Make Business Fun 1000ventures.com Fun must a big element in your business strategy. No one should have a job they don't enjoy. If you don't wake up energized and excited about tackling a new set of challenges, then you might be in the wrong job. Fun must a big element in your business strategy. No one should have a job they don't enjoy. If you don't wake up energized and excited about tackling a new set of challenges, then you might be in the wrong job. Never allow your company to take itself too seriously Take swings, have fun Find job that challenges you Remove anything that makes people less excited about going to work Celebrate success
- 42. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise • GE Success Story: Flash Points • 25 Lessons from Jack Welch Lead More, Manage Less Build a Winning Organization Harness Your People for Competitive Advantage Build a Market-Leading Company © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
- 43. Build the Market-Leading Company: Lesson 21 Be Number 1 or Number 2 1000ventures.com "When you're number four or five in a market, when number one sneezes, you get pneumonia. When you're number one, you control your destiny. The number fours keep merging; they have difficult times. That's not the same if you're number four, and that's your only businesses. Then you have to find strategic ways to get stronger. But GE had a lot of number ones." "When you're number four or five in a market, when number one sneezes, you get pneumonia. When you're number one, you control your destiny. The number fours keep merging; they have difficult times. That's not the same if you're number four, and that's your only businesses. Then you have to find strategic ways to get stronger. But GE had a lot of number ones." Evolve a game plan, a business strategy "number one, number two“ Send shivers throughout your organization Exact the highest standards and make sure that everyone in your company meets those standards Look for the quantum leap Get rid of fat
- 44. Build the Market-Leading Company: Lesson 22 Live Quality 1000ventures.com "We want to change the competitive landscape by being not just better than our competitors, but by taking quality to a whole new level. We want to make our quality so special, so valuable to our customers, so important to their success that our products become the only real value choice." "We want to change the competitive landscape by being not just better than our competitors, but by taking quality to a whole new level. We want to make our quality so special, so valuable to our customers, so important to their success that our products become the only real value choice." Take great pride in your work Make quality your way of life Quality is your job Make quality the job of every employee Seek out quality training Involve customers Exchange best practices
- 45. Build the Market-Leading Company: Lesson 23 Constantly Focus on Innovation "You have just got to constantly focus on innovation. And more competitors. You've got to constantly produce more for less through intellectual capital. Shun the incremental, and look for the quantum leap." Now the fundamentals have got to be more education. More information knowledge, faster speeds, more technology across the board. "You have just got to constantly focus on innovation. And more competitors. You've got to constantly produce more for less through intellectual capital. Shun the incremental, and look for the quantum leap." Now the fundamentals have got to be more education. More information knowledge, faster speeds, more technology across the board. Invest in continuous education and training Shun the incremental and go for the leap Search for the best ideas Practice systems thinking and holistic approaches Invest in information technology and information management Spend an hour per week learning what competitors are doing More information at 1000ventures.com: “Innovation”
- 46. Build the Market-Leading Company: Lesson 24 Live Speed "If you're not fast you can't win... Speed is everything. It is the indispensable ingredient of competitiveness." Speed, simplicity and self-confidence are closely intertwined. By simplifying the organization and instilling confidence, you create the foundation for an organization that incorporates speed into the fabric of the company. "If you're not fast you can't win... Speed is everything. It is the indispensable ingredient of competitiveness." Speed, simplicity and self-confidence are closely intertwined. By simplifying the organization and instilling confidence, you create the foundation for an organization that incorporates speed into the fabric of the company. Cultivate the culture of speed Eliminate layers Remove all roadblocks Don't "sit" on decisions Create an open organization Communicate faster Make speed a habit Pounce every day More information at 1000ventures.com: “Fast Company”
- 47. Build the Market-Leading Company: Lesson 25 Behave Like a Small Company Small companies have huge competitive advantages. They "are uncluttered, simple, informal. They thrive on passion and ridicule bureaucracy. Small companies grow on good ideas – regardless of their source. They need everyone, involve everyone, and reward or remove people based on their contribution to winning. Small companies dream big dreams and set the bar high – increments and fractions don't interest them." Small companies have huge competitive advantages. They "are uncluttered, simple, informal. They thrive on passion and ridicule bureaucracy. Small companies grow on good ideas – regardless of their source. They need everyone, involve everyone, and reward or remove people based on their contribution to winning. Small companies dream big dreams and set the bar high – increments and fractions don't interest them." Get lean Get agile Start thinking like a small company Infuse a small company soul into your organization Communicate like a small company Stay close to your customers 1000ventures.com
- 48. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise • GE Success Story: Flash Points • 25 Lessons from Jack Welch Lead More, Manage Less Build a Winning Organization Harness Your People for Competitive Advantage Build a Market-Leading Company TTHHAANNKK YYOOUU!! © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
- 49. 25 Lessons from Jack Welch Creating the world’s most competitive enterprise Support Information To read Slides with Executive Summaries, view / print the Mini-course as Note Pages Related web-based chapters of Ten3 Business e-Coach • 25 Lessons from Jack Welch • How To Make Effective Presentations End-user License Agreement: it’s below this slide - view it as Note Pages Related Products/Services from Ten3 team: Products Services Training Would you like to make any comments regarding this Mini-course? Please send us e-mail © 2005 Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com. October 2005
Editor's Notes
- Corporate Leadership: the Jack Welch Way Jack Welch has been with the General Electric Company (GE) since 1960. Having taken GE with a market capitalization of about $12 billion, Jack Welch turned it into one of the largest and most admired companies in the world, with a market value of about $500 billion, when he stepped down as its CEO 20 years later, in 2000. Although Jack Welch is "the celebrated leader of a global manufacturer often noted for its technological prowess, he has utilized a very human process to drive change through GE's vast organization. Having respect for the individual as a pivotal force in organizational change, Welch created a model of exceptional performance every corporate leader can learn from. The Role of the Leader in the New Economy As Jack Welch wrote in a letter to shareholders: "In the old culture, managers got their power from secret knowledge: profit margins, market share, and all that... In the new culture, the role of the leader is to express a vision, get buy-in, and implement it. That calls for open, caring relations with every employee, and face-to-face communication. People who can't convincingly articulate a vision won't be successful. But those who can will become even more open – because success breeds self-confidence." Welch urged all GE leaders to stretch their business strategy, "Don't ever settle for mediocrity. They key to stretch is to reach for more than you think is possible. Don't sell yourself short by thinking that you'll fail." Do the best possible - and then reach beyond. Stretch "essentially means using dreams to set business targets - with no real idea of how to get there. If you do know how to get there - it's not a stretch target.“ Employee Empowerment Under Welch's leadership, managers had wide latitude in building their GE units in entrepreneurial fashion. Determined to harness the collective power of GE employees, Jack Welch redefined also relationships between boss and subordinates. He wrote: "The individual is the fountainhead of creativity and innovation, and we are struggling to get all of our people to accept the countercultural truth that often the best way to manage people is just to get out of their way. Only by releasing the energy and fire of our employees can we achieve the decisive, continuous productivity advantages that will give us the freedom to compete and win in any business anywhere on the globe."
- The Revolution that Began from the Top Jack Welch planned to launch a revolution at GE from the day he took over the company and wasted no time in executing his plan. No one in American business had the vision to transform a basically healthy major company, to fix something that wasn't broken. Welch's revolution began from the top. He made GE leaner, tougher, faster more competitive – with fewer people, fewer business units, few managers, and more leaders. Though to many GE had been an icon, a sacred institution that could not be tampered with, Welch applied a kind of "survival of the fittest" rule of thumb to GE businesses and to GE personnel; those who survived were the ones who were needed. For twenty years he led a series of revolutions at GE, seeking to recast a highly bureaucratic, labor-intensive and slow corporate giant into a highly productive entrepreneurial organization that would function with speed, simplicity and passion of a small company. Given GE's size and complexity, it was a heroic task, but Welch knew that to make GE the world's competitive enterprise, transformational change was essential. Creating the World’s Most Competitive Enterprise Jack Welch's goal was to make General Electric (GE) "the world's most competitive enterprise." He knew that it would take nothing less than a "revolution" to transform that dream into a reality. "The model of business in corporate America in 1980 had not changed in decades. Workers worked, managers managed, and everyone new their place. Forms and approvals and bureaucracy ruled the day." Welch's self-proclaimed revolution meant waging war on GE's old ways of doing things and reinventing the company from top to bottom. To get GE to successfully compete in an increasingly complex and competitive business environment, he altered significantly the way managers did their jobs. Actually, he wanted to discard the term "manager" altogether because it had come to mean someone who "controls rather than facilitates, complicates rather than simplifies, acts more like a governor than an accelerator." The revolutionary massive changes introduced by Jack Welch worked – whether it was the change that made GE businesses leaders in their market, or that added profitable, productive businesses to GE's family, or that tapped the brains of knowledgeable employees. Today, GE with its unique learning culture and boundaryless organization is one the most admired company in the world. The techniques and ideas that Welch has employed to move GE forward are applicable to any size corporations, small, medium, or large.
- Corporate Leadership: the Jack Welch Way Today, General Electric succeeds in dozens of diverse businesses, and is continuously at the vanguard of change. Some years ago however, in locations throughout GE, local managers were operating in an insulated environment with walls separating them, both horizontally and vertically, from other departments and their workforce. Employee questions, initiatives, and feedback were discouraged. Determined to harness the collective power of GE employees, create a free flow of ideas, and redefine relationships between boss and subordinates, Jack Welch, CEO, General Electric, created a new corporate culture. In the company's 1993 Annual Report, Welch noted, "To be blunt, the two quickest ways to part company with GE are, one, to commit an integrity violation, or, two, to be controlling, turf-defending oppressive manager who can't change and who saps and squeezes people rather than excites and draws out their energy and creativity.“ Though many at GE have been good at their jobs, and have been able to motivate and explain, but no one has Jack Welch's ardor. He was GE's number one cheerleader and called himself "the advertising manager of our company." He had the zeal and the optimism and a lexicon of a winning football coach: "exciting", "remarkable", "staggering", "incredible". These are the words Welch employed to describe one of the powerful enterprises in the world, writes Robert Slater in his book "Jack Welch and the GE Way." As W. James McNerney Jr., head of GE Aircraft Engines, noted: "The excitement comes from within him and is extremely contagious. He's a tremendous motivator. He's excited and he gets you excited and you're always moving forward. He keeps it simple. The differentiator between GE and many other companies is that there are more people moving in the same direction and with the same enthusiasm. Jack might like this on his tombstone. 'I wasn't smarter that anyone else, but I helped 270,000 people make me look smarter than most.' " The revolutionary massive changes introduced by Jack Welch worked. By the mid-1990s GE had become the strongest company in the United States and the most valuable company in the world, as measured in market capitalization.
- GE: A Leadership Development Academy General Electric is the most notable success in developing leadership talent. Welch made leadership development a top priority. When he retired from GE, he had more than half a dozen viable candidates to replace him. Besides, during the Welch era, more than 30 younger GE leaders were hired away by other companies as CEOs. In 1997, Business Week conducted a survey of the top 25 general management recruiters, asking them for a list of executives likely to become CEOs at major corporations within 5 years. Five of the top twenty candidates, including the top vote-getter, were from GE. Focusing on Leadership Attributes GE provides a good example of a company that makes the most of the leadership attribute model for developing and deploying better leaders. As both companies and world change continuously, Welch set up to figure out what values and capabilities people would need to be successful in the future, and then how to develop them. GE uses the concept of competencies and bundles of leadership behaviors to improve leaders. It bases its approach to leadership to leadership development on four essential tasks: 1. The organization recognizes the importance of leadership to its business success. Senior managers strongly commit to build the next generation of leadership. 2. GE has in place a specific process for developing leadership talent. Top GE executives participate in numerous activities aimed at (i) improving their abilities, (ii) increasing career opportunities, and (iii) aligning both to corporate strategy. GE executives are often offered CEO jobs at other firms. 3. GE defines leadership attributes behaviorally, for the benefit of future leaders. Leaders are held accountable both for “making the numbers” and “living the GE values.” GE Leadership Effectiveness Survey (LES) synthesizes GE values into a list of 10 categories and then stipulates specific behaviors consistent with each value. The LES serves GE as a standard for leaders at every level. All of them are expected to reach their numbers the “right way.” 4. GE uses the leadership competencies stipulated in the LES to integrate a number of management practices, such as considering a candidate’s abilities on the LES categories when making hiring or promotion decisions, and using annual 360-degree feedback.
- GE Values Guide Nowhere GE shared values take on importance greater importance than on a small, wallet-size card that GE employees now carry with them. GE's values are so important to the company, that Jack Welch had them inscribed and distributed to all GE employees, at every level of the company. But before the cards were furnished to the staff, GE had come to consensus on which core values it wanted to cultivate in its employees. Many hours were spent at GE's Leadership Institute and elsewhere deciding on exactly what those values should be. It became a badge of honor not only to carry the card but also to uphold the values. As Jack Welch notes: "There isn't a human being in GE that wouldn't have the Values Guide with them. In their wallet, in their purse. It means everything and we live it. And we remove people who don't have those values, even when they post great results.“ The Four Types of GE Managers Jack Welch is essentially suggesting that the only way to last at GE is to get on board, to become a team player, to adapt oneself to the company’s values and culture when he describes the four types of GE managers and assesses which ones will ultimately succeed – and which ones won’t. Type 1: delivers of commitment – financial or otherwise – and shares GE’s values. Type 2: does not meet commitments and does not share GE’s values. Type 3: misses commitments but shares the values. Type 4: delivers on commitments but does not subscribe to GE’s values. The Type 1 is to be kept and promoted. The Type 2 is to be fired. The Type 3 is to be nurtured in hope that they might improve. The Type 4 are not Jack Welch’s type of leader. Out of the door they go: “Not as pleasant a call but equally easy.” Though many business leaders would find a person of the Type 3 totally unacceptable, Welch is not so unforgiving of this type. He cares more that a manager adheres to company values that meet the numbers – and will give this person every chance to succeed: “They usually get a second chance, preferably in a different environment.” Jack Welch required all managers should learn to become team players and coaches. He also took steps against those managers who wouldn't learn to become team players by cutting the bottom 10% every year. "One of the surest ways to raise the level of a team is to cut from the bottom and add to the top," advised Welch.
- People Power Jack Welch has always said that GE's primary product and core competence is not jet engines or gas turbines, but people. One of the most fundamental truths about Welch's management principles is that it's about people, not numbers. "We are constantly amazed by how much people will do when they are not told what to do by management," he says. “The world not belong to 'managers' or those who can make the numbers dance. The world will belong to passionate, driven leaders – people who not only have enormous amounts of energy but who can energize those whom they lead… The essence of competitiveness is liberated when we make people believe that what they think and do is important – and then get out of their way while they do it.” Lead More. Manage Less Managers muddle - leaders inspire. Leaders are people who inspire with clear vision of how things can be done better. "What we are looking for are leaders at every level who can energize, excite and inspire rather than enervate, depress, and control." See Change as an Opportunity Change is a big part of the reality in business. "Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while... Keeping an eye out for change is both exhilarating and fun." Energize Others Genuine leadership comes from the quality of your vision and your ability to spark others to extraordinary performance. Getting employees excited about their work is the key to being a great business leader. "We now know where productivity - real and limitless productivity - comes from. It comes from challenged, empowered, excited, rewarded teams of people." Stretch Stretch targets energize. "We have found that by reaching for what appears to be the impossible, we often actually do the impossible; and even when we don't quite make it, we inevitably wind up doing much better than we would have done."
- Going for the Leap Jack Welch, the legendary former CEO of GE, believed in surprise move, the bold play, and shocking his rivals. He loved the idea that he could shake things up while others looked on from the sidelines, sitting idly by while he knocked his competitors for a loop. Welch's critical ingredients of the quantum leap were: Surprise Boldness Shock. "This was what Jack Welch had in mind when he began reshaping General Electric. It's what he had in mind when he began thinking about his conquest of RCA. Acquiring RCA was a revolutionary move for General Electric. Throughout most of its history, GE grown from within. It simply did not believe in growing by acquisition,“ writes Robert Slater in his book "Jack Welch and the GE Way." Six Sigma In bringing Six Sigma quality to GE, Jack Welch recognized that the program was not only for engineers and technical minds. Indeed, it can be used in a variety of situations in which a company’s best and brightest are engaged in this quality program. GE Work-Out Ultimately, the goal of the Work-Out program was to "clean up" GE, to make workers more productive and processes simpler and more clear-cut. Work-Out was also designed to reduce, and ultimately eliminate. all of the waste hours and energy that organizations like GE typically expend in performing day-to-day operations. In Welch's words, Work-Out is meant to help people stop "wrestling with the boundaries, the absurdities that grow in large organizations. We're all familiar with those absurdities: too many approvals, duplication, pomposity, waste." Two Defining Aspects of the Work-Out 1. Employees have to be able to make suggestions to their bosses face-to-face. 2. Employees have to be able to get a response – on the spot, if possible.
- The GE Multifactor Business Portfolio Matrix With the help of McKinsey and Company, a leading consulting group, the General Electric Company (GE) developed a popular business portfolio analysis tool called the GE Multifactor Portfolio Matrix. This tool helps managers develop organizational strategy that is based primarily on market attractiveness and business strengths. Each of the organization’s strategic business units (SBUs) is plotted on a matrix of two dimensions: industry attractiveness and business strength. Each of these two dimensions is actually a composite of a variety of factors. Industry attractiveness might be determined by such factors as the rate of industry growth, the number of competitors in an industry, and the weakness of competitors within an industry. Business strengths might be determined by such factors as a company’s core competencies and capabilities, financially solid position, its good bargaining position over suppliers, and its high level of technology use. Asking Effective Questions To Jack Welch, business leadership is all about knowing what questions to ask of his subordinates. That's all managing is, says he: just coming up with the right questions and getting the right answers. My job, says Welch, is to understand the strategic issues within each of our businesses where they are going around the five questions: 1. What does your global competitive environment look like? 2. In the last three years, what have your competitors done? 3. In the same period, what have you done to them? 4. How might they attack you in the future? 5. What are your plans to leapfrog over them?
- The Biggest Opportunity for Growth and the Toughest Stretch Goal Jack Welch was told that Six Sigma, the quality program pioneered by Motorola, could have a profound effect on GE quality. Although skeptical at first, the GE Chairman initiated a huge campaign – in the GE Way, a way that had never been done before – to infuse quality in every corner of the company. Welch called six sigma the most difficult stretch goal GE had ever undertaken. Within four years, "we want to be not just better in quality, but a company 10,000 times better than its competitors," he announced. "We want to change the competitive landscape by being not just better than our competitors, but by taking quality to a whole new level. We want to make our quality so special, so valuable to our customers, so important to their success that our products become the only real value choice.“ Welch made an official announcement launching the quality initiative at GE's annual gathering of 500 top managers in January 1996, He called the program "the biggest opportunity for growth, increased profitability, and individual employee satisfaction in the history of our company." He has set itself a goal of becoming a six sigma quality company – producing nearly defect-free products, services, and transactions – by the year 2000. Making Quality the Job of Every Employee Welch made quality the job of every employee. Senior manager's bonuses were tied to Six Sigma results. All professional level employees were informed that they had to get Six Sigma training or they would not be considered for a promotion – no belt, no promotion. Welch credits the Six Sigma quality initiative with "changing the DNA of the company", meaning that it has had a greater impact on the productivity of GE than any other program. Setting Individual Performance Standards Jack Welch described what he felt should be the five characteristics of the people who steer the quality program through its rigors: Enormous energy and passion for the job – a real leader – sees it operationally, not as a "staffer." Ability to excite, energize, and mobilize organization around six sigma benefits – not a bureaucrat. Understands six sigma is all about customers winning in their marketplace and GE bottom line. Has technical grasp of six sigma, which is equal to strong financial background and capability. Has a real edge to deliver bottom-line results and not just technical solutions.
- Four MAIC Steps: Making the Six Sigma Process Work 1. Measure: Identify the key internal process that influences critical-to-quality characteristics (CTQs) and measure the defects generated relative to identifies CTQs. Defects are defined as out-of-tolerance CTQs. The end of this phase occurs when the black belt can successfully measure the defects generated for a key process affecting the CTQ. 2. Analyze: Why defects are generated? Brainstorm, use statistical and other relevant tools to identify key variables that cause the defects. The output of this phase is the explanation of the variables that are likely to drive process variation the most. 3. Improve: The objective of this phase is to confirm the key variables and then quantify the effect of these variables on the CTQs, identify the maximum acceptable ranges of the key variables, make certain the measurement systems are capable of measuring the variation in the key variables, and modify the process to stay within the acceptable ranges. 4. Control: Ensure that the modified process now enables the key variables to stay within the maximum acceptable ranges using tools such as statistical process control or simple checklists. Five Corporate Measures (Source: "Jack Welch and the GE Way", Robert Slater, 1999) 1. Customer satisfaction: Each business performs customer surveys, asking customers to grade GE and the best-in-category on critical-to-quality issues. The grade is a five-point scale, where 5 is the best. A defect is defined as either less than best in a category or a score of 3 or less. GE measures defects per million survey responses. The results are reported on a quarterly basis. 2. Cost of poor quality: There are three components: appraisal, which is mostly inspection; internal costs, largely scrap and rework; and external cost, largely warranties and concessions. GE tracks the total as a percent of revenues on a quarterly basis. 3. Supplier quality: GE tracks defects per million units purchases, where the defective part has either one or more CTQs out of tolerance or the part is received outside the schedule. 4. Internal performance: GE measures the defects generated by its processes. The measure is the sum of all defects in relation to the sum of all opportunities for defects (CTQs). 5. Design for manufacturability: GE measures the percent of drawings reviewed for CTQs and the percent of CTQs designed to six sigma. Most new products are now designed with CTQs identified.
- Why Work-Out? As Jack Welch began to recognize that employees were an important source of brainpower for new and creative ideas, he wanted to create an environment that pushes towards "a relentless, endless companywide search for a better way to do everything we do." The Work-Out program was a way to reduce bureaucracy and give every employee, from managers to factory workers, and opportunity to influence and improve GE's day-to-day operations. The Work-Out in essence turned the company upside down, so that the workers told the bosses what to do. That forever changed the way people behaved at the company. The Work-Out Concept At its core, Work-Out is a very simple concept based on the premise that those closest to the work know it best. When the ideas of those people, irrespective of their functions and job titles, are solicited and turned immediately into action, an unstoppable wave of creativity, energy, and productivity is unleashed throughout the organization. At GE, Work-Out "Town Meetings" gave the corporation access to an unlimited resource of imagination and energy of its talented employees. Work-Out's Four Major Goals 1. Build Trust. Encouraging employees to speak out critically inside the company about GE and the way they perform their jobs without negative consequences to their careers. 2. Empower Employees. Capitalizing on employees' knowledge and their unique perspective through granting them more power in exchange for expecting them to take more responsibility for their jobs. 3. Eliminate Unnecessary Work. Getting employees work smarter, not harder. 4. Create a New Paradigm for GE. Letting GE employees define and create a boundaryless organization in which the entire workforce works toward common goals. Encouraging employees to identify problems and come up with solutions.
- Five Sessions of a GE Work-Out: Making Change Really Happen In most organizations, change efforts come and go – and rarely make a difference. But at GE, one of the largest companies in the world, one particular change process helped spark a complete transformation – Work-Out. With Work-Out as part of its DNA, GE has become one of the most innovative, profitable, and admired companies on earth. The Work-Out Event typically consists of five sessions that take place over the course of one to three days: 1. Introduction Brief participants on the goals and agenda for the Work-Out, and the culminating event: the Town Meeting Review the process and ground rules (no sacred caws, no "turf-defending," no blaming, no pulling rank by managers, no complaining; focus on solutions). 2. Brainstorming Multiple cross-functional teams each brainstorm a different aspect of the problem. Each team creates a list of top 10 ideas for achieving the team's designed goals. 3. The Gallery of Ideas Each Work-Out team presents its 10 best ideas to the rest of the Work-Out participants. Participants vote on the best 3-4 ideas worth implementing from each team's top 10. 4. Generate Action Plans Teams use the remaining time to develop an action plan for implementing the selected ideas, and then prepare a presentation, with supporting data, requesting approval for the idea from the Sponsor at the Town Meeting. Each idea must have an "owner" who will take responsibility for seeing it through implementation if it is approved. 5. The Town Meeting Teams present their recommendations to the Sponsor. The Sponsor dialogues with the team and other participants about the viability of the idea, and asks for input from managers who will be affected by the team's recommendation, before making a "yes/no" decision on the spot.
- External Venture Investments by GE Equity Main source of information: "Venture Catalyst", Donald L. Laurie, 2001 Established in 1995, General Electric (GE) Equity, a business unit within GE Capital, invested nearly $4 billion in 300 businesses by 2000; of those 60% represent opportunities that emerged outside GE; two-thirds of ventures sell products and services to GE. Following its strategy of a lot of small bets, GE Equity invests an average of $3 million to $5 million in each of companies, and it gets somewhere between 5 and 11% of each venture The segments in which GE Equity invests include financial services, business services, health care, telecommunications, media and Internet GE Equity employs more than 200 people and makes more than $120 million in net income 75% of GE Equity's investments are qualified as strategic The key component of GE Equity's plan is co-investment program that requires GE capital or individual GE businesses to match its investment; 85% of GE Equity's investments are done either jointly with another GE Capital business or jointly with one of the GE company businesses GE Equity's Goals GE Equity's initial plan was only to invest in areas unrelated to GE, with an eye toward making some money. Having understood how equity investing and growth are converged, the top management of GE Equity changed the company's strategy. It was decided that GE Equity should make investments in companies, technologies, and distribution channels that could further the strategic interests of the various GE businesses. GE Equity's venture investment goal is to build a world-class, global, private-equity business. The second goal is to extend GE's management and operating systems to the portfolio companies. The Two Missions of GE Equity Value Investing - using corporate venture investments to help GE businesses grow. Ideally, each and every of GE Equity's investments adds value to both GE and the start-up. Before investing in a venture, GE Equity determines if a synergetic relationship between the venture and one of more of GE's businesses is possible. Making Money - investing with the expectation of a 30 to 40% return within three to five years.
- Highly Disciplined Business Management System (BMS) BMS is central to GE Equity's management and its venture activities. Each potential investment undergoes a rigorous examination procedure developed by GE Equity top management and carefully selected probability-and-decision theory experts. GE Equity developed a systematic investment approach based on decision and probability theories, and it is also known in the marketplace as having the most onerous due-diligence checklist in the world of corporate venture investing. The due diligence report explores in depth and provides information on the investment rationale and investment considerations; an industry and company overview; value proposition; management team; company's marketing strategy; capital structure; financial assumptions; comparable companies; and key risks and uncertainties. Portfolio Management The BMS also includes a portfolio management system that monitors the performance of companies and assigns them ratings of green, yellow and red. Companies in the underperforming red category are subject to in-depth monthly review by the GE Equity top management, whose decisions can call for action that range from offering assistance to the troubled venture team to exiting the investment. BMS, which can be accessed online, includes and tracks not only every investment but also every prospective investment. Value-Added Investing Ventures associates with GE Equity benefit immensely from GE's value-adding capabilities. They gain credibility as a GE partner and get access to GE's wealth of industry-specific knowledge and research, marketing, sales, and distribution capabilities. GE Equity also created Community.com as a portal for the companies in which GE Equity has invested so they could come together and interact. Using this web-tool, the companies are able to sell to one another and take advantage of GE's purchasing power. GE often works out a licensing agreement for a portfolio company with GE. It can also help start-ups over some trouble, sometimes charging prevailing consulting rates for its guidance. GE equity does not seek to dominate the companies in which it invests. This approach characterized by support and respect for smaller enterprises as well as willingness not to seek control is an important aspect of the company's success. On their part, entrepreneurs see in GE Equity a value-added opportunity to get where they want to be more quickly than they could with a venture capital firm, that provides only cash.
- Jack Wech as a Corporate Change Leader Jack Welch's goal was to make GE "the world's most competitive enterprise." He knew that it would take nothing less than a "revolution" to transform that dream into a reality. The model of business in corporate America in 1980 had not changed in decades. Workers worked, managers managed, and everyone new their place. Forms and approvals and bureaucracy ruled the day. Welch's self-proclaimed revolution meant waging war on GE's old ways of doing things and reinventing the company from top to bottom. Today, GE with its unique learning culture and boundaryless organization is one the most admired company in the world. The techniques and ideas that Welch has employed to move GE forward are applicable to any size corporations, small, medium, or large. Jack: Straight from the Gut In his book 'Jack: Straight from the Gut', Welch is both storyteller and coach, using his exceptional career as the backdrop to share his thoughts on what it takes to be a great leader. Part management text, part page-turner, Jack shows how the man widely regarded as the finest corporate executive of his generation built his business and his reputation. It’s best to be small, no matter how big you are. By slashing unneeded bureaucracy and insisting that GE’s businesses be in the top two positions in their respective fields, Welch instilled an entrepreneurial spirit and a quick- thinking, quick-moving approach to competition and constant improvement. It was a small-company approach to running an enormous, multi-billion-dollar organization, and it worked marvelously. It’s all about people. Jack Welch’s passion was making people GE’s core competency, and he saw to it that the company found and developed great people. Companies must be boundaryless to unlock their potential. Insular thinking results in stale ideas and, consequently, stale organizations. By breaking down the walls and borders that separated various departmental and functional areas at GE, Welch was able to unlock the full creativity of his people, propelling the company forward with fresh, creative approaches to problems. Quality is nothing without efficiency. GE’s Six Sigma initiatives replaced sloganeering quality strategies with ones that brought about measurable results in increased efficiency, reduced defects and satisfied customers.
- Create a vision and then ignite your organization to make this vision a reality. Get people so passionate about what they are doing that they cannot wait to execute this plan. Have great energy, competitive spirit and the ability to spark excitement and achieve results. Search for leaders who have the same qualities. Focus on strategic issues. Your job is to understand the strategic issues within each of your businesses where they are going around the five questions. Know the talent they need to win in those markets and the amount of capital they need. And make bets. Don't micromanage. Your job is to see the big picture. Don't manage every detail. Don't get caught up in the minutiae or obsess over every detail, but instead inspire others to execute of your vision. Surround yourself with great people and trust them to do their job and contribute their best to the organization. Involve everyone and welcome great ideas from everywhere. Anyone can be a leader, just so long as they contribute, and the most meaningful way for anyone to contribute is to come up with a good idea. Business is all about getting the best ideas from everyone. New ideas are the lifeblood of the organization, the fuel that makes it run. "The hero is the person with a new idea." There is simply nothing more important to an organization than expressing ideas and creating a vision. Lead by Example. To spark others to perform, you must lead by example. Jack Welch mastery of the four E's of leadership – Energy, Energize, Edge, and Execution – was always in evidence. "He had great energy, sparked others, had incredible competitive spirit, and had a record of execution that was second to none. This is a key of the Welch phenomenon. Had he been lacking in any of the traits he espoused, he would not have commanded such acclaim.“ Six Rules for Successful Leadership from GE's Jack Welch 1. Control your destiny, or someone else will. 2. Face reality as it is, not as it was or as you wish it to be. 3. Be candid with everyone. 4. Don't manage, lead. 5. Change before you have to. 6. If you don't have a competitive advantage, don't compete.
- Don't get bogged down in overmanaging. Don't run your business. Run is not the right word. Lead it. Manage less to manage more. If you use half your capacity on memorizing thoughts and details, you've got very little time left to look for things to change and drive. "Since much of business comes down to facing reality and then acting on that reality, over-managing has the potential to confuse people. By getting caught up in unimportant details, no one can see the true reality that might be staring them in the face." Don't waste a lot of time on making budgets. They waste energy. The world is changing quickly. You can't afford to waste time in bureaucracy. Focus on strategic issues and improvement. Work on your business, not for your business, to figure out exactly what it is you need to do in order to achieve your goals. Don't hold information close to your chest. If you know a little bit more than anyone who works for you, don't hold this information close to your chest. It totally constraints your organization and your personal capacity to implement change. Inspire, empower, and get out of the way. You cannot do everything yourself. The key to leading is developing and nurturing great leaders. Give workers the tools and training they need to perform their jobs better. Manage by creating a vision, chose the best people, make sure they run with that vision, and provide them with the necessary resources. And don't forget to get out of the way. "You will never know how far people can go unless you give them the opportunity to try. Once employees take responsibility for their own jobs, then managers can do theirs: create a vision and get their team to act on that vision."
- Creating a Vision In one of his first speeches as CEO, Welch explained that he was not going to lay out an "all-inclusive" grand strategy or step-by-step agenda for the company. Instead, he was going to articulate a vision and a few clear goals for the company. He has always felt that best leaders are visionaries. They do not get caught up in the minutiae or obsess over every detail, but instead inspire others to execute on that vision. To Welch, there are several reasons why it is better to lay out a general vision and not an exact blueprint. It is the leader's responsibility to come up with the vision. Once the vision was communicated, it is up to the team to turn this vision into a reality. A leader who spends to much time on the details is likely overmanaging. It is much better to give a general direction and empower the team to figure out the exact route. Jack Welch believed that the only way to lead is to talk about company's values, not numbers. Numbers have little to do with creating a vision of fulfilling a mission; they don't instill corporate values into the minds and hearts of the employees, and they don't provide much help in living up to those values or carrying out the vision. In short, it's not management philosophy, it's just a lot of cheerleading. And cheerleading doesn't turn a company around. Create and project a clear vision. Best leaders are visionaries. Give a general direction and empower the team to figure out the exact route. "The leader's unending responsibility must be to remove every detour, every barrier, to ensure that vision is first, clear, and then real. The leader must create an atmosphere in the organization where people feel not only free to, but obliged to demand clarity and purpose from their leaders." Articulate a few clear stretch goals for your company. Set stretch goals, and if people don't make them, don't punish them for trying. "The key is helping people reach for the unreachable, and to celebrate when they come close. That will build confidence into the fabric of the organization, and prepare the team for greater challenges." Make sure you have the very best people to carry your vision out. Hire those most capable of turning visions into reality – ask questions about how they might go about attacking a particular thorny problem. Promote those people who have the best record of making things happen.
- Simplicity is one of the keys to business. It is an art form, with many definitions: "To an engineer, it's clean, functional design with fewer parts. For manufacturing it means judging a process not by how sophisticated it is, but how understandable it is to those who must make it work. In marketing it means clear messages and clean proposals to consumers and industrial customers. And, most importantly, on an individual, interpersonal level it takes the form of plain-speaking, directness – honesty,“ says Welch. Don't make business harder than it is. Business is simple. No matter how different your businesses seem one from another, urge everyone in the company to think simply, to see themselves as performing essentially the same two processes – inputs and outputs – and not to make anything more complicated out of business than that. The inputs are the same. They are people, energy, and physical space. Think simply to create a clear vision. Simplicity is indispensable to a business leader's most important function: creating and projecting a clear vision. "The leader's unending responsibility must be to remove every detour, every barrier, to ensure that the vision is first clear, and than real. The leader must create an atmosphere in the organization where people feel not only free to, but obliged to demand clarity and purpose from their leaders." Make your messages simple. Every idea you present must be something you could get across easily at a cocktail party with strangers. Build self-confidence. Simplicity requires enormous self-confidence. Self-confidence is the antidote to insecurity. "One of the most difficult things for a manager to do is to reach that all-important threshold of self-confidence in which being simple is comfortable... You can't believe how hard it is for people to be simple... Clear tough-minded people are most simple." Simplify your workplace and communications. De-complicate everything. Identify those complicated forms, processes and ways of doing thins that waste the most amount of time, and work with colleagues to eliminate or streamline them. Eliminate complicated memos and letters - communication should be filled with ideas and simplicity, not complexity and jargon. Make meeting simpler. Make sure to have no complicated and boring minute-by-minute agenda. Instead, encourage your managers to simply tell about the best idea they have come up with since the last meeting.
- Take the "Boss Element" our of your company. "You've got to balance freedom with some control, but you've got to have more freedom that you've ever dreamed of." Redefine the traditional concept of management making listening to employees an integral part of every manager's job. Gave employees the right – and the responsibility – to come up with their own ideas for solving problems. The goal is to give everyone a say in the way the organization is managed – and to keep bosses from dictating every step in the decision-making process. Keep formality and rigidity out of the office. Harness the power of an informal place. "Without needless rules, titles, and approvals people are not afraid to voice their ideas, even they go against conventional company wisdom." In 1980s, form was very important. "Today form isn't allowed. Global battles don't allow forms. It's all substance. Form means somebody is not intensely interested in the company. Somebody on umpteen boards. Somebody off giving speeches all the time. Somebody that doesn't have their eye on the ball. Somebody who has reached the position of chairman as the culmination of a career, rather than the beginning of a career.“ Hold more informal meetings. "Lighten up meetings by asking your staff to "run" the meeting, and suggest "a no notes allowed" meeting as well." Find simple ways to loosen things up. Introduce flexible working hours, a more relaxed dress code, etc. Formality gets in the way achieving great things. Welch believed that the part of the GE success story was the power of GE as "an informal place". No one called him "Mr. Welch," it was always "Jack". He left his tie at home more often than not, held informal meetings, and encouraged everyone to lighten up. At GE Work-Out meetings, employees and managers alike were asked to dress casually at the workshops, in chinos and T-shirts, in order to blur distinctions between managers and workers. Brainstorm with bosses and colleagues frequently. Weave brainstorming into the cultural fabric of your organization. Brainstormers offer your team members a chance to shine. It's a friendly competition. Organize a once-in-a-while informal get together. Invite workers with spouses and significant others.
- Live action all day. The current business environment requires an energized, energizing leader. "You've got to be live action all day. And you've got to be able to energize others. Your cannot be this thoughtful, in-the-corner-office guru. You cannot be a moderate, balanced, thoughtful, careful articulator of policy. You've got to be on the lunatic fringe." Allow employees more freedom. Give employees more responsibility. Never lead by intimidation. That was the old way to run a business. Inspire others to want to perform instead. Let people know how their efforts are helping your organization. The people who help you perform your job would be more motivated if they knew the bigger picture, how their efforts help the organization to achieve its goals, and that you truly appreciate their efforts. Send handwritten thank-you notes to colleagues, partners, and customers. Few take the time to do it, so it almost always has an impact. Case in Point Robert Slater in his book “Jack Welch and the GE Way” writes that in 1987 Jack Welch requested a meeting with the head of a particular GE business. The business had produced profits, but it certainly was not setting any records, and Welch had a strong feeling that it could do much better. He hoped that meeting would lead to improved performance. But Welch's message was lost on the manager. He had no idea what Welch wanted. Welch wanted the man to get some vision. To get some enthusiasm for his work and re-energize his employees. Finally, Welch had a proposal for the perplexed manager. "What I'd like you to do is take a month off and just go away. When you come back, act as if you were just assigned to the business and you hadn't been running it for four years. Just come in brand new, hold all the reviews, and start slicing everything in a different way." The man still didn't get it. He did not understand that Welch wanted him to rewrite his agenda, take a new look at the business plan, and see things with a fresh eye. He didn't get Welch's insistence that he become excited about his work, and that he figure out how to energize his troops. Six months later the executive no longer worked for GE.
- Accept the truth. Facing reality is one of most important business rules. Whether in life or in business, those who are able to face reality and acknowledge truth are usually successful. Yet, it is often difficult to face reality and so much easier to avoid the truth as it may hurt, embarrass, be painful or self-deflating. Yet, facing this truth is what makes business so simple. The art of leading comes down to one simple thing: Determining and facing reality – about situation, business, market, products, and people – and then acting quickly and decisively on that reality. Own up the reality, don't bury your head in the sand: Face the reality that the world is becoming increasingly competitive. Face the reality that no job is guaranteed for life. Face the reality that managing a business by erecting huge bureaucracies is ineffective. Face the reality that business is really simple. See things as they are, not as you wish them to be. "Look reality in the eye and don't flinch." Never fool yourself into thinking that things will just get better on their own. It's a trap. Don't make up plans based on wishes. Face the truth. Think what you could do if things don't get better. The more you face reality, the more likely it is that you will learn from your mistakes ad eventually bring your business success. Look at things with a fresh eye every day. Confront what the reality is today. Face the reality of each morning. "It may be a competitive reality, or a marketing reality, but each morning is different. What was important yesterday may no longer be important today."1 You might make a completely different decision about a deal you agreed on yesterday or a program you started, in light of the changing environment of the last twenty-four hours. Look at your situation as an outsider. You may be too close to things to see the truth. Gain new understanding through seeing things from different perspectives. Play scenarios. "The best time to change is when you want to, not when you have to. In assessing situations, construct several scenarios based on different outcomes. Always have a "plan B" if things do not go as planned."
- It's nonsense to fear change. Too many managers believe that standing still is the safest business strategy. Bur it is not. The business environment is constantly changing. "New competitors. New Products. Any business that ignores these facts is doomed to collapse." Adapt your management style. "It's a management style that forces people to change. The decision to make a change happens so fast that most people have little time to dwell upon their actions. All they know is that keeping an eye out for change is both exhilarating and fun." Spark other to deal with change. It is a management style that forces people to change. Bring people into the change process. Start with senior managers and provide all managers with the tools and training they needed to engineer and drive change throughout the company. "Start with reality... When everybody gets the same facts, they'll generally come up with the same business decisions." Prepare employees for change by incorporating the very concept into the values of the organization. Deal with change in a proactive manner. Winners win because they aren’t afraid to make changes. They take on foes that scare others and never flinch. Reassess the situation constantly and change before you have to. "If the rate of change inside an organization is less that the rate of change outside... their end is in sight." Defy tradition. Hold "why do we do it that way?" meetings. Invite colleagues to contribute one idea on changing something important at the company. Don't be afraid to buck conventional wisdom. “Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while.” Think short-term and long-term change. "To truly stay one step ahead, devise one year and three-year plans based on different scenarios." Reinvent your business constantly. Change never ends. Never stop thinking about the need for change. Prepare your company for perpetual change, make change a great constant. "The goal may be the same, never-ending growth, but the tools and methods are constantly evolving. Start every day as if it were your first day on the job. Make whatever changes are necessary to improve things. Reexamine your agenda constantly. Rewrite it, if necessary. In that way, you avoid falling back on old habit."
- "Discover where the best ideas are, and implement them," is one of the Jack Welch's trademark messages to managers. Creating, nourishing and building a learning culture at GE is, in his view, the best way to eradicate one of the least attractive features of the old GE – the "not invented here" syndrome. Any idea, if it's good one, says Welch, is worth pursuing and adopting – no matter where where it comes from – inside GE, or at Wall Mart, Motorola, Mitsubishi, wherever. Welch has a neat phrase for adopting an idea. He calls is "legitimate plagiarism.“ It is Welch's ability to get others excited about those good ideas explains his phenomenal results. He is an excellent communicator. Of all his management secrets, his extraordinary ability to communicate, to engender an enthusiasm in employees, may well be his greatest. He knows that it is not enough to simply raise an idea with employees. You have to keep repeating an idea until it finally sinks with every employee at the company. Communicate, then communicate it again! Ideas can be from any source. "The quality of the idea does not depend on its altitude in the organization." Search the globe for ideas. "Boundaryless behavior evaluates ideas based on their merit, not on the rank of the person who came up with them." Cross-pollinate. Share what you know with others to get what they know. Encourage an exchange of ideas at virtually every level of your organization. Encourage a free flow of ideas not only among your businesses but also between your company and other businesses as well. Develop a pervasive and insatiable thirst for good ideas. Have a constant quest to raise the bar, and get there by constantly talking to others. Make sure everyone around you knows that you are interested in all ideas, you want to hear from them, and you want them looking everywhere for new ideas. "Then celebrate them when someone comes up with a good one. This will ensure a steady infusion of new ideas into your organization." Study competitors. One of the best places to learn good ideas is from competitors. Make a practice to spend an hour each week to study anything that will provide insight into their latest initiatives. Plagiarize – it's legitimate. Adapt new processes and techniques from other companies. GE had benefited a lot from a flood of ideas taken from other companies. It adopted the Six Sigma quality program from Motorola. "GE was also able to move effectively into the Chinese market by adopting advice and best practices from IBM, Johnson & Johnson, Xerox, and others."
- Demonstrate relentless consistency in everything. Relentless consistency in everything – in making sure that the company values are alive and well at every level of the organization, in determining whether training programs are working, in seeing is a meeting goals are achieved, or in checking a factory's plans – is a key to success in business. "Your don't get anywhere if you keep changing your ideas. The only way to change people's minds is with consistency. Once you get the ideas, you keep refining and improving them; the more simply your idea is defined, the better it is. You communicate, you communicate, and then you communicate some more. Consistency, simplicity, and repetition is what it's all about..." When you call a meeting, see if its goals are achieved. Welch had little use for managers who called a meeting, set the goals, but never followed up to see if the goals are achieved: "Somebody runs the January meeting and they leave and say, "Nice going," and they thank the person that ran it. "It was a great meeting." Then they have a March meeting. Somebody else runs it. And he brings in somebody else. Then they have a long-range planning session, and there's no relationship to the meeting they ran in January." At your executive meeting, there should be a relentless consistency, a pounding, a drumming, over and over. Don't change your mind. Don't jump around. Don't give your meetings a new flavor of the month. Harp on a few key themes and repeat them over and over. These key theme should reverberate endlessly at your company. Add them up and they amount to an effort to be consistent, to follow up. Expand your communication to reach a critical mass. Refine it, get better on it, and it will begin to snowball. "If you have a simple consistent message, and keep on repeating it, eventually that's what happens. Simplicity, consistency and repetition - that's how you get through. It's a steady continuum that finally reaches a critical mass." Be consistent – consistently! Be sure that you deliver the identical non-nonsense message to every audience. The follow-up business strategy will pave the way for your success. "If you have a simple, consistent message, and you keep on repeating it, eventually that's what happens. Simplicity, consistency, and repetition – that's how you get through. It's a steady continuum that finally reaches a critical mass."
- Jack Welch has always hated and fought bureaucracy. To him, bureaucracy is the enemy. Bureaucracy means waste, slow decision making, unnecessary approvals, and all the other things that kill a company's competitive spirit. He spent many years battling bureaucracy, trying to rid GE of anything that would make it less competitive. He didn't simply strip away a little bureaucracy. He reshaped the face of the company to rid it of anything that was getting in the way of being informal, of being fast, of being boundaryless. Welch felt that ridding the company of wasteful bureaucracy was everyone's job. He urged all his employees to fight it. "Disdaining bureaucracy" became an important part of GE's shared values, the list of behaviors that were expected from all GE employees. Bureaucracy is the enemy. "Bureaucracy hates change, is terrified by speed and hates simplicity... Big corporations are filled with people in bureaucracy who want to cover things – cover the bases, say they did everything a little bit. Well, now have people out there all by themselves, there they are, accountable for their successes and their failures... Some who looked good in the big bureaucracy looked silly when you left them alone." Drop unnecessary work. Stop monitoring things and your subordinates' performance too closely. This sort of command-and-control management style does not permit managers to spot trouble soon enough. Stop firming memos at one another as they prevent you from talking directly with junior managers and field workers. Delayer, create a flat responsive organization. "Every layer is a bad layer. The world is moving at such a pace that control has become a limitation. It slows you down." Without all those layers, your company can become lean and agile. Do everything you can to simplify, remove complexity and formality, and make the organization more responsive and agile. Cross-pollinate to make faster and better decisions. Eliminate tools and documents that discourage original thinking. Encourage employees to identify problems and come up with solutions. Force any manager who thwarts their efforts out of the company. Make your workplace more informal. "Send handwritten notes instead of memos, keep meetings conversational, and encourage dialogue up and down the corporate ladder."
- Eliminate boundaries between management layers. "To reap the full benefit of every employee requires a new way of thinking, a new world where employees run free. In this brave new world all employees are permitted to participate in decision making and have full access to vital information needed to make these decisions." Ask yourself, 'What is keeping me from letting my subordinate make these decision?' Eliminate boundaries everywhere: between engineers and marketing people; between your company and your suppliers and customers; between full-time and part-time workers; between your company and the whole outside community. Seek out ideas from everyone. Use the brains of every worker – involve everyone. "Simply by involving and listening to everyone, you will help remove horizontal and vertical barriers. Make sure to listen to those closets to the work and the customers." Harness the power of diversity. At General Electric (GE) the sum is greater than its parts as both business and people diversity is utilized in a most effective way. A major American enterprise with a diverse group of huge businesses, GE is steeped in a learning culture and it is this fact that makes GE a unique company. As Jack Welch puts it: "What sets GE apart is a culture that uses diversity as a limitless source of learning opportunities, a storehouse of ideas whose breadth and richness is unmatched in world business. At the heart of this culture is an understanding that an organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage." As Welch noted in his 1996 Letter to Share Owners, "The constant sharing of business experiences and cultural insights, from around the world, is creating a Company whose brains, as well as businesses, are truly global.“ The GE Leadership Effectiveness Survey (LES) provides a framework for evaluation of the corporate leaders that includes, inter alia, the following parameters: "Fully utilizes diversity of team members (cultural, race, gender) to achieve business success" and "Demonstrates global awareness / sensitivity and is comfortable building diverse / global teams." Never stop eliminating boundaries. Ridding your organization of boundaries is a way of life and cannot be handled once and forgotten. Continue to involve everyone, learn good ideas from everywhere, and promote other boundaryless behavior.
- Don't focus too much on numbers. Management is about people, not numbers. Numbers aren't the vision. Management and leaderships is about people, not numbers. In the GE's values guide there is no direct reference to the numbers part of the business. Talk numbers less. Focus more on the key behaviors and actions that will help company grow, delight customers and win new business. If you can get your people to come up with the right business values – and integrate them into their behavior – your financial record will be fine. Let values rule. "Let it be known that values will play a vital role in hiring and promoting at your company. Support and encourage those employees who typify the most important values of the company." Live values. "Walk the talk." Live up to the company values and let others around you know what's most important. It is absolutely essential for a leader to buy into the company's 'soft stuff' – value scheme and corporate culture – and be able to sell those values to everyone else. Emphasize your company's values and culture. Urge employees to face reality; to lead, not manage; to change before it's necessary; to be boundaryless; to pursue simplicity; to be self-confident. Leaders who adhere to your corporate values should be expected to create a clear, simple, reality-based, customer-focused vision; they should be supposed to have a passion for excellence; to stimulate and relish change; to have enormous energy and energize others. Anyone at your company who adheres to these values is going to automatically help in the overall effort to produce the good numbers that you strive for. Part your company with those who don't live the values of your company. Playing up the soft stuff is a key to taking your company to even greater heights in the future. For a business leader, getting numbers up or coming up with a strong, market leading product is crucial. So is knowing how to market than product. But it is absolutely essential for a leader to buy into the company's value scheme and its corporate culture, and to be able to sell those values to everyone else. Delivering the numbers is simply not enough. Business leaders who bring home the numbers but fall short in living up to the company's values and walking their talk should be removed to support your corporate values.
- Leadership Development as a Strategic Duty of the CEO CEO Jack Welch, to assure GE’s competitive future spent 40% of his time on people issues, much of it on leadership development. He tracked the top 500 people. When asked how it was that he succeeded where others had failed, Welch said that what was most important to him at GE was knowing and developing people, not knowing the details of every business. He saw his job as choosing and developing the right leaders, and then it would be up to them to develop the strategy and know the details of the business, “Every day we are developing and assessing people, in the hallway, in meetings, at Crotonville, on the job, trying them in new jobs. We carry out extensive people reviews three times a year. We see this as our single most important job… I’m proud of having so much leadership talent.” Build self-confidence. "Your got to have the self-confidence to hire brilliant people, may times smarter than you are sometimes. You've got to feel very comfortable with that situation." Look for team players. You need new-type managers, those "who can swallow their ego, blur their identities, and work for the good of the company." Look for coaches. Coaching is an important part of the good leaders' role. Leaders must seek to develop high value in other leaders below them. Help them build their cross-functional expertise. Shift talents around. Measure performance of the leader pipeline. Develop metrics. Track the number of leaders each leader has played a major role in developing. GE’s Leadership Center at Crotonville GE has long been known for developing some of the best leaders in business. Worldwide, GE invests about $1 billion annually on training and education programs. The centerpiece of GE’s commitment to excellence in leadership development is the John F. Welch Leadership Center at Crotonville, the world's first major corporate business school. Crotonville's mission is to create, identify and transfer organizational learning to enhance GE growth and competitiveness worldwide. Through Crotonville programs, GE people are tackling new business problems from around the world and sharing knowledge with customers, suppliers and business colleagues. Crotonville plays a crucial role as an agent of cultural change at GE.
- Don't think that you or your company have all the answers. That's the first order of business in a learning organization. "Keep learning. Don't be arrogant by assuming that you know it all, that you have a monopoly on the truth. Always assume that you can learn something from someone else. Or from another GE business. Or even from a competitor. Especially from a competitor." Make intellect rule. Business is all about intellect. Encourage your workers to think for themselves. Offer a reward for best ideas. By getting everyone to think and contribute, your organizations will be better prepared to compete in today's ultra-competitive arena. Make learning a top priority. Make sure that everyone knows that your company is committed to learning; that learning is a way of life, not just a fad of the week. Devise programs and initiatives that foster learning. "Our true 'core competency' today is not manufacturing or services, but the global recruiting and nurturing of the world's best people and the cultivation in them an insatiable desire to learn, to stretch, and to do things better every day... values and behaviors are what produce those performance numbers, and they are the bedrock upon which we will build our future." Create an operating system that drives knowledge and learning throughout the company. It may include everything from the company's key initiatives (such as GE Work-Out and the quality improvement initiative, Six Sigma), to meetings, training courses, and coaching. Make important information easily available to everybody. "In a learning organization, employees are given access to important information and are expected to scope out new ideas and opportunities and come up with creative solutions to problems." Create a culture where ideas are translated into action and results. Create ownership. One of the keys to creating an action-oriented culture is to make sure that every recommendation has someone who is accountable for making it happen, and the power to drive it forward. The delegation of authority to the idea owner has to be genuine, not just lip service. The owner should have the authority to make sure the idea is implemented – even if that means going across functional lines or pushing people at higher levels to do something.
- Injecting a Spirit of Common Purpose By making all his employees feel that they had a stake in the company’s future, Welch was injecting a spirit of common purpose among GE’s employees and businesses. Though he was empowering his employees through Work-Out and other processes, Welch didn’t want to label these processes empowerment. He preferred the phrase high involvement: “That doesn’t mean abdication of decision-making authority by leadership. And that gets confused sometimes. We want everyone to have a say. We want ideas from everyone. But somebody’s got to run the ship. Now, that doesn’t mean somebody runs the ship by directing it. Somebody runs the ship with a total input from everyone. Empowerment is OK as long as it’s understood. Empowerment doesn’t mean anarchy. Involvement is less misleading – high involvement, a say in the decision-making, a stake in the institution, a voice. And I’ll tell you one thing: With voice comes responsibility.” Some Principles of Employee Involvement Start with yourself. "Engaging everyone does not start with the person in the next cubicle or office, it starts with you. Tell your boss that you would like to help him or her achieve his or her goals, and ask exactly what you can do that would help." Encourage people to take initiative. "Make decisions yourself,” Welch told employees at the factory level. “If you are confident that you are right about something, don't just sit back and give in: you can change things, and urge upon your boss.” Establish a meritocracy in your company. Make hiring and promotion decisions based on ability and achievement. Use the brains of every worker. Make sure that it is the person with the best idea who wins. Reward and celebrate new ideas to encourage others to want contribute as well. Reward those who live the company's values, show "guts", and, in doing so, make the numbers. Create an atmosphere where workers feel free to speak out. In order to engage every mind, every member of the team must feel comfortable enough to speak out.
- Set up a shared and worthwhile goal. Unleash huge stores of positive energy by making people feel that they really are contributing members of a team that is working toward a shared and worthwhile goal. Welch called them "rewards for the soul" (that need to be accompanied by "rewards for the wallet.") Behave positively. You must behave positively if you wish to get positive results from your team. If your behavior is negative you will achieve only mediocre results. Positive behaviors include: living the values; being an entrepreneur; hitting high targets; starting decisively; embracing change; doing what you say; concentrating focus; managing on the facts; forgiving honest error; and organizing yourself. Help junior executives become future great leaders. "The biggest advice I give people is you cannot do these jobs alone. You've got to be very comfortable with the brightest human beings alive on your team. And if you do that, you get the world by the tail... Always get the best people. If you haven't got one who's good, you're short-changing yourself." Build diverse cross-functional teams. Welch gives a hypothetical example. "Assume there is a multifunctional business consisting of engineering, marketing, and manufacturing components. And the business has the best manufacturing person it has ever had – someone with excellent numbers, who produces high-quality goods on time. "But this person won't talk with people in engineering and manufacturing. He won't share ideas with them, and won't behave in a boundaryless way with them. But now we're replacing that person with someone who may not be quite a perfect but who is a good team player and lifts the team's performance. Maybe the predecessor was working at 100% or 120%, but that person didn't talk with team members, didn't swap ideas. As a result, the whole team was operating at 65%. But the new manager is getting 90% or 100% from the whole total. That was a discovery." Facilitate cross-pollination of ideas. Managers and other employees must act boldly outside functional boxes and traditional lines of authority in a climate of learning and sharing. Brainstorm frequently. Bring in outside speakers to your meeting. Take long coffee breaks so people can swap ideas. Part your company with those who won't play as part of a team. Their debilitating effect on the team can outweigh the benefits of their individual talent.
- Welch urged all GE leaders to stretch their business strategy, "Don't ever settle for mediocrity. They key to stretch is to reach for more than you think is possible. Don't sell yourself short by thinking that you'll fail." Do the best possible - and then reach beyond. Stretch "essentially means using dreams to set business targets - with no real idea of how to get there. If you do know how to get there - it's not a stretch target.“ Stretch your business strategy. Stretching means exceeding goals. "Don't ever settle for mediocrity. They key to stretch is to reach for more than you think is possible. Don't sell yourself short by thinking that you'll fail." Do the best possible – and then reach beyond. Stretch "essentially means using dreams to set business targets – with no real idea of how to get there. If you do know how to get there – it's not a stretch target." Stretch yourself. Don't be satisfied with the best you can now and the best you think you can do. The higher you aim, the more you are likely to achieve. Back up your stretch goals with ambitious self-motivation and self-development to ensure complete success. Ask managers and employees to reach for their dreams. "Dreams are exciting; decimal points aren't." Stretching "allows people reach for the goal. And people are getting more and more comfortable with the idea that you get the best out of people not by fighting budgets, which are all about minimal numbers, but by getting people to do the best they can, and measuring their progress toward it – against last year, against what competitors are doing." Reward business leaders even for falling short of a stretched goal. Punishing for falling short of a stretch goal is counterproductive. If the company aimed at 15 and made 12, celebrate. What's critical is setting the performance bar high enough; otherwise, it's impossible to find out what people can do. Don't abuse stretch. For stretch to be effective it should be tied to the overall business strategy so that it turns that strategy into a specific issue that employees can accomplish. Think outside the box but stick to your commitments as well. Keep stretching. Stretching forces you to do stuff you wouldn't otherwise do. Don't be as good as you have to be; be as good as you can be. Set a stretch target and start moving towards it. As soon as you become sure you can do it, it's time for another stretch.
- Encourage employees to look well ahead. Taking the long view in their career will concentrate their mind on what they need to do in preparation for the next promotion. It is a test of their self-confidence. Nobody will have confidence in you unless you have confidence in yourself. Turn people loose. Adopt informal approach. Being informal is a big deal. Don't allow formalities to get in the way. Act in informal ways and set an informal style for others. Like simplicity, confidence thrives in an informal arena. Ignore hierarchical layers. Break the chain of command. Communicate freely up and down. Achieve wide personal contact. Make surprise visits. Send reams of handwritten notes. Pay for performance as an entrepreneurial boss would pay. Simplify the workplace. Simplify production and other processes. "By removing complexity from the workplace, you make it easier for people to achieve in their jobs. Ideas include communicating more informally and streamlining the most cumbersome forms and processes." Provide training and coaching. In today's rapidly changing world, education, training and coaching should be a continuous life-long endeavor. Your core competence should be developing people: "In the end, great people make things happen." Let people know that you value their ideas. Outlaw autocracy and tyranny to help people to be open, to speak up, and to share. Involve employees in decision-making. "Everyone wants to know that their ides are valued (that was the lesson of GE Work-Out). You can add confidence to your own team simply by asking colleagues to voice their opinion, and showing that you value their judgment." Give people independence and resources. Empower workers to flourish and grow. Let people manage their delegated business as they see fit. Remember however, that “a mission cannot, and must not, be delegated to anyone except the people ultimately held accountable for it.” Encourage people to take big swings. The inevitable surge of self-confidence that grows in people who win leads to another natural outgrowth: simplicity.
- Never allow your company to take itself too seriously. "As I went to bigger pieces of GE, I found bigger bureaucracies, layers and all that stuff and it wasn't friendly," writes Jack Welch. "Business was very serious-turf-boxes. Business isn't that. Business is ideas and fun and excitement and celebrations, all those things." Ultimately, Welch's book Winning published in 2005 is about making business more fun: “There are several themes you’ll hear again and again: the team with the best players wins, so find and retain the best players; don’t overbrain things to the point of inaction; no matter what part of a business you’re in, share learning relentlessly; have a positive attitude and spread it around; never let yourself be a victim; and for goodness sake – have fun.” Take swings, have fun. Welch's "Authentic Leadership Model" included such success factors and traits as having a sense of humor, having fun, and having infectious enthusiasm. Welch's ultimate advice to those who want to be managers: “Err on the side of the bold. … Take swings, have fun.” Find job that challenges you. "Seek out jobs and assignments that challenge your mind. You will never find out what you are truly capable unless you have job that inspires you." When asked to give one important piece of advice for the new generation of managers, Welch answered, "Do your thing. I mean have fun. Do what you like. If you're doing something you don't like, get the hell out of it. Go live and do things and reach for the moon all the time. Have fun doing it and don't be afraid. Don't live in a box." Remove anything that makes people less excited about going to work. Business should be about passion and winning and creating new things. It doesn't have to be about slogging through bureaucracy and approvals and all the other things that make work so depressing. Celebrate success. “Business is ideas and fun and excitement and celebrations, and all those things.” Business has to be fun. For too many people, it's "just a job". It is also a great way to energize an organization. A CEO's job is to make sure that his/her team is having fun – while they're being productive.
- Evolve a game plan, a business strategy "number one, number two." Build on what the company does best. Have a Unique Selling Proposition based on giving customers value that competitors cannot equal or surpass. Become more concrete, more focused. In business, the strong survive, the weak do not. The big, fast ones get to play, the small, slow ones are left behind. There is a competitive advantage of being the best – or the second best – that can, and should, be exploited. Winners and market leaders will be those insist upon being the number one or number two fastest, leanest, lower-cost, world-wide producers of quality goods or services and those who have a clear technological edge or a clear competitive advantage in their chosen niche. Send shivers throughout your organization. Don't keep your number one, number two strategy a tightly held secret keeping everyone guessing about your intentions. Make it clear to everybody that your company has a purpose and focus and is determined to become a most competitive enterprise. Shake things up, force your leaders to look at their businesses anew, giving them a challenge to grapple with: the challenge of staying number one or number two under constantly changing competitive conditions. Set the bar a bit higher. It is healthy. It is invigorating. Exact the highest standards and make sure that everyone in your company meets those standards. Mediocre players will eventually lose out. Don't benchmark yourself against your direct competitors - target much higher. If your returns are nine and your competitor's seven, you are doing well. But can't you get fifteen? Look for the quantum leap. Make surprise moves – shock your rivals. Shake things up while other look on from the sidelines, sitting idly by while you knock your competitors for a loop. The three critical ingredients of the quantum leap are surprise, boldness, and shock. Get rid of fat. There is no real virtue in simply looking for a fight. If you are in a fight – that is , in a competitive battle to dominate the marketplace – your job is to win. If you cannot win, it is best to find out a way out, to jettison your weak business so you could live to fight another day. Focus on your core strengths, and get rid of weak businesses that slow you down. Create a synergistic combination of star businesses.
- Take great pride in your work. A real leader has enormous energy and passion for the job, and sees it operationally, not as a 'staffer.‘ Make quality your way of life. Every process, product, service, memo, idea, speech, report, etc. bears a certain level of quality. Infuse quality into everything you do. Focus on how people are producing, not on how much they produce. Quality is your job. "Never think that quality is someone else's job. The best way to ensure quality is to understand that it's your job, 24 hours a day and seven days week." Make quality the job of every employee. Quality must be central activity of every person. "You can't be balanced about this subject. You've got to be lunatics about this subject. You've got to be passionate lunatics about the quality issue. You've got to be out of the fringe of demand and pressure and push to make this happen. This has to be central to everything you do every day. Your meetings. Your speeches. Your reviews. Your promotions. Your hiring. Everyone of you here is a quality champion or you shouldn't be here." Seek out quality training. At GE, Six Sigma changed the fundamental DNA of the company. Jack Welch used to say that Six Sigma was the most training thing GE ever had. "It's better than going to Harvard Business School." Moreover, the detailed training for Six Sigma projects, followed by their execution indoctrinates and enthuse employees as they learn how much they can do, as individuals and in teams, to transform performance. Involve customers. Quality program is aimed at enhancing satisfaction of your customers. Find out what customers want. Involve them to participate in your work, to drive it, to "manage your enterprise." Exchange best practices. Best practice exchanges can take both internally and externally. To illustrate, Welch once picked 29 managers to tell about their Six Sigma successes before 471 peers gathered at Boca Raton. By doing so, Welch not only encouraged the propagation and sharing of quality ideas. He sustained the top-down pressure for greater efficiencies and wider effectiveness – and encouraged others to spread the message in turn.
- Invest in continuous education and training. Now, when everybody's job is many times faster than it was few years ago, the fundamental have got to be more education, more information knowledge. "Everyone has to be gearing themselves to a faster pace, to more competitiveness, to more intellectual capital. That's the game." Shun the incremental and go for the leap. Balance fast-growth, higher-risk businesses with dependable and steady ones. The rapid growth of a business may well be unpredictable. The dependable businesses, though, give a company "enormous staying power" and underpin a balanced portfolio. Constantly improve productivity. Successful companies value incremental gains. But make also surprise moves. Disrupt yourself rather than be disrupted. Invest in young innovative firms, especially if a synergetic relationship between the venture and one of more of your businesses is possible. Search for the best ideas. Create an innovative atmosphere where people are confident that how far and fast they move is constrained only by the limits of their creativity and drive and by their standards of personal excellence. Establish a "boundaryless" culture in which all employees at all levels of the company participate in innovation and problem solving. "The only ideas that count are the A ideas. There is no second place. That means we have to get everybody in the organization involved. If we do that right, the best ideas will rise to the top." Practice systems thinking and holistic approaches. Seek to improve and optimize the totality of your business rather than the profits of its components. "Everything about this enterprise is doing more with less. It needs rejuvenation all the time. Quality is the next in the learning process. Getting rid of layers. Getting rid of fat. Involving everyone. All that was to get more ideas. The whole thing here is to create a learning organization." Invest in information technology and information management. "The Internet is the Viagra of big business," says Jack Welch. Today information is understood as a competitive necessity, from resolving internal organizational issues to addressing market-based competitive realities. Spend an hour per week learning what competitors are doing. Spend time on their websites, or studying their ads, catalogues and conference papers.
- Cultivate the culture of speed. "Speed is the indispensable ingredient in competitiveness... Speed keeps businesses – and people – young." Speed exhilarates and energizes. It's addictive, and it's a taste you need to cultivate. Eliminate layers. Delayering speeds communications and helps to get new products and services to markets more quickly. Remove all roadblocks. The world is becoming more information-intensive, and decision-making and quick responses are indispensable weapons. And in future, change will be even quicker. The old advantages of patience, paternalism, and respect fro tradition are now hurdles in a world that is rapidly changing." Anything that slows your company down must be removed. Eliminate bureaucracy, make informal a way of life, and empower employees. Don't "sit" on decisions. Don't set something aside instead of making a decision on the spot. In order to get speed, real speed, decisions at virtually every level have to be made in minutes, not days or weeks. Create an open organization. "Speed is the product of an open organization. Enormous energy and the ability to energize others is one of our critical values. Involve everyone and move quickly. If you can't come to a fast decision, and you can't get everybody in the game quickly, then you don't have the right values. Being a brilliant administrator is not enough. You've got to excite people. Get them going." Communicate faster. Make your messages simple and informal. Be focused and consistent. Remove constraints blocking communication between senior and junior levels of your organization, across functions, and across geographic and cultural lines. Make speed a habit. Incorporate speed into every activity and process. Decrease control: as control decreases, speed increases, and vice versa. Pounce every day. Leave no stone unturned. Live urgency. Don't waste time. Take advantage of every minute, and know that even a minor delay can mean losing vital business." Make decisions faster. Move faster than your competitors to win business, please customers and snap up opportunities. "Don't sit still. Anybody sitting still, you can guarantee they're going to get their legs knocked out from under them."
- Get lean. Slice away unnecessary bureaucratic layers of management. Every layer is a bad layer. Remove the monitoring role of senior managers. Get agile. Develop 'a big company body in a small-company soul," one that has the financial muscle and speed to deal with global competition. Find a way to "combine the power, resources, and reach of a big company with the hunger, the agility, the spirit, and the fire of a small one." Start thinking like a small company. As institutions grow and become more comfortable, their priorities shift from speed to control; from leading to managing; from winning to conserving what they had won; from serving the customer to serving the bureaucracy. "Make your business grow, but do everything possible to get that small-company soul into the body of your big business – and you'll have the best of both worlds." Infuse a small company soul into your organization. Small companies know the penalty for hesitation in the marketplace. Run you company as if you were running a grocery store. "In a grocery store, you know the customers, their names, what they buy, and whether they like your offerings." Communicate like a small company. "Small companies communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them the generally know and understand each other... We love the way small companies communicate: with simple, straightforward, passionate arguments rather than jargon-filled memos, "putting it in channels", "running it up the flagpole," and worst of all, the polite deference to the small ideas that too often come from big offices in big companies." Stay close to your customers. "Everyone in a small company knows the customers – their likes, dislikes, and needs – because the customer's thumbs up or down means the difference between a small company becoming a bigger company tomorrow - or no company at all. It comes down to something very simple: Small companies have to face into the reality of the market every day, and when they move, they have to move with speed. Their survival is on the line."
- END-USER LICENSE AGREEMENT AND LIMITED WARRANTY Grant of License and Ownership This Ten3 Mini-course (“Mini-course”) is licensed, not sold, to you by Vadim Kotelnikov, the author (“Licensor”), and in consideration of your payment of the license fee, which is a part of the price you paid, and your agreement to these terms. This license allows you to use and display your copy of the Mini-course on a single computer (i.e. with a single CPU) at a single location for academic and presentational use only, so long as you comply with the terms of this Agreement. You may make one copy for back up, or transfer your copy to another CPU, provided that the Mini-course is usable on only one computer. You may disassemble, rearrange or translate the Mini-course without changing its individual slides and removing the reference to the source. You may also print out the Mini-course as slides or handouts for your personal use. Restrictions You may not transfer or distribute the Mini-course to anyone else. Except for backup, you may not copy the Mini-course. You may not network the Mini-course or otherwise use it on more than one computer or computer terminal at the same time. You may be held legally responsible for any copying or copyright infringement which is caused by your failure to abide by the terms of these restrictions. Termination This license is effective until terminated. This license will terminate without notice from the Licensor if you fail to comply with any provisions or limitations of this license. Upon termination, you shall destroy all copies of the Mini-course software. Should you have any questions concerning this agreement or if you wish to contact the Licensor for any reason, please send e-mail to: headoffice@1000ventures.com