There are business leaders, industry leaders, global leaders, and then there’s Jack Welch.
Jack Welch started working at General Electric in 1960 as a junior chemical engineer earning less than $1000 a month. He almost quit the company shortly after arriving, disenchanted by the corporate bureaucracy that seemed to stifle growth and fresh thinking. He persevered, however, and just two decades later he had climbed the corporate ladder and was named the youngest CEO in the 124-year-old company’s history.
Adjusted for inflation, the company’s stock price had lost half its value in the ten years before Welch took the reins. With a fresh perspective and a talent for management, Welch took to dismantling the management and bureaucracy he had identified decades earlier and revitalizing a company that was big but hardly innovative. By the time he retired from his post in 2001 Welch had succeeded in transforming GE into a global leader and a profit machine. The company’s stock price had increased 4000% and Fortune magazine dubbed him Manager of the Century.
So, what made Welch so successful, and what set him and GE on the path to greatness?
In my opinion it comes down to his mastery of three interconnected concepts: vision, strategy, and fast execution.
When Welch arrived at the helm he laid out his vision for GE executives and business managers clearly and simply. As Fortune magazine recalls:
Welch gave GE a new mission: to be the world’s most valuable company. This profound shift in focus not only reoriented the company but also was so audacious — GE was then No. 10 — that it could actually stir people. As the centerpiece of his new plan, Welch declared that every GE business must be No. 1 or No. 2 in its industry, another radical change in self-assessment, and he reportedly wasn’t crazy about any of them being No. 2.
That’s the vision: be the world’s biggest company, and be first or second in every single business unit, too.
Next came the strategy to achieve that vision. Among the immediate changes that Welch made were:
- Selling off 71 businesses that could not or would not be best in class
- Launching 118 new business, joint ventures, or acquisitions to expand GE’s reach, especially in the service sector
- Cutting the planning staff at the GE corporate office and spinning out planning to managers working in individual business units
- Most importantly, he set in place a strategy of pushing his managers to think for themselves and not rely on the central corporate office to make decisions. The famed GE blue books – the five volumes of management advice that were “designed to minimize the “human element” in decision making” that every GE manager was required to follow – were torn up.
And then came the execution.
Welch’s strategy began to bear fruit as his exhortations to take decisions locally, learn from other successful companies, and identify and promote the high performers early broke through decades-old systems. Execution wasn’t always smooth and there was pushback against some of the more controversial policies that followed. Yet so inspiring was his vision and so aligned was the strategy that the execution was largely considered just the next logical step in GE’s path to global success.
But how would the best manager of the 20th century cope with the 21st century? While I believe the fundamentals of vision, strategy, and fast execution remain so key to success there are other concepts that the best managers embrace now that Welch would have rejected.
Take experimentation, for one, and the desire to fail fast to learn more, iterate often, and work with agility. There’s also an openness to new ideas that’s shared amongst the best managers and executive leaders today. Great ideas and inspiration aren’t always going to emerge from the company you lead but instead will come from competitors, or perhaps entirely different industries altogether.
For 20 years Welch used vision, strategy, and execution to reform, then transform General Electric. Now, nearly twenty years after Welch retired, those same three qualities, along with a willingness to experiment and embrace the best ideas no matter where they come from, continue to define the corporate leaders and C-level executives who are embracing truly transformational technologies in our current digital revolution.
Every day I see how CoSMo’s Asset Investment Optimization technology is playing a role in guiding the vision, developing the strategy, and linking it directly with operational decision making and execution in some of the world’s most asset intensive industries.
I’m proud that CoSMo plays a role in helping executives make their mark on the twenty-first century just like Jack Welch made his mark on the twentieth-century, and I’m excited about the ways our technology is being used across a variety of industries to drive transformation, support innovation, and move executive visions to industrial reality.
Jack Welch image courtesy of Hamilton83