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SPARK OF THE CORPORATE

“Learning to love change is an unnatural act in any century-old institution, but the GE I am leaving does just that. Great people, not great strategies, are what made it all work”.

Jack Welch the most bold, powerful, influential and well-known business legacy of his era took up the charge as Chairman and CEO in April 1981. Here began a history of transformation for GE. Welch was at the helm as CEO for almost two decades until 2001 September, with Jeff Immelt as his successor.

The company had a strict beaurocratic style of management. In his first phase of transformation, Welch made a series of controversial decisions and tough calls in the process of transforming the company.

The first strategy he adopted was that each division must be top one and two in their respective markets, or else they got to “fix it, sell it, or close it”. Jack Welch also followed a strategy of lay offs, one in every four employees, within five years.

There were 118,000 employees in all, including 37,000 employees in the businesses that were closed. The media opposed his policies and this massive layoffs and closures earned him the title unflattering moniker “Neutron Jack”.

In spite of the high resistance from outside, Welch remained much focused on his job. In mid 1970’s he was carried away by the high efficiency and their competitive cost structure of Japanese in the industry, this in turn led to fear that Japanese would pose a threat to GE. As a result, he acquired a Japanese company RAC for $6.3bn in 1985 with the main aim of getting NBC that would transform the company.

Jack wanted to free the company from beurocracy and make it more a people’s company, where ideas flourished and boundaries vanished. Welch strongly believed that "Culture does count, big time." Therefore, he laid much stress on "boundary less" culture where the employees of all the levels of the company equally participated in the problem solving and innovation. As the strategy of people’s culture took off and assumed momentum, Jack ordered all the 4,000 managers of the company to thoroughly analyze their staff on annual basis. The top 20 percent of the staff were nurtured and strongly rewarded. The middle 70 percent of the workers were more needed and crucial for the operations of the company and the remaining 10 percent of the employees were to be improved or eliminated. This“Vitality Curve” was the base to construct a “People Factory”, resulting in retaining the best talent in the corporation.

With the spirit of early successes, Welch moved ahead and bought “Kidder” one of the Wall Street’s oldest investment firms in 1986, against the advice of few key board members. Welch later said it was the biggest mistakes that he had ever made in his entire career and that “The Kidder experience never left him”. It was a classic case of hubris, a scandal erupted, and there was an insider trading in exchange of cash.

In the second phase of transformation, Welch focused on four basic initiatives like Globalization, Services, Six-Sigma, and e-business for which Welch became more iconic. During the globalization, Welch traveled around the world making deals in different countries like India, Japan, China, Hungary etc and was never a person to sit in the head office. The countries, which were either in transition or out of favor, were targeted. Welch managed to finish his first big deal in New Eastern Europe. Meanwhile under remarkably excellent leadership of Jack, the services division grew from $8bn in 1995 to $19bn in the year 2001.During his tenure, GE market value grew from $13 billion to $500 billion.

In 1996, Welch recognized that quality has become growing concern for the growth of business. Therefore, he implemented a mathematically designed program called Six Sigma, which improved processes, decreased deviations, and created more perfect products at relatively low cost. Today this program is embraced at all levels of GE.

Though Welch was little late in entering the e-business market, the impact it had on the company was huge and allowed GE to broaden and expand its markets, finding new customers and make its supplier base more global.

Jack Welch worked for General Electric Company from 1960 until 2001. From 1981 to 2001, he was its Chairman and CEO. On September 7, 2001, Jack Welch said goodbye to the company, and the people, who have comprised the whole of his business life. He appointed Jeff Immelt to succeed him and set in place a staff that he believes will support his successor, and set a glorious future to the company. He is a reputed strategist, great visionary who could realize his strategies and moved the company towards success. Finally he transformed the company as he wished from a beaurocratic company to a more dynamic and competitive company in the whole world. He is a role model for all the upcoming business people. He is the author of many books like Winning, Straight from the gut etc in which he revealed his management and leadership styles and approaches, so that they would guide future generation managers and leaders.

Career Outlook

Jack Welch joined General Electric in 1960 soon after completing his masters and PhD. He started his career at GE as a junior chemical engineer in Pittsfield, Massachusetts, for salary of $10,500 like any other person. Once he accidentally blew up the roof of the factory while working on a plastics project. No doubt, that Welch was blunt and candid, which alienated few people, but was named a company manager at a young age of 32, the youngest in GE history. After a year in GE, he got a very minimum raise of only 1000 dollars for which he was more displeased, and in addition to this the invaded bureaucracy within the company made him leave the company to work with International Minerals & Chemicals in Skokie, Illinois.

Ruben Gutoff, an young executive two levels higher than Welch, identified that Welch was the more valuable, highly potential and important human capital, which the company cannot afford to lose. Therefore, he persuaded and convinced Welch to be back in the company. The lines of persuasion go as follows “"Trust me," Gutoff remembers pleading. “As long as I am here, you are going to get a shot to operate with the best of the big company and the worst part of it pushed aside." "Well, you are on trial," retorted Welch. "I'm glad to be on trial," Gutoff said. "To try to keep you here is important." At daybreak, Welch gave him his answer. "It was one of my better marketing jobs in life," recalls Gutoff. “But then he said to me--and this is vintage Jack--'I'm still going to have the party because I like parties, and besides, I think they have some little presents for me.'"

Twelve years later Welch took charge as the Vice President of GE in 1972. Later he climbed up the corporate ladder to become Senior Vice President in 1977, Vice Chairman in 1979. Finally, he achieved his long-term goal of becoming CEO of GE in 1981, with Reginald H. Jones as his successor. He was the youngest Chairman and CEO of the company. This was the initiation for change in management and transformation of GE in 1982.

More about Jack Welch

BornNovember 19, 1935 (age 76)
Peabody, Massachusetts, U.S.
ResidenceBoston, Massachusetts, U.S.
Alma materBachelors in chemical engineering (University of Massachusetts Amherst)
M.S and PhD (University of Illinois)
OccupationFormer CEO of General Electric (GE)
Marital StatusMarried
ChildrenFour

Jack The leader of leaders Jack Welch was born in Salem, Massachusetts, in 1935. He was the only adored child raised in a working-class Irish neighborhood in Salem, Massachusetts, where Jack learned most of his life lessons. His father John was a Boston & Maine Railroad conductor and his mother Grace was a homemaker. She was most influential person in Welch’s life teaching him most important commandments of life like "If Jack had any leadership style, a way of getting the best out of people,” Grace Welch taught him the value of competition, just as she taught Welch the pleasure of winning and the need to take defeat in stride." Grace Welch raised young Jack with tons of love and self-confidence. She always wanted Jack to give top performance in academics and in sports. Despite of a persistent problem of stuttering and small stature, he excelled both in academics and in sports. It was in the local country club that he developed life long interest in playing golf. Jack Welch repeatedly said that he owed a lot to his mother. He completed his schooling at Salem High School. His interest in learning new things made him earn Bachelors degree in Chemical engineering at the University of Massachusetts Amherst, in 1957. Later he expanded his mind and earned his M.S and PhD the University of Illinois, Urbana-Champaign, in 1960. He was a member of the Alpha chapter of the Phi Sigma Kappa fraternity, while at U Mass.

Coming to personal life of Jack Welch ; Carolyn was the first wife of Jack Welch , they divorced after 28 years of marriage in 1987 after having four children. Later Jack married Jane Beasley, who was a mergers-and-acquisition lawyer, in April 1989. They got divorced in 2003, which proved to be expensive for Welch ($180million). Jack made Suzy Wetlaufer as his third wife. She fell in love with Welch, while preparing for an interview with him for the magazine, and was forced to resign from the responsibility of editor-in-chief of the Harvard Business Review, in early 2002. She co-authored his book ‘Winning’, in 2005, as Suzy Welch.
In May 1995, Welch underwent triple bypass surgery and returned to full time work in September of the same year. He included golf in his exercise schedule, which he gave up due to back ailments. Welch also served as a member of Augusta National Golf Club. He has no regrets in giving up golf. He got involved in various other activities like modern art, cross border traveling, teaching and attending Red Sox games.

Inspiring Quotes of Jack Welch

Jack“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”
Jack“An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.”
Jack“If you don’t have a competitive advantage, don’t compete.”
Jack“Change before you have to”
Jack“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
Jack“When you were made a leader you weren't given a crown, you were given the responsibility to bring out the best in others.”
Jack“Face reality as it is, not as it was, or as you wish it to be.”
Jack“Common mission trap for companies: trying to be all things to all people at all times.”
Jack“Control Your Own Destiny or Someone Else Will”
Jack“If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it you almost don't have to manage them.”
Jack“Giving people self-confidence is by far the most important thing that I can do. Because then they will act.”
Jack“The world of the 1990s and beyond will 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.”

4E’s Model and six rules of successful leadership by Jack Welch

4E’s Model:

EnergyLeaders should have tremendous personal energy
EnergizeLeaders energize teams, and do not intimidate them.
ExecutionLeaders are action-oriented, and should focus on getting results.
EdgeLeaders should have a competitive edge and a will to win.

Six Rules:

JackControl your destiny, or someone else will.
JackFace reality as it is, not as it was or as you wish it to be.
JackBe candid with everyone.
JackDon't manage, lead.
JackChange before you have to.
JackIf you don't have a competitive advantage, don't compete.

Twenty five Lessons from Jack Welch

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."

Jack Create a vision and then ignite your organization to make this vision a reality

JackFocus on strategic issues.

Jack Do not micromanage.

JackInvolve everyone and welcome great ideas from everywhere.

Jack Lead by Example.

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-based 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."
Articulate Your Vision:"Leaders inspire people with clear visions of how things can be done better." The best leaders 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.
Simplify: Keeping things simple is one of the keys to business success. "Simple messages travel faster, simpler designs reach the market faster, and the elimination of clutter allows faster decision making."
Get Less Formal: "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."
Energize others: Genuine leadership comes from the quality of your vision and your ability to spark others to extraordinary performance.
Face Reality: Face reality, and 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.
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."
Get good ideas from Everywhere: 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."
Follow up: 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.
Get Rid of Bureaucracy: 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."
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 boundary less organization.
Put Values First: 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 and exciting others.
Cultivate Leaders: 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.
Create a Learning Culture: 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."
Involve Everyone: 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.
Make Everybody a Team Player: 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.
Stretch: Set stretch goals. 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."
Instill Confidence: Create a truly confident workforce. Confidence is a vital ingredient of any learning. 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."
Have Fun: Fun must be 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...
Be Number 1 or Number 2:"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."
Live Quality:"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."
Constantly focus on innovation: "You have just got to constantly focus on innovation and competitors. You have to constantly produce more for less through intellectual capital. Shun the incremental, and look for the quantum leap." Now the fundamentals have to be more education. More information knowledge, faster speeds, more technology across the board.
Live Speed:"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.
Behave like a Small Company: Small companies have huge competitive advantages. They are uncluttered, simple, and 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." 
Hope viewer’s caught up spark…

 

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