Jack - Straight from the GutFormer General Electric CEO Jack Welch leaves us with many lessons in management and leadership.
From his humble beginnings as a competitive kid from working-class Salem, to his rise to becoming CEO in 1980, and the twenty-plus years reign at the top. In this book, Jack Welch recalls how hard the climb to the top was; even if people from the outside thought it was easy.Jack Welch was a diligent worker who would put in long hours and never missed a day of work. He loved greeting the public and meeting interesting people. Jack Welch started at GE in 1960, but soon became frustrated with bureaucracy that it almost drove him out of the company.In 1961, he got a $1,000 raise. It was fine until he found out later that he got exactly what the others received. Jack felt strongly that he deserved more than the “standard”increase. He started looking for another job, and he felt trapped in the pile at thebottom of a big organization.A lot of people think that
differential treatment erodes the very idea of teamwork. Butaccording to Jack Welch, you build strong teams by treating individuals differently.Winning teams come from differentiation, rewarding the best and removing theweakest, always fighting to raise the bar.In 1963, on his third year with the company, Jack blew up a factory. He was then 28years old and he was the boss, so he took responsibility. It was also the first time hemet Charlie Reed who took a Socratic approach in dealing with the accident.In 1971, JackWelch got a job as the head of the chemical and metallurgical division.This brought new challenges. His first job was to get a close look at his team. He isthe first to admit that he was somewhat impulsive in removing people in those earlydays. It is the toughest and most difficult thing to do, it''s never easy and it doesn''t everbecome easier.Having been in the field, Welch had a strong prejudice against most of thebureaucratic culture and its “superficial congeniality.” The atmosphere wascharacteristically pleasant on the surface, with distrust and savagery boiling beneath it.He started identifying business that were not core to GE''s and started laying off a lot of employees.Welch''s “Number One or Number Two” vision shaved 118,000 people from GE''spayroll in a five-year period. This move earned him the name “Neutron Jack” - theguy who removed the people but left the buildings standing.All the while Welch invested millions of dollars in supposedly “unproductive”pursuits, such as renovation of the company''s headquarters and a major upgrade ofits Crotonville management development center.Both were consistent with becoming a world-class competitor. GE could not hire and retain the best people, while becoming the lowest-cost provider of goods and services, without doing both.Spending millions on buildings that made nothing, while closing downuncompetitive factories that produced goods. Both were consistent withbecoming a world-class competitor. For years, Jack Welch was not a fan of the so called “quality movement,” feeling thatearly quality programs were too heavy on slogans and light on results. The subject ofquality had, however, become a concern of many GE employees by 1995, a concernbacked up by industry figures.Immediately,Welch mobilized GE''s executives toward the goal of making Six Sigmaan enormous success. As with every initiative, GE backed up Six Sigma with its rewards system, altering itscompensation plan for the entire company so that 60 percent of one''s bonus wasbased on financials and 40 percent on Six Sigma results. The results of GE''s Six Sigma push were almost immediate, $150 million in savings in the first year alone, and $1.5 billion by 1999.Although Jack Welch admits he was slow to recognize the power and opportunityinherent to the Internet, when he got into it, he got into it full-force, and brought hiscompany into the DigitalAge.The buying and selling was faster and more global, and it had profound ramificationson business. GE saw the Internet opportunity in three pieces: the buy, the make andthe sell.There is no formula for being a CEO. Everyone does it differently, and there''s no rightor wrong way to go about it. There is no magic formula to figure out what is the rightthing to do in all cases. But he goes on further to point out to a few necessary traits that are necessary in a leader.