People always overestimate how complex business is.
This isn’t rocket science. We’ve chosen one of the world’s simplest professions. This is one of Jack Welch’s fundamental beliefs about management. As he phrases it:
I operate on a very simple belief about business. If there are six of us in a room and we all get the same facts, in most cases the six of us will reach roughly the same conclusion.
The problem is, we don’t get the same information. We each get different pieces. Business isn’t complicated. The complications arise when people are cut off from information they need.
To get the critical information, Welch says, a manager must ask five key questions:
- What does your global competitive environment look like?
- In the last 3 years, what have your competitors done?
- In the same period, what have you done to them?
- How might they attack you in the future?
- What are your plans to leapfrog them?
GE, an enormous enterprise operating on an international scale, is surely a good test of this philosophy. How did Welch manage to keep up with all 12 of GE’s businesses? His answer:
There are a series of mechanisms that allow you to keep in touch. I travel around the world often, so I’m smelling what people are thinking . . .
None of us runs the businesses. I’m never going to run them. I don’t run them at all. If I tried to run them, I’d go crazy. I can smell when someone running [a business] isn’t doing it right.
So again, Welch is more of a “supermanager” than a manager, overseeing a dozen huge businesses simultaneously. He is actively involved but mainly through recruiting talented people, providing vision, and allocating resources.
My job is to put the best people on the biggest opportunities, and the best allocation of dollars in the right places.
That’s about it. Transfer ideas and allocate resources and get out of the way.
But information was also critical. Downsizing at GE helped by creating a company that was far more effective at communicating with itself.
As we became leaner, we found ourselves communicating better, with fewer interpreters and fewer filters. We found that with fewer layers we had wider spans of management.
Inevitably, as managers and employees in the lower ranks were asked to take more responsibility, Welch began to feel that it was important to distinguish between leaders and managers:
Leaders—and you take anyone from Roosevelt to Churchill to Reagan—inspire people with clear visions of how things can be done better. Some managers, on the other hand, muddle things with pointless complexity and detail. They equate [managing] with sophistication, with sounding smarter than anyone else. They inspire no one.
Jack Welch never involved himself in deciding on the style of a refrigerator or what television programs NBC should schedule for Thursday night prime time. As he put it:
I have no idea how to produce a good [television] program and just as little about how to build an engine . . . But I do know who the boss at NBC is. And that is what matters. It is my job to choose the best people and to provide them with the dollars. That’s how the game is played.
What companies and business leaders must do, he argues, is to
provide an atmosphere, a climate, a chance, a meritocracy, where people can have the resources to grow, the educational tools are available, they can expand their horizons, their vision of life. That’s what companies ought to provide . . .
People say to me, “Aren’t you afraid of losing control? You’re not measuring [anymore].” We couldn’t lose control of this place. We’ve got 106 years of people measuring everything. So we’re not going to lose control. It’s in our blood.
WELCH RULES
- Business is simple. Complications arise when people are cut off from vital information.
- Always keep the five key questions in mind: What does your global competitive environment look like
- In the last 3 years, what have your competitors done?
- In the same period, what have you done to them? How might they attack you in the future? What are your plans to leapfrog them?
- Managing is allocating people and resources. Put the right people in the right job, give them what they need, and then get out of the way.
- Managers lead with vision. Managers must persuade others to implement through the force of vision.