I am not going to attempt, for the sake of intellectual neatness, to tie a bow around the many diverse initiatives of General Electric.
At the end of his first year as CEO, Jack Welch explained what he wanted to do at GE:
If I could, this would be the appropriate moment for me to withdraw from my pocket a sealed envelope containing the grand strategy for the General Electric Company over the next decade. But I can’t . . .
What will enhance the many decentralized plans and initiatives of this company isn’t a central strategy, but a central idea—a simple core concept that will guide General Electric in the ’80s and govern our diverse plans and strategies.
Instead of directing GE’s businesses on the basis of a specific step-by-step strategic plan, Welch preferred to set out only a few clear, general goals. This would permit his employees to make the most of opportunities that came their way.
Welch was impressed by what he had read about the Prussian military strategists in the nineteenth century:
They did not expect a plan of operation to survive beyond the first contact with the enemy. They set only the broadest of objectives and emphasized seizing unforeseen opportunities as they arose.
In running GE, Welch adopted the same attitude: Strategy would not be etched in stone but instead would evolve over time. It was important to set broad objectives that were consistent with the company’s values and to apply those values as situations arose.
The values that guided Welch through the 1980s and 1990s were very general. But taken together, they provided a strong management framework:
- Create a clear, simple, reality-based, customer-focused vision and be able to communicate it in a straightforward way to all constituencies.
- Understand accountability and commitment and be decisive; set and meet aggressive targets; always with unyielding integrity.
- Have a passion for excellence; hate bureaucracy and all the nonsense that comes with it.
- Have the self-confidence to empower others and behave in a boundaryless fashion; believe in and be committed to Work-Out as a means of empowerment; be open to ideas from anywhere.
- Have, or have the capacity to develop, global brains and global sensitivity, and be comfortable building diverse global teams. Stimulate and relish change; do not be frightened or paralyzed by it. See change as opportunity, not just a threat.
- Have enormous energy and the ability to energize and invigorate others. Understand speed as a competitive advantage.
- To show the consistency of Welch’s attitude toward change at GE over the years, we include a version of those values from the summer of 2000.
GE leaders . . . always with unyielding integrity:
- Are passionately focused on driving customer success
- Live Six Sigma quality, ensure that the customer is always its first beneficiary, and use it to accelerate growth
- Insist on excellence and are intolerant of bureaucracy
- Act in a boundaryless fashion; always search for and apply the best ideas regardless of their source
- Prize global intellectual capital and the people that provide it; build diverse teams to maximize it
- See change for the growth opportunities it brings, e.g., e-business
- Create a clear, simple, customer-centered vision, and continually renew and refresh its execution
- Create an environment of “stretch,” excitement, informality, and trust; reward improvements and celebrate results
- Demonstrate, always with infectious enthusiasm for the customer, the 4-E’s of GE leadership: the personal Energy to welcome and deal with the speed of change, the ability to create an atmosphere that Energizes others, the Edge to make difficult decisions, and the ability to consistently Execute
Don’t get bogged down in details, Welch advises. Lay out your goals and adjust to changing realities as you go along.
WELCH RULES
- Set out a general framework for your team. Do not try to set a detailed game plan for every situation.
- Create values that are consistent with the company vision. Values should reflect the vision, culture, and goals of the organization.
- Make sure there is room to maneuver. Core values should be constant, but the strategies may need to change with the competitive environment.