The art of leading comes down to one thing: facing reality, and then acting decisively and quickly on that reality.
Jack Welch’s goal was to transform GE’s businesses into the best in the world. To get there, he devised a strategy called Face Reality.
Welch just couldn’t get enough of “facing reality”:
It may sound simple, but getting any organization or group of people to see the world the way it is and not the way they wish it were or hope it will be is not as easy as it sounds. We have to permeate every mind in the company with an attitude, with an atmosphere that allows people—in fact, encourages people—to see things as they are, to deal with the way it is now, not the way they wish it would be.
Facing reality in the early 1980s meant taking an entirely new look at GE’s businesses and deciding what to do with them. Welch called this process “restructuring.”
Restructuring wasn’t about change at the margins. It was about scrutinizing the whole company and changing things.
IT’S OKAY TO CHANGE A COMPANY
At the core of restructuring was the assumption that it was okay, sometimes even necessary, to change the company. In October 1981, just 6 months after he took over as CEO, Welch addressed 120 corporate officers and spelled out his agenda. It was nothing short of a revolution.
Bureaucratic waste would come to an end, he said. No longer could anyone write deceptive plans or propose unrealistic budgets. Henceforth, the tough decisions that had to be made would be made.
Reading between the lines, Welch was really saying:
Check your old excuses at the door.
Stop insisting that life has been unfair to you. Stop seeing conspiracies. Deal with situations as they are. In Welch’s words:
Most of the mistakes you’ve made have been through not being willing to face into it, straight in the mirror that reality you find, then taking action right on it.
That’s all managing is, defining and acting. Not hoping, not waiting for the next plan. Not rethinking it. Getting on with it.
MOVING QUICKLY
In his later years as CEO at GE, Welch admitted that he himself had not always faced up to reality. Nor had he moved quickly enough to implement major changes at GE:
I would have liked to have done things a lot faster. I’ve been here for 17 years. Imagine if I’d taken 4, 3, or even 1 year too long in making my decisions. I would have had a rude awakening.
On balance, though, Welch made bold decisions that indicated he was (a) facing reality, (b) adjusting to that reality, and (c) moving quickly.
In the early 1980s, when he realized that GE would have to restructure, he was facing reality: GE needed to devote all of its resources to its strongest businesses.
In the mid-1980s, when he authorized GE’s purchase of RCA, he was facing reality: GE needed the acquisition to push hightech growth.
In the late 1980s, when he began the Work-Out program, he was facing reality: Employees needed a voice in running the company.
In the mid-1990s, when Welch started his now-legendary Six Sigma quality program, he was facing reality: GE’s quality programs were just not working.
And in the late 1990s, when the Internet came into its own, Welch faced a new reality. At first, like so many other CEOs, he avoided the Internet. But as new models for doing business in cyberspace emerged, Welch set out to revamp the entire enterprise.
He talked about the Internet, and facing reality, when he addressed GE shareholders in April 2000:
Seeing reality for GE in the ’80s meant a hard look at a century-old portfolio of business . . . Seeing reality today means accepting the fact that e-business is here. It’s not coming. It’s not the thing of the future. It’s here . . .
To Jack Welch, facing reality was of supreme importance.
Stick your head in the sand, and your business will stay stuck in the past. If you face reality and move quickly, you have a chance to compete and win in a changing business environment.
WELCH RULES
- Face reality. Business leaders who avoid reality are doomed to failure.
- Act on reality quickly! Those who truly face reality can’t stop there. They must adapt their business strategies to reflect that reality, and they must do so quickly.
- Turn your business around. Stick your head in the sand, says Welch, and you will fail. Face reality, and you may turn a bad situation into a great one.