Fortune magazine once hailed General Electric as the “most admired company in America.” In Fortune’s words, Chairman Jack Welch “has rewritten the book on management while keeping GE huge, nimble, and immensely profitable.” Although GE has changed since Welch retired in 2000, it is still the fourth most recognized brand in the world.
Can Hudson Valley organizations employ the strategies, ideas, and insights that Welch used to improve GE and apply them in any company of any size, even today? Welch didn’t mind engaging in what he called “plagiarizing” good ideas. “Adapted ideas are better than new ones, because most of the bugs have been worked out.”
His personal mantra became “embrace change, don”™t fear it.” He took over GE’s leadership in 1981, knowing that Japanese manufacturers had improved their quality and could compete at lower prices. GE had to change and Welch set out to make GE leaner, tougher, and more competitive.
He shut down or sold business units, keeping only those that could be No. 1 or 2 in their markets and cut the workforce from 412,000 to 229,000. The company was deeply entrenched in products like light bulbs, turbines, locomotives, dishwashers, refrigerators and jet engines.
Today, it is heavily involved in services and owns RCA, the nation”™s second- largest service firm, which includes NBC TV. In 2004 GE spun off most of its mortgage and life insurance assets into an independent company, Genworth Financial and acquired 80 percent of Universal Pictures forming NBC Universal.
Welch decided the bureaucracy, which was supposed to provide order and control, was a liability. In the 1980s, GE’s business leaders reported to senior VPs, who reported to executive VPs, all of whom had staffs of their own. Once Welch had completed his transformation, only 14 business leaders reported directly to three people who occupied the CEO’s office: Welch and his two vice chairmen.
After completing deep employee and management cuts, he knew he had to instill a sense of stability in the organization. Welch then empowered GE’s remaining employees through a new “Work-Out” program that gave everyone a chance to have input on improving GE’s day-to-day operations. Welch believed that small, lean companies communicate better, move faster and waste less.
With fewer people, only important things get done. However, as companies grow, they follow predictable life cycles. Priorities shift from speed to control; from leading to managing; from winning to conserving what they’ve won; and from serving the customer to serving the bureaucracy.
From the legacy of Welch we learn that there’s nothing wrong with growth, but that organizations should never lose sight of the advantages that small firms offer such as quick, direct communications and fast decisions. In 1995, NBC won the exclusive rights to broadcast the Olympic Games. Because layers and layers of bureaucracy had been eliminated, the deal was completed in a single weekend.
Finally, Welch demanded that his remaining managers stop being bosses and start acting like leaders, breaking the paradigm that managers should monitor, supervise, control and keep a close eye on subordinates. With its hundreds of thousands of employees, “managing less is still managing better.” Instead of bosses who intimidate people by pointing out their mistakes, they inspire a clear vision of how things can be done better and then ”¦ get out of the way.
Questions for discussion:
What can we learn from GE and the legacy of Jack Welch in order to communicate better, move faster and waste less?
Are we guilty of doing things and participating in low margin markets because of a reluctance to embrace change and enter new ventures?
Joe Murtagh is The DreamSpeaker, an international keynote speaker, meeting facilitator and business trainer. For questions or comments, Joe@TheDreamSpeaker.com, www.TheDreamSpeaker.com or call (800) 239-0058.
