Leadership Secret 1- Harness the Power of ChangeIt is important in today’s changing economy that business leaders are not afraid to make necessary changes to succeed. When Jack Welch became CEO of General Electric in 1981, it was a lethargic business, satisfied with its output and entangled in bureaucracy. He understood the competition that overseas markets presented and the need for a new global strategic plan. He was able to envision the true potential of his resources and implemented drastic changes such as the Stretch, Work-Out, and Number One, Number Two business concepts (which will be discussed later) to achieve his goals.
Leadership Secret 2- Face Reality!This is the most important rule in Jack Welch’s business strategy. Too many business leaders become comfortable with their performance and refuse to see the need for change. A business leader must understand the importance of accurately defining their company’s current position if they are planning on making successful changes. And once problem areas are discovered, managers must act immediately to correct them. When Welch took over at GE, he quickly addressed the common practice of sugar coating financial paperwork that only left a false since of security and insisted that every business unit in the GE empire must be the number one or number two competitor in its respective marketplaces or it would be fix, close, or sold.Leadership Secret 3- Managing Less is Managing BetterManagers need to provide the vision for their employees and instill confidence. Too many times, employees are held back by not having the power to make even the simplest of decisions without approval.
Managers should empower their employees and trust that they are giving their total effort. This will give managers more time to work on plans to achieve the long-term goals of the company.Leadership Secret 4- Create a Vision, Then Get Out of the Way“People always overestimate how complex business is.
This isn’t rocket science. We’ve chosen one of the world’s most simple professions.” In Jack Welch’s words, business is simple. A leader needs to supply his employees with the information, the resources, the vision, and the atmosphere to succeed and reward them when they do. Welch does not concern himself with the details of GE’s many business units; he only needs to make sure he has the right people in place to carry out his overall vision.Leadership Secret 5- Don’t Pursue a Central Idea; Instead Set Only a Few Clear, Central Goals as Business StrategiesThis secret reiterates Leadership secret 4. A leader needs to set up a framework for the company and not a detailed plan for every entity or situation. Business leaders should also establish a set of core values that will always remain constant with the company’s long-term goals.
Leadership Secret 6- Nurture the Employees Who Share The Company’s ValuesA company’s values must remain constant. They highlight how a company treats its employees, customers, and competition. And, having employees that professionally live by these values is essential in maintaining a company’s vision. Jack Welch separates managers into three different categories: Category A managers meet their goals and share in the company values.
Their future is bright in the company. Category B managers don’t always achieve good numbers but do share in the values.These managers should be encouraged to improve and should be assured security in the company. Category C managers always make the numbers but do not follow the company’s values and beliefs about business. These managers usually run a dictatorship type operation with little respect for their employees’ work and knowledge. Although, they are reaching their goals, they need to be let go before they unravel the continuity and respect that is essential for success.
Part II- Igniting a Revolution: Strategies for Dealing with ChangeLeadership Secret 7- Evaluate Your Business with a Fresh Eye and Decide WhatNeeds Fixing, What Needs Nurturing, and What Needs to be Jettisoned!This secret is a prelude of how Jack Welch moved against the traditional grain of the 115 year old GE Empire and made unconventional decisions to carry the company into the 21st century. It expresses the need to have your “…finger on the pulse of the environment inside and outside the company.” Don’t be bound by tradition and control.Leadership Secret 8- Be number One or Number Two and Keep Redefining Your MarketThe Number One, Number Two Concept was Jack Welch’s way of demanding the most out of his managers and businesses.
His strategy was every business unit in GE either be number one or number two in their respective markets. His reasoning behind this is that the top two competitors in a market could survive a slow growth economy and that everyone else would experience compounding problems during an economic downturn. Also, the top two companies would generate enough income to advance the technology of products and the production processes, which would result in higher quality and competitive pricing.Leadership Secret 9- Downsize, Before it’s Too LateDownsizing is a nasty word in business and is usually only associated with companies in some type of economic turmoil. When Jack Welch became CEO at General Electric, profits were over one billion dollars a year and there seemed to be no apparent problems. But, he knew that some business units were not going to succeed under his Number One, Number Two strategy and not all the those employees could be reassigned. He also knew that he needed to upgrade equipment to surpass the productivity of GE’s competitors. Jack Welch stressed the need to downsize now, before it presented more complex problems in the future.
He knew the move would make him quite unpopular, but today GE, through acquisitions and mergers employs far more people than it did before Jack Welch took over.Leadership secret 10- Use Acquisitions to make the Quantum Leap!This secret simply outlines General Electric’s acquisitions of RCA and Honeywell. Both moves are considered the highlights of Jack Welch’s tenure as CEO of GE.
The RCA move was a drastic step out of the norm for the inwardly focused corporation and the Honeywell deal was a last second effort by Jack Welch that landed GE one of the largest industrial mergers in corporate history.Leadership Secret 11- Learning Culture I: Use Boundarylessness and Empowerment to Nurture a Learning CultureEmpower your employees and encourage them to think. Even encourage them to look outside the company to find ideas. In today’s work environment, many employees are treated as replaceable robots, only there to do a certain job and go home. Welch’s theory is to provide a channel for employees to voice their opinion on operations and provide solutions. Then, managers can take these solutions and share them with other managers, so everyone benefits from a great idea.Leadership Secret 12- Learning Culture II: Inculcate the Best Ideas into the Business, No Matter Where They Come fromThis secret simply reinforces the beliefs of Leadership Secret 11.
Leadership Secret 13- The Big Winners in the 21st Century will be Global In summary, this secret explains the need to look outside the U.S. border for customers. To achieve this, however the company needs to have a secured position in its home market.
Part III- The Boss Element: Productivity Secrets For Creating the Boundaryless OrganizationLeadership Secret 14- De-layer: Get Rid of the FatJack Welch is making a direct reference to the overload of managers in the GE Corporation. Of GE’s 400,000 employees, 25,000 were some type of manager. With so many supervisors overseeing work it took way too long for to get anything accomplish. De-layering gets rid of the bureaucracy and speeds up the communication process. It also empowers and places accountability on lower levels, which will improve the quality of work.
The tough part of this strategy is cutting the executive positions. It takes more courage to fire a peer, a fellow manager, than a lower level factory employee.Leadership Secret 15- Spark Productivity Through the “S” SecretsThe first of these secrets is Speed. Fast on-the-spot decisions and quick implementation of ideas will make for a more productive outcome. Simplicity is also important.
Memos should be direct and to the point. Communicating ideas so they are clearly understood will speed up their delivery time. Self-confidence is the last of the three “S” secrets. A manager must believe in what he preaches. He must exuberate a self-confident image to his employees to earn their trust and respect.Leadership Secret 16- Act Like a Small CompanyAgain, this secret is an emphasis on speed. Small company can move fast and they are informal. There is no lengthy paperwork process to go through to make decisions.
And small companies know their customers. Managers need to stay in contact with customers and listen to their needs. Although Jack Welch admits there are advantages to being big, a company needs to hold on to that small business mentality.Leadership Secret 17- Remove the Boundaries!Remove all barriers that are hindering your business. Make sure there are clear channels between managers, personnel, customers, and suppliers. With few boundaries businesses can run quickly, smoothly, and efficiently.Leadership Secret 18- Unleash the Energy of Your Workers Unleashing the power of the workers is simply a prelude to Jack Welch’s Work-Out program, which gives workers the chance to channel their ideas to top management.
Jack Welch also made a point to turn workers into owners in the company, knowing they would direct more energy into their work.Leadership Secret 19- Listen to the People who actually do the WorkIn 1990, Jack Welch implemented the Work-Out program. He believed that the best way to improve a process is to ask the people closest to the work.
A large cross-section of GE employees would gather together and break into small groups and discuss ideas. Each session lasted approximately 2-3 days. At the end of the session, top management officials were invited in to listen to the group’s proposals and provide, on the spot, either a yes or no answer to each idea. If they needed time to research an issue, they had to form a team to gather facts and return an answer within thirty days. In its history, most proposals received a “yes” answer on the spot. Although it is difficult to calculate an exact number, the Work- Out program has saved General Electric millions of dollars with its innovative solutions.
Leadership Secret 20- Go Before Your Workers and Answer All their QuestionsNow, with so many people in the company asking questions and presenting problems, it was necessary that everyone received an answer. Leaving questions unanswered would only discourage employees to speak out, and good ideas would go unheard. Questions were broken down into two categories, Rattlers and Pythons.
Rattlers were easy problems to solve. They could receive a yes or no answer on the spot. Pythons, on the other hand, were problems that were entangled between different business units and suppliers and required some effort to solve. Nonetheless, everyone received answers to their proposals, no matter how involved the project.Part IV- Next Generation Leadership: Initiatives for Driving- And Sustaining- Double-digit GrowthLeadership Secret 21- Stretch: Exceed Your Goals as Often as You CanThe concept of Stretch was developed to get the most out of General Electric employees. Workers were asked to establish near impossible goals and give 110% to achieve them; and, those employees that reach their goals would be nicely rewarded.
But, even if they fell short, they still would exceed their normal standards. As long as managers did not reprimand employees that didn’t reach there goals, Stretch would definitely boost productivity.Leadership Secret 22- Make Quality a Top PriorityNow, that Jack Welch had set his Stretch and Work-Out concepts into motion, productivity was at an all-time high. It was now time to shift the focus of the company to quality in GE products. Only products of the highest quality would provide customer satisfaction and create customer loyalty. Welch’s quality initiative was soon followed by the implementation of the Six Sigma Quality Concept.
Leadership Secret 23- Make Quality the Job of every EmployeeThe Six Sigma Quality initiative was a program used to drastically reduce the number of defects in the production process. It was pioneered by Motorola and proved to be very effective. Jack Welch hoped to implement the process in five years, half the time it took Motorola to reach its goals. He figured, with the help of Stretch and the Work-out program, his employees could take the Motorola example and run with it. Six Sigma involved using statistical information to reduce defects in the product and the production process by 10,000 times. At its implementation, GE had 35,000 defects per 1,000,000 items (3.5 sigma).
The goal was to reduce that number to 3.5 defects per 1,000,000. Leadership Secret 24- Make Sure Everyone Understands How Six Sigma WorksSix Sigma has to become a way of life for a company. It involves measuring every process, analyzing each of them, and improving upon them. There are four different players in the Six Sigma process, Champions, Master Black Belts, Black Belts, and Green Belts. Champions are top management executives that present the project.
There are 7 to 10 Champions in each GE business. Master Black Belts are trained to teach Black Belts the statistical formulas needed to solve a particular problem. They also act as a mentor to help guide Black Belts through projects. Black Belts are directly involved in the project and are in charge of measuring, analyzing, and improving each process. They report back to the Champions. Green Belts assists Black Belts on a part-time basis, to help them gather information and implement new processes.
It is important that all employees understand the Six Sigma process, and that they are striving to help produce the highest quality product at all times. After five years of operating under the Six Sigma process, GE has saved more than $2 billion dollars.Leadership Secret 25- Make Sure the Customer Feels QualityIt is important that the customers know how they directly benefit from the Six Sigma process. Whether, it’s from a reduction in delivery time or an improved design that makes a product run faster and more efficiently, make sure the customers feel the effects or Six Sigma is not a success.Leadership Secret 26- Grow Your Service Business- It’s the Wave of the FutureAfter producing high quality products at high productivity rates, companies should direct more attention to the services side of an industry. The growth rates for product services increases more rapidly than that of product productions, so there is great incentive to direct your primary resources to provide service after the sale.
Leadership Secret 27, 28, 29- Turn Your Business into an e-CompanyThe Internet is the future of business. Bring your company up-to-date and provide customers, not only with product descriptions and information, but with a way to shop, communicate and interact with your company via the web. The Internet also provides less chance for human error in the ordering process because fewer individuals have to handle information. And, most importantly, the Internet speeds up operations, whether it is use for sending information to employees or receiving custom orders from customers.Jack Welch has definitely revolutionized the business approach. He has proven, over the years, that his techniques and concepts are extremely effective and that business leaders, worldwide, should heed his advice. This book provides a small glance into the methods and methodology of, arguably, one of the greatest managers of our time!Bibliography: