Management and Leadership Lessons From Jack Welch Of GE -Part 01
The following lessons are from the book “Jack, Straight from the Gut -What I’ve learned leading a great company and great people” by Jack Welch.
Jack Welch joined GE as a junior chemical engineer in 1960. Slowly he began to grow in his career and by 1981, he became CEO of General Electric. That time, the company was worth $12 billion. Twenty years later, when Jack was about to retire, it was worth a total of $280 billion. He transformed GE’s business and revolutionised the company’s entire corporate culture with his distinctive, highly personal management style. What could we learn from him?
Coca-cola is the first cola product. Seven-Up is the first un-cola product. Redbull is the first energy drink. Brands enter a consumer’s mind through differentiation. Like brands, Jack believed in personal differentiation, a distinctive identity from other colleagues at the workplace. It has become the principal part of his work life.
How to differentiate yourself at the workplace? A brand differentiates from other competitors by offering a unique value proposition to the customer. The differentiation lies in the add-on value a brand offers to the customer. The value that would help a customer to gain something.
Like brands, Jack says that we should offer add-on value to our company which would help the company to gain something because of us -maybe an extra business or something else.
Help Them To Help Us -Jack writes that many people are content with working to meet the job expectations set by somebody else in the organisation and the company also expects the same. You could work for years in a company by just meeting the job’s expectations. Working perfectly to the script. But if you are a goal oriented person, would like to rise quickly in the career ladder, you need to be different from those people. You need to help your company to make more money. He also adds that the value-add tactics for differentiation would mean going beyond the defined ‘job description’ aided by reflective thoughts and a little imagination.
How to go beyond the job description and find a new value add-on that would help the company?
After PhD, Jack joined GE as in charge of the company’s new chemical concepts in newly formed ‘Plastics Division’. One day, his manager’s boss Reuben Gutoff asked him the complete cost and physical property analysis of GE’s new plastic versus every major competing product offered by the DuPont, Dow and Celanese.
Jack saw every challenge or task as an opportunity to get out of the pile and differentiate himself. He knew that just answering what he was asked to do would not get him anything.
Jack thought from the shoes of his boss -He deeply pondered on what his senior managers would do with the data he provides and how they would use and what else information would they be needing. He advises us to think bigger than the questions posed to us. Think like the owner of the company.
Jack provided whatever details Reuben asked but also added the projected long-range product costs of nylon, PP, acrylic and acetal against GE’s new products. His thought process gave him the answers. It was unusual from a guy from the research department. Reuben was pleasantly surprised and took note of him. Jack’s additional work had simplified many of Reuben’s tasks and helped in swift and effective decision-making. It provided him with a fresh perspective.
When you go above and beyond the job description, your boss would automatically recognise you. As expected, within a few months, Reuben offered Jack a leadership position.
Becoming Linchpin -Once, in his earlier part of his career, troubled by GE’s bureaucracy, Jack wanted to leave GE and submitted his resignation. But Reuben and others convinced him against leaving and offered him better pay and promised him to keep the bureaucracy out of his way. Who would want to leave a person like Jack who not only understands the value of his role but also knows how to increase that value in a way that would have a positive impact on the organization's bottom line. Who wouldn’t be willing to pay a little more for an employee like that?
“Rigorous differentiation helps you to become a real star and only the ‘real stars’ build great businesses” -Jack Welch.
Jack’s first job at GE was to get the newly invented plastic raw material out of the lab into the production. He had to work with researchers and scientists. He faced an enormous challenge in exciting the scientists about the product’s potential. The research was entirely funded by corporate and it offered no direct incentives for scientists to focus their energy on any one business and help in commercialising the product. The researchers just loved advanced research. Jack struggled to motivate them to put time into the development of the materials after the invention phase. In addition to that, he had no authority over them. But he loved the challenge. It was all persuasion. He worked hard and found ways to build relationships and motivate them. Finally, he achieved the desired results. Jack’s contribution got the attention of senior management.
In the following year, during the appraisal, Jack got a shock. He received a standard raise of $1000 like every other guy in that cadre. He was frustrated and could not believe how they could treat him like others when he had offered a massive value to the company. He strongly felt that those standard raises were based on employees meeting minimum standards for specific periods of time and not based on the value an employee brings to the table. The pay should be based on performance.
Jack firmly believed that compensation paid to an employee should reflect the employee’s value addition to the company. As the value contribution goes up, the pay should go up. People generally think that if they work more time, they are entitled to get more money. Jack says that It is not about the time you spend but about what value you generate in those hours that counts.
Jack was of the opinion that rating people based on their performance has been part of everyone’s life from their first day in school and what was the need to stop it when we leave college.
Imagine a customer care representative who is loyal to the company and delivers his customer support as per the script and on the other hand, imagine a Zappos customer care representative, who goes beyond the job description, helps a customer to order an ‘out of stock’(in Zappos website) item from a rival website and converts upset customers into loyal patrons. The Zappos representative experiments the ways to interact with customers, keep track of customer’s reaction and make changes in the script and provide suggestions to the other members of the team. Will you pay both of them the same?
Jack also points out the differential treatment in sports teams, be it football, hockey, cricket or baseball to validate his perspective. Take the example of the Indian Men’s Cricket team -The players are divided into three categories -Grade A, B, and C and payment varies across the categories.
Jack asks “Does differential treatment erode the very idea of teamwork? You build strong teams by treating individuals differently. Winning teams come from differentiation, rewarding the best and removing the weakest, like a sports team.”
Jack strongly felt that the same thing has to be applied to the office too. You need to field the best players inside the office and differentiate them through the payment system.
Bradley Kirkman writes, “Existing research has generally shown that leaders treating team members differently, depending on factors such as how competent they believe each member is, can result in productive teams”
In the early part of Jack’s career, on one night, his chemical experiments blew up a three-storied office. Fortunately, no one was injured but a major part of the building collapsed and resulted in a huge loss. The next day, he had to go and explain to a corporate group executive, Charlie Reed. He was afraid and felt guilty. His confidence was shaken. He knew that the company had every right to fire him. But to his surprise, in the meeting, Reed made him at ease, listened patiently to his side of the story and finally asked him, “Jack, so, what did you learn from the project?”
Jack replied, “I could find a way to fix the reactor process so that the mistake won’t be repeated”.
Reed replied, “Good. So, you would be happy to move forward with the project?”
Jack was pleasantly surprised. Reed did not show anger or any other emotion but just logical rational discussions which helped Jack to self-reflect on the problem and find solutions.
Whatever has happened is in the past. It holds nothing valuable except for some lessons.
Reflect and Learn -From Reed’s behaviour, it was clear that it’s natural for humans to make mistakes but successful people learn from them and never repeat it. Jack’s mistake caused him pain and he felt guilty. But pain is an effective teacher that will help a person not to do that mistake again and force him to find ways to prevent them in future.
Importance Of Fearless Environment -Reed would have easily fired Jack to make a point that perfection alone matters but then GE would have lost a good guy who went on to become GE’s leader and who transformed their business. Imagine the loss if they fired the guy.
There would be other consequences too, if they had fired Jack -it would have encouraged other employees to hide their mistakes and led to the proliferation of dishonest culture. It would have further paralysed the ability of employees to learn from mistakes and grow.
Jack took those lessons to heart and later expanded them -As CEO, he created a fearless environment where it would be safe to take risks and make mistakes -An environment where criticisms can flow from the bottom up without any hierarchical limitations -Where an individual would be happy to acknowledge his or her mistakes frankly and openly.
Celebrate Effort, Not Results
In the 1970s, one of Jack’s team developed ‘Harlac’ light bulb that lasted ten times longer than the typical light bulbs at a fraction of energy but expensive to buy. Unfortunately, consumers did not buy the light bulb and the project failed. GE lost more than $50 million. Jack didn’t punish those involved in ‘Harlac’ project but celebrated their great ‘efforts’ by handing out cash awards and promoted several of them to new jobs. This act fostered the thought that taking risks is encouraged and failing is fine in GE -a positive step in building a fearless culture.
Why do we need to reward efforts? One of Daniel Kahneman’s research showed that we highly underestimate the impact that luck has in many situations, and we massively overestimate the effects of our own actions. In many cases, some executives with a lesser effort got good results as luck went their way and many, even after wild efforts, could not reach their goal due to circumstances beyond their control.
It would be extremely demotivating to those “Harlac” team members if they didn’t get recognition for their extra effort and at the same time, they had to witness their lesser competent colleagues receiving both cash awards and promotion.
Jack feels that leaders must focus more on the effort of employees than on just their results.
Criticising Failure -Lee Iacocca, Former chairman, Ford advises “When an employee is down or could not meet an objective or upset about his failure, do not be hard on him. If you criticise him, you not only run the risk of hurting him badly, you are taking away his motivation to improve and try again”.
Regarding the “Harlac” failure, Jack also says “When people make mistakes, the last thing they need is discipline. It’s time for encouragement and confidence-building measures. Our primary goal should be to restore their self-confidence. Piling on during a weak moment will make leaders lose their confidence. They would begin to panic and spiral downward into a hole of self-doubt”. Jack gave them confidence by rewarding and promoting them for their efforts and risk-taking nature.
A lot of good leaders who were successful in running a million-dollar business had lost themselves to self-doubt when they made a costly mistake and had ruined their lives.
Jack believed that fearless culture encourages creativity and independent thinking and it is essential for a company’s rapid progress.
If you don’t mind being wrong on the way to being right you will learn a lot. If you can’t tolerate being wrong, you can’t grow -Ray Dalio.
SELLING YOURSELF WITHOUT BEING ARROGANT
In the year 1964, as Jack successfully commercialised the new plastic material from the lab, the company had to put a new plant for manufacturing of the new plastic. In the meantime, his then boss got promoted to another department and the General Manager’s slot in the new factory was open. Sensing an opportunity, Jack wanted to take up the leadership role. He was looking to advance ahead of his organisation’s promotion cycle. He strongly felt that he deserved it.
Jack approached Reuben Gutoff and evinced interest in the new leadership position. Gutoff was shocked, “Are you kidding? You don’t know anything about marketing. That’s what this new product introduction is all about”.
That’s the time Jack realised that he needs to sell himself to his bosses in order to grow in his career. He had to build a compelling case for why he deserves the promotion. Sales are ‘persuasion’. He had already gained experience in persuading his team’s scientists to co-operate and collaborate. Now, he had to do that with his bosses.
From his experience, Jack says, “Your work generally won’t speak for itself. You must speak for yourself. Make sure that managers understand the effort you put into your job and the results you produce. A bit of modest bragging will not only help you come promotion time, but it will also help discredit any attacks levied against you”.
Is Self-Promotion a terrible idea? We are conditioned to believe that by loving our work and working diligently with a dedicated focus, our management would recognise our contribution soon and would promote us. We are all made to believe that self-promotion is a sin, distasteful and self-serving. But when the time comes, most of us have witnessed how some people have plucked out those leadership roles with ease, which was within the reach of our hands. We have observed people who know how to promote themselves and their contributions (without being annoying about it) get ahead of their higher-performing peers all the time.
Do you want to leave your career growth in the hands of fate? Do you want your future to be at the mercy of whims, fancies and biases of some persons?
Is self-promotion against natural characteristics? A pufferfish will not get a mate if it does not self-promote its skills, strength through building a complex patterned sand art. Peacock self-promotes through the beautiful blue-green plumage. Bowerbird promotes itself through decorating its nest. It is the same for all the species. Self-promotion is a necessary and evolutionary natural trait for every species.
In humans, self-promotion is more of selling about ourselves. Scott Edinger says, “Sales is the most fundamental skill for every professional”. He further adds “the resistance to sales stems from an antiquated idea that selling is pushing people to buy something they don’t want, don’t need, or can’t afford.” But that notion is outdated. Selling is moving somebody else to action”. And that should be part and parcel of professional life.
If you’re not comfortable promoting your achievements and promoting yourself, it’ll be difficult, if not impossible, to grow quicker in your career.
It’s not about us but others -If you are really still uncomfortable at promoting yourself, then maybe it’s time to reframe your thoughts.
If you care for people, people will care for you.
Are you genuinely interested in the welfare of others? Do you love to put the happiness of other people before yours? Do you want your company to build a sustainable business so that it could continue to transform the lives of many people? Then, Self-promotion takes a different purpose here.
You are promoting your achievements and contributions not for your own benefit but for the benefit of the team and the organisation’s future. See yourself as a third person and view your character, abilities & skills and think about achievements and contributions. Will you recommend the person? If yes, then you are doing a disservice to your team and your company by not promoting yourself. It is your responsibility to talk about what you have achieved and what you have contributed. It is your duty to sell yourself across the organisation.
Also, you need to be aware that your managers probably would not have enough time and opportunities to understand your efforts, interests, abilities and skills. If you can appraise them about yourself clearly with just enough information which would help them to decide, you would be making their lives easier and in-turn helping your company.
How to promote yourself?
Critical Achievements with Long-Term Impact -We have already seen how Jack Welch always worked above and beyond the job description and added value to the company. Whenever he achieved one of those value-add outcomes, he would note down the results and long-term impact. Those three to five of the biggest and appreciative professional accomplishments were the critical elements that enabled him to set himself apart from the competition.
Facts, Not Interpretations -Jack presented his achievements, abilities as facts and not as interpretations. Though he had good knowledge of plastic materials, he never called him a ‘Plastics Expert’. Though he could persuade fellow scientists to collaborate, he never interpreted that as an accomplished skill. He just presented the facts. Some of his colleagues loved his way of dealing with people and followed it but Jack never interpreted that as ‘ability to inspire’. If you are calling yourself as influencer, thought-leader, expert, think about it. It might be your interpretations. Present them in facts.
Stories -If you have followed Jack’s speeches, you could see that he loves telling his achievements through stories. Stories connect with the feelings of listeners. Stories will also help us to advertise our skills, abilities without coming out as a braggart.
Being Empathetic -A successful sale is based on how well you understand your customer and customise your offerings. To understand them, observe and think from their shoes. Jack Welch used to think from the perspectives of his boss. Everyone is interested in themselves and in their own benefits. A boss promotes a person who would help him to grow in his career ladder. It was important to understand their expectations, requirements, anxieties and customise your offerings in their language.
Be Humble — The foremost thing is ‘To be humble’ while promoting yourselves. Though the above points would help you to come out humble, still you need to be conscious about not crossing the line. Experts, on the other hand, say that we need to be little egoistic to grow in the career.
Lee Iacocca, former chairman, Ford writes, “A certain degree of ego for self-promotion is necessary and natural. A large ego is destructive. The small ego knows our strengths, helps us to be confident, will move us purposefully towards our goals. Large Ego, on the other hand, will always look for recognition. It constantly makes us the desire for the need to be patted on the back. The large ego will make us think that we are cut above everybody else. It will force us to talk down to the people who work for us”. Large ego is detrimental to leadership skill development.
In his earlier part of the career, Jack used to brag about his achievements -He boasted how he sold more plastics in his first year than anybody else in the previous ten years. He was full of himself and had no regard for previous leaders as well as his colleagues. The one important thing to remember is ‘There is no success without the presence of other people’. Can you go to Mars and try to succeed with no one around?
Later, Jack began to appreciate and gave due credit to people around him, which helped him to network and build strong relationships which further ensured support for his leadership aspirations.
Be Confident — While talking about his accomplishments, Jack used to do that with confidence and conviction. Be confident. Practice confidence.
Finally, remember, every one of us has to develop sales skill. You are the product. If you don’t communicate the ‘product’ benefits, it would be difficult to convince anyone to buy it.
References: Article in Forbes Magazine by Bonnie Marcus, Blog in Glassdoor Posted by Jacob Baadsgaard, Jack, Straight from the Gut by Jack Welch, IACOCCA -An Autobiography by Lee Iacocca, HBR articles by Heidi Grant, Rebecca Knight, Dorie Clark, Anna Ranieri.