Blunt Welch

Citation

Wilson, I. (2002), "Blunt Welch", Strategy & Leadership, Vol. 30 No. 1. https://doi.org/10.1108/sl.2002.26130aae.001

Blunt Welch

Ian Wilson

Jack: Straight from the Gut

By Jack Welch, with John A. ByrneWarner Business Books479 pp.$29.95

Most books about strategic management could use a little hype. This one, in contrast, arrived amid a media frenzy over the transfer of power from the legendary CEO of General Electric, Jack Welch, to Jeffrey Immelt, a brouhaha over Welch's $7 million book advance, and suspense about an on-off GE-Honeywell merger. Now, after the pre-publication publicity spree, here's Jack: Straight from the Gut – Welch's first person account of his upbringing, his career at GE, his values and strategies, and his emergence as the management icon of the twentieth century.

The book, though co-authored by John Byrne of Business Week, is pure Welch. You get the forceful, straightforward, articulate, cocky, combative, blunt Welch so loved by most managers who knew him and survived. He grabs readers by the arm and leads us through the stages of his life – his childhood in South Boston absorbing self-confidence and competitiveness from his mother, and later his recruitment and hiring by GE. Then he replays his battles with the GE culture as he learns how to differentiate himself, "get out of the pile", and progress up the old hierarchy. He recaps his encounters with the dead hand of GE bureaucracy and how he defeated it. Finally, after his many brushes with the old regime, "Reg" Jones (his predecessor) taps Welch for the top spot. Jones senses the need for change, and he's impressed by Welch's ability to deliver.

There will be readers who wonder whether the heritage of Welch's ideas and strategies will survive the shocks of September 11, 2001. Another era has begun, they will argue, and Welch was lucky to get out before the world turned upside down as recession and terror blasted our prosperity and complacency. I am convinced, however, that – regardless of how much the world may change – Welch's approach to strategy will remain a model for all seasons. His approach is timeless because it stresses the critical importance of boldly confronting reality, whatever face it may wear. Listen to his definition of strategy, one that he has used both inside and outside the company:

Strategy is trying to understand where you sit today in today's world. Not where you wish you were and where you hoped you would be, but where you are. And [it's trying to understand] where you want to be ... [It's] assessing with everything in your head the competitive changes that you can capitalize on or ward off to go from here to there. It's assessing the realistic chances of getting from here to there.

That is not a textbook definition of strategy; but it has the ring of conviction and authenticity.

• •

  You get the forceful, straightforward, articulate, cocky, combative, blunt Welch so loved by most managers who knew him and survived.

For readers of this journal, Jack has more to say about leadership than about strategic planning. Indeed, it is not by chance or by oversight that the book's index contains no reference to strategic planning or strategic management. Significantly, the sole "strategic" reference in the index is to strategic thinking. Welch placed more emphasis on motivating good people than on developing elaborate planning systems. Witness, two of his favorite maxims are: "Strategy is 75 percent about people, 25 percent about other stuff," and "Great people, not just good strategies, are what made it all work." He was never one to put his trust in elaborate planning methodologies. He was known for driving to get beyond the binders of the planning books produced by the staff and for preferring simplicity over the artificial complexity that bureaucracy loves. He put his emphasis on "wallowing" in ideas to wrestle through a complex issue, and on reducing strategic thinking to answering five straightforward questions:

1. 1.

   What is the detailed global position of your business and that of your competitors: market shares and strengths, by product line and region, today?

2. 2.

   What actions have your competitors taken in the past two years that have changed the competitive landscape?

3. 3.

   What have you done in the last two years to alter that landscape?

4. 4.

   What are you most afraid your competitors might do in the next two years to change the landscape?

5. 5.

   What are you going to do in the next two years to leapfrog any of their moves?

There is, of course, more – much more – to it than that. But simplicity and directness permeate his whole approach.

Welch maintains – and I emphatically agree – that there is no formulaic answer to most strategic questions, and no single planning methodology that will suit all cases. But, if we look carefully, we can see, in the anecdotes he cites, the outlines of his planning philosophy and practice which can be summed up briefly in the following steps:

1. 1.

   Face reality.

2. 2.

   Create a vision – and communicate it persistently and consistently.

3. 3.

   Develop a strategic culture.

4. 4.

   Set stretch goals.

5. 5.

   Select and motivate great people (note the emphasis he places on this point in the chapter on "The people factory").

6. 6.

   Execute, execute, execute.

7. 7.

   Keep flexible.

• •

  Perhaps his greatest contribution to management thinking and practice has been his ability to harness the hard and the soft elements of strategy – numbers and values, things and people, operations and culture.

Perhaps his greatest contribution to management thinking and practice has been his ability to harness the hard and the soft elements of strategy – numbers and values, things and people, operations and culture. From the outset of his tenure as CEO, Welch knew that GE had to change radically – in its portfolio of businesses, its organization structure, its levels of employment, and yes, and most particularly, its culture. Initially he focused on the reorganization and downsizing, the de-layering of management, the buying and selling of businesses. Famous Welch Maxims: Be No. 1 or 2; Fix, sell, or close. These were the days of Neutron Jack ("I hated [the nickname] ... But I hated bureaucracy and waste even more.") and his insistent struggle to persuade the GE organization that it had to change. Only as these changes began to bite did the soft side of his strategy become dominant – Welch the visionary, the instigator of the work-out process, the promulgator of the principles of speed, simplicity, and self-confidence, and the initiator of the "boundaryless" organization – the list goes on.

My reservations about the book have to do with the fact that it came out so quickly after his retirement. From a publisher's point of view, no doubt the timing was exactly right, enabling the book to ride the crest of the wave of awesome publicity that attended the departure of one of the most successful managers of an era and the transfer of power at GE to Immelt. But delaying the book for a year or two would have given Welch – and us – the opportunity to gain better perspective on his achievements (including the appointment of his successor, which he ranks among his main contributions) and the continuing relevance of his strategy.

All in all, it is an eminently readable book – like its author, fast-paced, clear, forceful, rejecting all the jargon and gobbledygook that normally pollutes books of this genre. We have heard most of his message before – at least those of us who have closely followed Welch's career and thinking. But it is helpful to have it all collected together in one place and in one voice. Remarkably, for a management book, it will, I think, age well and become a treatise we can keep dipping into for guidance, inspiration, and ideas. Would-be disciples, however, shouldn't try simply to mimic Welch, but to adapt and build upon his ideas.

But those who want a detailed account of the year-by-year evolution of Welch's strategy and leadership in transforming GE will, I am convinced, gain more from his chairman's messages in 20 years of annual reports. These remarkable documents, so different from the sterile numbers-only reports from most CEOs, are enlightening communiqués from the battlefront, documenting the evolution (as it occurred) of Welch's thinking, values, strategy, and initiatives.

Read Jack by all means; it is more than worth the time. But then go back and re-read his stunning, action-oriented annual messages. These briefings are what should challenge us to take comparable action, and write comparable reports, on the progress of our own businesses.