Many books dealing with management are written by people who merely teach how to run a successful business, people who know more about theories than practice. A business, however, cannot be run by a book. At the end of the day, employees striving for a promotion, MBAs opting for a new career or college graduates searching for their first job or even a manager yearning for sound advice will trust a successful CEO, someone like Jack Welch. During his forty-year career at General Electric, this legendary CEO steered the company onto a winning path, despite tough competition.
In his latest book, “Winning”, which he describes as a road map, Jack Welch gives an honest and thorough look at how to succeed in business. Warren Buffet considers it the ultimate book on management; he insists: “No other management book will ever be needed.” Jack Welch has put into words, a lifetime’s experience and wisdom about business. He admits, however, that there are no easy formulas and one cannot provide all the answers because both business and the world are always changing.
This ultimate management book does provide guidelines, rules and mistakes to avoid. Before we even get into the first chapter, Welch orders us to have fun: “Business is a game, and winning that game is a total blast!”
Page after page, “Winning”, turns into a fascinating read. It begins with a riveting account on the importance of values. In a successful company, values are used as “marching orders” because they embody the means to the end: succeeding. Welch illustrates this point with a brilliant analysis of what went wrong at Arthur Andersen and Enron.
The dramatic demise of these two companies was due to a severe disconnection between the companies’ mission and values. Arthur Andersen was founded a century ago with the mission to become the most respected and trusted auditing firm in the world. The foundation of this noble mission was severely threatened when a promising money-making consulting firm was created. The ruthless mentality of the aggressive consultants affected the accounting division. Eventually, some accountants abandoned the sound values which had guided them for so long.
“Throughout most of the 1990s, Arthur Andersen was a firm at war with itself. The consulting business was subsidizing the auditing side and didn’t like it, and you can be sure the auditing side wasn’t crazy about the bravado of the consulting types. In these circumstances, how could people know the answer to questions such as “What values matter most?” and “How should we behave?” Depending on which side of the firm you pledged allegiance to, your answer would have been different” writes Welch.
The firm partners ended up battling in court over the division of the profits. Eventually, in 2002, the venerable house collapsed.
The same thing happened with Enron; it was originally a simple energy company focusing on how to get gas from one point to another until the company changed its mission, becoming a trading company. Enron traded first energy and went on trading “anything and everything”. There was no evaluation system to monitor the financial dealings taking place at the trading desk and Enron collapsed.
Throughout his career, Welch spoke openly, and although he was warned that his candor would get in the way of his career, he credits candor for helping his career move forward. His sincerity and truthfulness led him to create the invaluable Work-Out process, two to three day events, in which groups of 30 to a hundred employees, meet to discuss more efficient ways of doing things. Welch believes that Work-Out was responsible for one of the most profound changes in General Electric during his tenure as CEO.
One of the most useful chapters deals with the difficult task of hiring. The author provides us with a framework for hiring employees at all levels. Furthermore, he gives us some practical advice for choosing a senior-level leader. The person who is going to run a major division or an entire company should have “a special capacity to anticipate the radically unexpected... The best leaders in brutally competitive environments have a sixth sense for market changes, as well as moves by existing competitors and new entrants,” says Welch. Good executives also tend to surround themselves with people better and smarter than they are. Finally, a leader should be endowed with a “heavy-duty resilience” — that is a senior-level leader should be able to stumble, fall and then learn from his mistakes, regroup, and start off again with renewed hopes and more conviction: “I always looked for candidates who had had one or two very tough experiences. I particularly like the people who had the wind knocked clear out of them but proved they could run even harder in the next race, “he explains.
The reader also benefits from expert advice regarding the most common mistakes companies make when launching a new product. Besides the lack of resources up front, companies tend to keep a new venture low profile instead of cheering in the media about its potential and limiting its autonomy.
“For a new business to succeed, it has to have the best people in charge, not the most available”, insists Welch.
Looking back on strategy, this outstanding manager, leads us to the crux of the matter and gives us a first hand look into his distinctive style of management. We learn that the strategy implemented at General Electric lasted because it was based on two vital principles: commoditization is evil and people are everything. When thinking in terms of strategy, Welch advises us to enforce ‘decommoditizing’, to make products and services distinctive and customers will stick like glue.
“Winning”, is not only brimming with anecdotes but it also offers innovative thinking, and solutions to problems that will change forever the way people deal with their work. Concerning the difficult relation between work and home, the twice-divorced Welch explains that saying no is difficult for people who have been promoted because they have said yes so often : “If you say yes to everything, you won’t get balance. You’ll get off balance. Saying no is incredibly liberating.... Have the mettle to say no to requests and demands outside your chosen work-life balance plan,” he concludes.
