Sunday, April 8, 2007

Straight From The Gut

By Jack Welch ( an autobiography)

Hi Friends,

I am posting an Instance from the book "Straight from the Gut".
This is a fantastic book which emulates the strategies followed by the GE.

Welch always stressed on that people are the firm's biggest asset, and he was very harsh on evaluating people. There is no room for complacency at GE.

Please follow the stratergy "Boundaryless" which stresses on a seamless flow of ideas and knowledge within and outside the organisation.


Workout was a huge success. It was used to take out the bureaucracy from the organisation. Ideas were flowing much faster than before. It will help transfer the brainpower of so many individuals into one a common forum. Helps in exchange of ideas. Workout was breaking the tradional boundaries of the organisation. Boundarlyless will remove all the barriers among the various functions: Engineering, Manufacturing, marketing and the rest. There will be no distinction between the domestic n foreign operations. It will focus on team work rather than concentrating on individual efforts. It intends to break down the external walls and make the consumers and suppliers part of the core team.

Boundary less will reward not only the incubator of the idea, but it will also reward the person responsible for realising and fulfilling the ideas. GE was not closed to best ideas from the industry. It had spearheaded many a idea which were not invented at GE, like the Kanban manufacturing from Japan. The motto was “Finding a better way every day”. All these ideas gave a new momentum to the learning culture at GE. It intended to induce groups to share ideas among businesses. Managers were being graded on this attribute in Human Resource review meetings. Jack discussed the four kinds of managers who were there at the GE… He says that the managers who don’t share the values n culture of GE have to leave even if they deliver on all their commitments. Jack wanted all the employees of his organisation to clearly focus and follow all these ideas of globalisation, reality, candour, speed and empowerment. He fired many managers not following the GE philosophy to drive the idea home.
Jack focussed on excellence and was intolerant of bureaucracy. He wanted to tap the global intellectual pool and people with global skill levels. Jack heavily promoted the idea of learning culture and focussed on integrated diversity. Jack revolutionised the idea of compensation, and promoted that the compensation system should be based on the organisational performance and not on the performance of individual captive units. Jack wanted the overall company’s results and stock price to mean more to people than the results of individual business.

GE has slowly increased the number of people getting option grants to reinforce the idea of self belonging to the organization. These option grants are given to the top performers of the organisation. Boundary less focussed on the idea of continuous sharing of ideas, by linking the series of planned meetings and reviews throughout the organisation. Jack focussed on making the idea bigger and better each time it was discussed. Jack encourages people to showcase their ideas in ten minutes over a two day event. This helps for new ideas free flowing in the organisation. There is a continuous evaluation which helps to identify the brightest and the best young people of the whole lot. Jack initiated a corporate initiatives group which focuses on building new initiatives within the organisation. The corporate initiatives group acted as a catalyst to speed up the flow and implementation of ideas. GE promoted the idea of a matrix, whereby all the best practices were listed and the managers were asked as to how did they achieved that best practice. This promoted stiff competition among the managers who all competed to be the beat in the industry.

GE followed the “Quick Market Intelligence” strategy which was to identify and solve the customer related problems at the onset itself. This involved meetings between the sales personnel and the manufacturing and plant staff to identify any hiatus in quality and other consumer related stuff. If any discrepancies were found, they were immediately solved and taken care of. This prevented any backlog in quality issues and helped to foster a good consumer image. There were weekly telephone calls held between sales team and the business’s top marketing, sales and manufacturing managers. This helped to solve the product availability and the quality issues facing the managers.

GE developed its own in-house auction system which was relatively very cheap as was available from the outside vendors. They used this platform to invite bids from the suppliers so that they can choose the lowest bid supplier and can make cost savings. This proved to be very successful as different businesses came up with their own cost savings targets and strived to meet them.

GE reinvented its strategy whereby it shifted its focus from being a no1 or no 2 in a narrow field. They instead now focussed on not garnering more than 10 % share of a big pie and divesting in a lot of businesses. This will give it more market share and propel it towards becoming a 100 Billion firm. Like in Medical systems GE moved from measuring the share of the diagnostics imaging to measuring all of the medical diagnostics.

GE opened its ambit to include fuel, power, inventory, asset management, and financial services. Even though it just had 1 – 5 % share of this huge 170 billion market it helped it to expand its revenue base. Owing to this strategy went from $70 Billion in 1995 to $130 Billion in 2000.

Hence this bounadryless concept was really working for GE cutting ideas n people across internal as well as external boundaries.

Entrepreneurial and People Factory:

GE has been at the forefront of discovering and promoting great people. It follows the strategy of “Everyone you meet is another interview.” Welch stresses that finding and retaining the right people is one of its core competencies. GE has always sought to bring a differentiation in its people hiring policies and in evaluating them. There is no place for complacency at GE.

GE followed the vitality curve (Strategy) to differentiate among its top 20, Middle 70 and bottom 10 percent of the people. This was used to identify the top notch talent based on performance and talent. The bottom 10 percent usually had to leave the organisation. Based on the position has on the vitality curve will decide his compensation package. Vitality curve focuses on performance management within the organisation.

All the managers and executives are evaluated on the basis of 4 E’s and corporate objectives of customer focus, e business and Six Sigma… are:

1) E --- Energy
2) E—Ability to energise others
3) E—Having a lot of edge
4) E—Successful Execution.

GE believes in treating people with dignity and giving them voice.

Jack stressed the need for maintaining a performance culture in order to ward off complacency from the workplace.

1 comment:

Anonymous said...

HI Ankur. Nice extract from the book. If you liked this book then u will like to read more books on Jack Welch Like 'Get Better of Get Beaten'.