4 E’s of Leadership by Jack Welch

About Jack Welch:

Ø      In his 20 years at the helm of GE, he increased the value of the company more than 30 times over

Ø      During his tenure at the helm, GE turned out more Fortune 500 CEOs than any other company in history

Ø      He sold off more than 100 businesses and fired more than 100,000 employees

Ø      Welch fired 1,18,000 people, including 37,000 people from businesses that were divested.

Ø      Under Welch, the company lost less than 1 percent of it’s A’s every year.

Ø      By the time Welch retired, more than 30,000 GE managers had received the stock options. He made millionaires out of hundreds of the managers he considered the company’s very best.

Ø      When Welch took over, GE had revenues of about $25 billion. When he stepped down, GE was a $ 130 billion company. The organic growth under Welch averaged under 10% per year. It was a torrid pace of acquisitions in the Welch era that helped fuel the GE growth engine. GE made an astounding 1,200 + acquisitions which accounted for about 40% of GE’s growth.

4 E leaders should have following characteristics

1. Energy: People who move 95 Miles/Hr in a 55 Miles an hour world. They embrace the change. Emotional energy – the kind of energy that a leader projects to help build the spirit or morale of an organization. It is an energy that reaches across people and binds together individual contribution into a purposeful whole. Emotional energy is the passion that gets the job done.

2. Energizes: They know how to spark others to perform. They are visionary. They know how to drive people towards a vision. They are selfless in giving credit when things go right and taking blame when things go wrong. They don’t engage in turf wars, operate in silos, or tolerate backbiting behavior. They instill confidence into the soul of organization. The new ideas are the lifeblood of the organization. Energizers aren’t necessarily the source of ideas; more likely, they encourage others to voice to voice their ideas. Further they ensure that these ideas are surfaced, celebrated and acted upon.

3. Edge:  They are competitive. They know how to make the really difficult decision.

Welch urged managers to go for the “quantum leap” rather than play it safe. Encourage your direct reports to do the same, and make sure that you don’t punish them for failure.

Leaders with edge know how to say yes or no and “avoid the maybes”

4. Executes: They are consistent performers. They know how to convert energy and edge into action and results. Further, people who execute effectively understand that activity and productivity are not the same thing.

Bossidy and Charan write that many failed corporate strategies failed mainly as a result of poor execution. An organization will execute consistently only if the right culture, practices, rewards, and  so on are deeply ingrained in the fabric of the company, and if the top management remains involved (execution can not be delegated). The authors also assert that managers who expend valuable company resources on other programs while ignoring execution are “building the houses with no foundations.”

Jeff Immelt got an edge over other competitors for CEO’s position for this quality.

Jack Welch’s categorization of leaders:

Type A - They live the values and make the numbers.

            They articulate the vision of the company throughout the organization, while they take care of the company’s business. These are the leaders whom Welch and his team worked hardest to retain.

Type B - They live the values but do not always make the numbers.

            Welch felt that these individuals should be given a chance to succeed either in their current job or in another assignment.

Type C – They do not live the values but they make the numbers.

            Welch concluded that the managers (even highly productive ones) who did not live the organization’s values should be terminated. In the long run, Welch argued, an organization can succeed only if the entire team is operating out of same playbook.

It is not worth trying to convert type B or type C leaders.

Under Welch, GE kept 99% of it’s “A” players and also did a thorough postmortem every time it lost one.

Jack Welch said -

1. His one of the famous statements is “the smartest people in the world hire the smartest people in the world,” but the truth is that he looked for far more than smarts.

2. “A primary task in taking company from good to great is to create a culture wherein people have a tremendous opportunity to be heard and ultimately, for the truth to be heard.”

3. “You have no right to be a leader if you don’t have it in your soul to build others. Nothing is worse than a whirling dervish who bores everyone. You need fertilizer and water.”

4. “This boundaryless learning culture killed any view that assumed the GE way, or even the best way….And the operative compulsion is to find out who has the better idea, learn it and put it into the action-fast.”

5. “If you and I and the business leadership of this country can have the self confidence to let people go – to create an environment where each man and woman who works in our companies can see a clear connection between what he or she does every day, all day, and winning and losing in the real world – we can become productive beyond our wildest dreams.”

6. “If you want to get the benefit of everything employees have, you have got to free them, make everybody a participant. Everybody has to know everything, so they can make the right decisions by themselves.”

7. Ask yourself Drucker’s question: “If you were not already in the business or market, would you enter it today, knowing what you know?”

8. “If you put a little more runway in front of someone and encourage them to take off – at high speed, in new direction – good things happen. You stretch that person’s vision.”

9. “We have found that by reaching for what appears to be impossible, we often actually do the impossible; and even when we don’t quite make it, we inevitably wind up doing much better than we would have done.”

10. Think of the last time your organization experienced a serious defeat or setback. Face reality by identifying the possible causes: Was it because manager dropped the ball? Was it the result of a poorly conceived organizational structure that paralyzed decision making? Was it because everyone was too polite or dysfunctional to articulate the problem before it was too late? Whatever it was, purge the company of this and other productivity killing cancers.

Being practical:

Welch expected that 2 out of 3 who were in race to become successor can leave the organization and hence asked all of them to submit the successor plan for the business they were heading so that business should not get impacted with their move.

Others said -

“Leadership development is about helping people grow, and if I can get people as individuals growing, then I have got a company that grows.” – James McNerney, who was competing with Jeff Immelt for the position of CEO in GE and then became Chairman of board & CEO of 3M.

“I learned from the experience. Sometimes you have to fail to win.” – Robert Nardelli, who was competing with Jeff Immelt for the position of CEO in GE and then became Chairman of board & CEO of Home Depot.

“Being a leader often means making decisions that others call foolish or wrong. It takes edge to stick to your plan when critics hammer you everyday.” - Nardelli

“I get more satisfaction from seeing things get done than I do about philosophizing or building sand castles. Many people regard execution as detail work that’s beneath the dignity of a business leader. That’s wrong. It’s a leader’s most important job.” – Larry Bossidy, former CEO and Chairman of the board, Honeywell

It is worth reading this book as Welch has justified the each and every point. It has not only the GE Authentic Leadership Model consisted of 12 traits that best describe the Welch leader but also a questionnaire to judge yourself. A questionnaire to assess your “energy” quotient & other questionnaires are also enclosed in a book. First half of the book contains Welch’s leadership model. Whereas the second half describes how the leaders who used to report directly to Welch turned around the other organizations when they could not become CEO of GE. 
You will also find a chapter on Vivek Paul who was CEO of Wipro. Vivek used to report to Jeff Immelt in GE. When Vivek Paul took over as CEO of Wipro in 1999, it was US $150 Million. However, he set an ambitious target to become US $ 4 Billon company by 2004. Though it ended up becoming US $1.3 Billion company by 2004, the company grew by CAGR of 54% despite dot com bubble burst in 2001 and got recognition as one of the leading IT vendors from India.This book is full of learning.

The Real Hero : William Kamkwamba

The Boy Who Harnessed The Wind............

It is a real story of a 14 year old kid who was dropped out of school because he had no money to pay the fee and who then managed to set up first windmill in a village. He is just 22 years old now.

The below link will take you to his homepage.
http://williamkamkwamba.typepad.com/

Here is You-tube video for the same.
http://www.youtube.com/watch?v=arD374MFk4w&feature=player_embedded

Here is the abstract of book "The Boy Who Harnessed The Wind" by co-author Bryan Mealer.
http://www.bryanmealer.com/

A picture of a windmill built from scrap is given below.
                                                                     

Book Review: The Great Indian Middle Class by Pavan Varma

It is post independence history. It talks about the politics, permit raj, red tapism, bureaucracy, favoritism and nepotism etc which every Indian knew. Jawaharlal Nehru, Lal Bahadur Shstry, Indira Gandhi, Mahatma Gandhi all were from middle class and had grown to a level where they became a role model for many people. It talks about how middle class started growing. How the banks got established to fund the young entrepreneurs. However, the book doesn’t have any valuable insights for future. Hence it is not interesting. Mahatma Gandhiji’s message is good and it is summarized below.

Mahatma Gandhi’s advice on Independence day in West Bengal: “Beware of power, power corrupts….Don’t let yourself be entrapped by its pomp and pageantry. Remember, you are in office to serve the poor in India’s villages.” And just few days later, he wrote the following lines for an unknown visitor:

“I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of poorest and weakest man whom you may have seen, and ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to a control over his own life and destiny? In other words, will it lead to Swaraj for the hungry and spiritually starving millions? Then you will find your doubts and your self melting away.”

Book Excerpt: Siddhartha by Hermann Hesse

Siddhartha was a handsome Brahmin's son living in a village. He grew up with Govinda who then became his close friend. They learnt the art of contemplation and meditation and started taking part in debates with learned men. Though everyone was happy with magnificent Siddhartha, he himself was not happy. Dreams and restless thoughts came flowing to him which further added to his thirst for knowledge. Hence he decided to leave house and join Samanas (monks).

Siddhartha learned a great deal from Samanas; he learned many ways of losing the Self and traveled through the path of self-denial. Govinda, Siddhartha's shadow, also traveled along the same path and made the same endeavors. One day Siddhartha asked Govinda, "Do you think we are any further? Have we reached our goal?" Govinda replied, "We have learned and we are still learning. You have learned each exercise quickly. Someday you will be a holy man, Siddhartha." Siddhartha said, "It does not appear so to me. What I have so far learned from the Samanas, I could have learned more quickly and easily in every inn in a prostitute's quarter, amongst the carriers and dice players." He further added, "I only find a short respite in my exercises and meditation, and am as remote from wisdom, from salvation, as a child in womb." Siddhartha accepted that his thirst for knowledge had not been quenched.

Govinda and Siddhartha decided to listen the Buddha preach in a nearby village. Buddha's talk about salvation impressed Govinda and he decided to join him. Siddhartha went to see him off where he got an opportunity to have an interaction with Buddha. Buddha said, "The goal of teachings is salvation from suffering." Siddhartha asked Buddha, "You have done so by your own seeking, in your own way, though thought, through meditation, though knowledge, through enlightenment. You have learnt nothing through teachings, and so I think that nobody finds salvation through teachings. To nobody you can communicate in words and teachings what happened to you in the hour of enlightenment. The teachings of enlightened Buddha embrace much, they teach much - how to live righteously, how to avoid evil. But there is one thing that this clear worthy instruction does not contain; it does not contain the secret of what the Illustrious One experienced - he alone among hundreds of thousands. That is what I thought and realized when I heard your teachings. That is why I am going on my way - not to seek another and better doctrine, for I know there is none, but to leave all doctrines and all teachers and to reach my goal alone - or die."

As he slowly went on his way, his head was full of this thought. He reflected deeply, until his feeling completely overwhelmed him and he reached a point where he recognized where he recognized causes, it seemed to him, is to think, and through thought alone feelings become knowledge and are not lost, but become real and begin to mature.

He left Samanas and came to town. As the years passed by he had become rich. People started liking him; they came to him if they wanted money or advice. He had no close friends except Kamala who is a courtesan.. Property, possessions, pleasure and riches had finally trapped him. He started gambling for money. He started becoming impatient with the losses. He was no longer kindhearted to beggars; he no longer had the desire to give gifts to poor. He noticed that the bright and clear inward voice, that had once awakened in him and had always guided him in his finest hours, had become silent. Finally he said good bye to all these things. Kamala found that he was with the child as a result of her last meeting with Siddhartha.

Siddhartha left the town. He was seating beside a river where he met Govinda once again. Then Siddhartha did introspection and decided to stay beside river. He started living with Vasudeva, who is a ferryman. He met with Kamala who died in his arms leaving behind his son along with him. Siddhartha loved his son. He wanted to pass on all his learning to him. However, son hated Siddhartha and wanted to indulge in Samsara.

Vasudeva said Siddhartha, "Who protected Siddhartha, the Samana, from Samsara, from sin, greed and folly? Could his father's piety, his teacher's exhortations, his own knowledge, his own seeking, protect him? Which father, which teacher, could prevent him from living his own life, from soiling himself with life, from loading himself with sin, from swallowing the bitter drink himself, from finding his own path? Do you think that anybody is spared this path? Perhaps your little son, because you would like to see him spared sorrow and pain and disillusionment? But if were to die ten times for him, you would not alter his destiny in the slightest." Finally son alone went to town leaving behind Siddhartha in sorrow. Siddhartha realized that his father had also suffered the same pain that he was now suffering for his son. He also acknowledged the repetition of events, the fateful circle of life.

The story ends with a lot of emphasis on being a good listener. In this book Vasudeva is projected as a good listener. Siddhartha said Govinda, "Vasudeva is a simple man; he was not a thinker, but he realized the essentials as well as Buddha. He was holy man, a saint." He further added, "Knowledge can be communicated, but not wisdom."

The book talks about the spiritual journey of a boy who questions himself about the right path one should follow in life. The voyage from asceticism to materialistic world and then to spiritualism had been captured very well with the meaningful conversation between Siddhartha and Govinda / Buddha / Vasudeva / Kamala. It has lot of touchy scenes. And hence it is worth reading this book.


Date :01-Sept-2009
Place: Mumbai