Manage-Wise

The Welch way of leading

Welch’s ideal leaders have boundless reserves of energy and a strong penchant for action. They embrace change and love the thrill of the game.

It all begins with energy. Leaders must have other strengths, such as intelligence and decision-making ability, but it is energy that converts good ideas into measurable performance.

Strictly defined, energy means a source of power, whether electrical, mechanical, or otherwise. But for our purposes, there is more to energy than its physical properties. In addition to physical energy, there is also mental energy and what might be called ‘emotional energy’—the kind of energy that a leader projects to help build the spirit or morale of an organisation.

It is an energy that reaches across people and binds together individual contributions into a purposeful whole. In that sense, emotional energy can be as important as or more important than physical energy. Emotional energy is the passion that gets the job done.

Passion, not charisma

Some books on leadership point to something called ‘charisma’ as an essential quality of a great leader. But when Jack Welch talks about the importance of passion as a component of effective leadership, he is talking about something very different from charisma. In fact, charisma (which we’ll define here as the quality of personal magnetism) has little to do with effective leadership. Peter Drucker has made this point in many of his works.

John Kennedy was one of the most charismatic American presidents in recent history, Drucker points out, but he failed to accomplish very much. Conversely, Drucker has also written that Dwight Eisenhower and Harry Truman had the charisma of ‘dead mackerels,’ but were extremely effective leaders.

Having passion, says Welch, “doesn’t mean loud or flamboyant. It is something that comes from deep inside.” But although the wellsprings of passion are internal, the workplace in which one finds oneself can be either supportive or destructive of passion. The best organisations, Welch argues, spark and nurture a person’s passion.

What kind of company nurtures passion? A company that encourages frank dialogue and candid communication and—conversely—rejects autocratic behaviour, turf wars and other behaviours that impede effective communication.

Passion is a fuel. As such, it can be put to the wrong purposes. Lacking good guidance, people can become passionate about the wrong things. For example, they may come to crave the limelight, put their personal goals above the goals of the organisation, build fiefdoms, and so on. But again, these behaviours are destructive because they work against an open, candid organisation.

Simplify the organisation

Getting high-energy people into the company is only the first step—the organisational equivalent of setting the table. The next, and bigger, task is to create an organisation that converts energy into results. Early in his tenure at GE, Welch set his sights on simplifying the organisational chart. Why? Because when he surveyed GE’s structure in the early 1980s, he saw a complex, lumbering, muddled organisation with too many management layers, too many titles, too much of everything. To his eyes, the structure made no sense: 25,000 managers, more than 130 vice-presidents, and more strategic planners than any one company would ever need.

With a speed and determination that shocked many of his colleagues, Welch delayered the company. He fired the strategic planners and put the responsibility for plotting the direction of each of the business units back into the hands of the people who led those units.

Later, he launched his now-legendary Work-Out initiative aimed at getting good ideas out of the entire workforce (and of course, compelling management to deal with those ideas). In all cases, Welch had three goals in mind: making the organisation more productive, weaving higher levels of self-confidence into the fabric of the firm, and throttling bureaucracy.

Welch saw in bureaucracy an enormous drain on the energy of an organisation. Bureaucracy kills passion and (as Peter Drucker notes), diverts energy from the critical tasks at hand. “The higher up an executive, the larger will be the proportion of time that is not under his control and not spent on contribution. The larger the organisation, the more time will be needed just to keep the organisation together and running, rather than make it function or produce.”

Drucker has identified one of the great management traps. In many companies, senior managers find most of their time consumed by simply keeping the trains running on time. Of course, the opposite should be true: The higher one climbs the ladder of a complex organisation, the more time one should have available to come up with new ways of looking at things. But in a highly bureaucratic organisation, senior managers spend much more of their time putting out fires or simply trying to get the organisation to move. Passion and productivity suffer accordingly.

Excerpt from Jack Welch and the 4E’s of Leadership by Jeffrey A Krames.
Reproduced with permission © 2005, Tata McGraw-Hill.
Price Rs 275.
E-mail: vishwanath_mum@tatamcgrawhill.com