What We Ought To Learn From Jack Welch

by Mar 5, 2020Leadership

Much has been written about Jack Welch, the legendary CEO of General Electric who passed away this week. I admired him for knowing that, as a leader, he was also a teacher. Wise teachers caution their students against idolizing their teachers, leaders, and mentors.

Welch has legions of devotees and for good reason.

Under his leadership, GE gained iconic status by being decisive, tough-minded and investing in leaders and their development in a way few have. During his tenure, GE’s revenue more than quadrupled and its market valuation rose to $410 billion from $14 billion.

As time passes and a respectful distance from today is achieved, the reviews of him will include more about his errors as well as the circumstances that worked in GEs favor. This is as it should be because learning from those who have achieved much is shallow if they are not understood holistically and in context.

We can learn much from Welch, but three things stand out. Courage, speed, and luck.

  • Courage

Welch was famously tough and combative. That isn’t the courageous aspect of his character. Courage allowed him to do what he thought necessary, even though it would draw criticism to him and GE. Jettisoning businesses that weren’t competing well at the top of their sector takes a courage of conviction. This is especially true when the leader who acquired them is also the one to say, “This isn’t working.” Often leaders find it hard to give up on something they previously thought pretty great.

The courage to give relevant, face-to-face feedback, is rare. Often leaders wait until they are flaming mad to be candid. At this point, the message comes colored with anger and frustration that makes it difficult to hear the essence. Welch’s lengthy and thoughtful messages to his team have been described as lengthy and thoughtful. Even a critical message is more likely to be heard when it is relevant to the job at hand.

  • Speed

Leaders have power but some are so reluctant to use it that it matters little whether their judgement is good or not. Welch was criticized for the speed at which he acted, perhaps especially when he reduced the workforce at GE dramatically. Inaction or actions taken too slowly sink many an enterprise, not just public companies.

Welch’s tendency appears to have been action, but he also had resources to support good decisions, not merely fast ones. The right information, meaning that which is relevant to your decisions, combined with decisiveness, enables leaders to take advantage of opportunities that others miss.

In matters of people and performance, Welch is reported to have taken a lot of time. Speed isn’t always about being faster. It’s about using the right speed.

We can learn much from Welch, but three things stand out. Courage, speed, and luck. Click To Tweet
  • Luck

The man said himself, “Obviously, nothing is permanent.” Certainly the stellar success of GE is an example. Welch’s successor, Jeff Immelt faced the head winds from the financial market meltdown early in his tenure. The circumstances outside of Immelt’s control are not a complete explanation for GE’s loss of value. Nor are the more positive conditions under which Welch led the only cause of his success. Neither man is completely understood if we look only at the financial results of GE.

Circumstances change, markets shift, fears of novel viruses disrupt supply chains and upend plans. Welch led GE at an auspicious time. While it’s worth studying what he did well, ignoring luck as a factor gives only a partial view.

The human cognitive tendency is to simplify events, results, and people because it’s much easier than working to understand things with their variations and external factors. If we are to learn from Welch, it is important to understand the man beyond the labels. If business schools do not teach students about Welch in a holistic way, it cheats students out of the opportunity to practice thinking in a way that will be of far greater value to them than any mythologized version.

Wise teachers caution their students against blind followership and idol worship. Wise leaders know that they are teachers and that over-simplifying leads to as many faulty decisions as over-complicating. Welch knew he was a teacher as evidenced by his actions while leading GE and in retirement. We can learn from what he explicitly taught and from observing what he did.

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