Brother, Can You Spare A Paradigm?

GET BETTER OR GET BEATEN! 31 LEADERSHIP SECRETS FROM GE’S JACK WELCH By Robert Slater. Irwin Professional Publishing, 200 pp., [...]

October 1 1994 by Robert J. Callender


GET BETTER OR GET BEATEN! 31 LEADERSHIP SECRETS FROM GE’S JACK WELCH By Robert Slater. Irwin Professional Publishing, 200 pp., S20.

21ST CENTURY LEADERSHIP: DIALOGUES WITH 100 TOP LEADERS By Lynne Joy McFarland, Larry E. Senn, John R. Childress. Leadership Press, 348 pp., $15.95.

Make no mistake about it, Jack Welch is an American original. You don’t take a company to an $80 billion market value on fluff and platitudes, and you can’t do it by imitating someone else. The success has spawned a generation of Welch-watchers: When THE CEO speaks, everyone listens. That isn’t all bad, considering that his business strategy and management philosophy have catapulted GE to the head of the class. In any case, the phenomenon is illustrated by the fact that every chief executive in America reads from start to finish Welch’s “handpainted” letter to shareholders in General Electric’s annual report.

Because of the “Welch factor,” many, too, likely will read “Get Better or Get Beaten! 31 Leadership Secrets From GE’s Jack Welch,” and “21st Century Leadership-Dialogues With 100 Top Leaders.” While the former, written by veteran Time magazine reporter Robert Slater, sifts through Welch’s management wisdom, the latter prominently features excerpts of interviews with him.

Both books underscore the fact that Jack Welch sees things differently-and more clearly-than the professional managers into whose hands much of corporate America has fallen over the past few decades. Such bean counters are more concerned with process than with vision or action, and they hold that commercial success is more a function of creative accounting than of customer satisfaction. Frequently, their management styles tend toward either “father-knows-best” paternalism or iron-fisted militarism.

In contrast, Welch says that what’s needed is less management and more leadership. If one component of leadership is generating innovative ideas, Welch consistently delivers the goods. Last year was no exception. Welch introduced a new word into the GE annual report-Thoundaryless,” which means the dissolution of functional, hierarchical, and geographical barriers, and which Welch described as “the soul of today’s GE.”

In a recent article in The Wall Street journal, Welch summed up his philosophy: “The best companies now know, without a doubt, where productivity-real and limitless productivity-comes from. It comes from challenged, empow ered, excited, rewarded teams of people. It comes from engaging every single mind in the organization, making everyone part of the action, and allowing everyone to have a voice-a role-in the success of the enterprise. Doing so raises productivity not incrementally, but by multiples.”

Because of the power of such ideas, both books will appeal to management wonks who believe that simply chanting the mantras of “vision,” “empowerment,” “change,” “candor,” “cut fat,” and “face reality” will produce GE-type results. By  definition, however, leadership is original and creative, not emulative, and I wonder whether Jack Welch doesn’t get slightly embarrassed by the flattery of plagiarism. Or, for that matter, by the constant attention of business journalists.

“Get Better or Get Beaten” is a crisp distillation of Welch’s thinking, delivered in the form of aphorisms. By now, most executives know the most significant ideas: €.Be No. 1 or No. 2 in every business you are in.

  • Transfer ideas and allocate resources, and then get out of the way.
  • Express a vision, and let your people implement it.
  • Move fast and decisively.
  • Cut costs ruthlessly.

Slater is pithy in using examples of how screw-ups at GE were turned into victories or changes in strategic direction. Paul Van Orden, who ran the housewares division in the 1970s, and later became a member of GE’s corporate office, recalls that “blankets burned, mixers broke down. The toaster-oven is an abomination. It’s an oxymoron. It doesn’t toast very well; it doesn’t broil. You can’t get the meat brown.” Amid great wailing, Welch eventually sold the business.

The shortfall of Slater’s book is that it recites and compiles, but it doesn’t interpret or evaluate. Nor does it identify ethics and integrity as leadership secrets, which they clearly are. For example, whether the Kidder Peabody debacle will detract from the appeal of the “31 Secrets” remains to be seen. One question is whether Kidder ever met the test of Leadership Secret 8: “Be Number One or Number Two.” If it did, then it occurred in the area of collateralized mortgage obligations-to the tune of an estimated $15 billion dollar inventory. Walter Wriston (former chairman of Citicorp and a longtime GE board member who recently retired) should have whispered in Welch’s ear that in the area of high finance, being No. 1 or No. 2 in a business can be dangerous. Market dominance is synonymous with asset concentration, the very thing that toppled Continental Illinois in the energy sector, and that hobbled Citicorp in Latin America in the late 1980s.

Another question raised by the Kidder incident relates to Leadership Secret 2: “Look Reality in the Eye and Don’t Flinch.” Welch recently was quoted in The Wall Street Journal as implying that “the press” had done in Kidder’s CEO, Michael Carpenter. He also said that investment banking is “the only business I know where perception ends up defining reality.” This is hardly a revelation, considering that failures of financial institutions are always issues of confidence or perception.

One also has to wonder whether the concept of “integrated diversity,” so important to Welch, is easily transplanted to all the businesses owned by a conglomerate such as GE. It would be difficult to imagine the traders at Kidder rallying around the theme of a recent GE advertising campaign, “We Bring Good Things to Life,” or visiting the hospital to see the guy (as shown in one of the campaign’s TV commercials) who had his eyesight restored partly because of GE’s magnetic resonance imager. Perhaps such an idea is more relevant to manufacturing than to the ethereal world of finance. In addition, I wonder how one builds and sustains a Welch-style culture with traders who earn enough money to retire after only two or three years.

Ironically, Joseph Jett-Kidder’s now-terminated 1993 hero of the year-personified the attributes of “boundarylessness” and “speed.” In short, the Kidder experience does not invalidate Welch’s principles; it simply shows them to be less than fallible.

Meanwhile, although the authors of “21st Century Leadership” lean heavily on contributions from Welch, they should have paid more attention to him. Welch has said, “Business is very simple; people who try to make it complex get themselves all wound around.”

Yet complexity is exactly what you get in a manuscript that quotes 101 business and non-business leaders and uses the wonderful tools beloved by consultants-organizational pyramids, arrows pointing in all directions, graphs, and rolling balls moving through their quadrants. All this portrays leadership as what it is not and never will be: managerial.

All the leadership secrets may be here, but finding them is like spending all day at the supermarket feeling the ends of cantaloupes in order to find the ripe ones.

There’s a plethora of boilerplate statements by CEOs, trumpeting their desire to be the premier producer/provider of widgets/financial services worldwide. On the flip side, it’s easy to spot real McCoy responses, including Bill Gates’ vision for Microsoft: “A personal computer on every desk in every home.” (Gates is Chief Executive magazine’s CEO of the Year.) Similarly, one would like to spend some time under the leadership of Chas. Levy Co. Chairman Barbara Levy Kipper, who says, “We encourage laughter and fun…We must instill intuition and a strong sense of what’s right and wrong.”

Appropriately, the theme of corporate culture gets considerable attention. Lee Iacocca describes the wrenching change brought on by Chrysler’s move from the hierarchical mode to one stressing individual innovation. But the going gets a bit heavy when the head of the Boy Scouts recapitulates the Scout Law and the Scout Oath. Awkwardly, in a section entitled, “The New Road Map: Winning Shared Values in a Healthy Culture,” this bit precedes a description by Welch of General Electric’s values. One finds it difficult to picture Welch exhorting his troops at GE’s Crotonville training facility to charge into the 21st century, armed with the rallying cry, “courteous, clean, and reverent.” Irreverence is what Welch is all about.

Then there’s a significant omission that ranks as the book’s major failing: At a time when global competitiveness may be the most critical issue facing corporate America, “21st Century Leadership” neglects to tap the thinking of leaders outside the U.S. Would readers not have been well-served by a contribution from a top Japanese executive, especially given the compulsion or need of American firms in recent years to imitate Japanese teamwork, quality-control, and customer-satisfaction techniques?

Like the Slater book, “21st Century Leadership” also fails to address adequately the issue of ethics. There’s scant support for the statement that “most leaders, when talking about values emphasize ethics and integrity as number one.” (Perhaps Jack Welch can redress the imbalance in GE’s next annual report, at the same time tackling the issues of multicultural diversity and the so-called glass ceiling for women executives.)

Unfortunately, what begins as an attempt to capture the essence of leadership becomes largely a repetitious recitation on mechanics and process, and an exercise in cliches. Fortunately, “21st Century Leadership” was not on General Eisenhower’s night table the evening before the D-Day invasion. If it were, he never would have said, “Let’s go,” as Jack Welch does every day of his life.


Robert J. Callender is former vice chairman of Chemical Bank and an executive-in-residence at the Columbia Graduate School of Business.