Winning by Jack Welch The book Winning by Jack Welch was written in 2004. It is a straight forward book that goes into all aspects of running a business and becoming a successful leader. The author was the CEO of General Electric for over 20 years. Welch retired in 2001 and spends his time traveling around the world giving speeches, answering questions and giving advice about how to be able to run a successful business. After a couple of years of touring and giving advice he decided to put it down on paper and wrote the book Winning.
Welch takes a look at every level of a business, whether it is a large or small company, the philosophy and practices should be the same. The book is divided into four sections. The first section is called Underneath It All and it takes a look at missions, values, using candor, differentiation and voice and dignity. The second section is called Your Company and has sections about leadership, hiring, people management, parting ways, change and crisis management. The third section is titled Your Competition and deals with strategy, budgeting, organic growth, mergers, acquisitions, and six sigma. The fourth section is about Your Career.
It discusses areas such as finding the right job, getting promoted, hard spots and having a work-life balance. UNDERNEATH IT ALL takes a look at what goes on behind the scenes is getting a business up and going. The one thing that stood out to me in this first section and is mentioned time and time again throughout the book is candor. Welch has talked about using candor for over twenty years and is amazed that it is not used as much as it should be. Welch actually calls the lack of candor “the biggest dirty little secret in business” (p. 25) Welch believes that people should not be afraid to say things like they are.
Say what you feel, etc. He believes that a company will run much better with candor going on. Welch has a theory about candor that he calls the Candor Effect. There are three parts to the candor effect. The first part has candor getting more people talking and sharing ideas which brings an advantage to any business. The second part is that candor can generate speed. Things will happen much faster when it is out in the open. The third part of the candor effect is that candor can actually cut costs. When people aren’t afraid to express themselves, things can get done much faster and more efficiently which will save money in the long run.
Welch also knows that it is hard for many to go with candor because people like to be nice to others and not necessarily speak their mind. Along with candor in the first part of the book is a chapter about missions and values that a company needs. A good mission statement must answer the following question according to Welch, “How do we intend to win in this business? ”(p. 14) On page 15 Welch says that “effective mission statements balance the possible and the impossible. ” A good mission statement and values won’t happen overnight. They take a lot of time and energy to develop and get into practice.
To be successful there has to be a big commitment to make it work. The top of the companies are the people who should be responsible for the mission statements since they ultimately will be the ones responsible for whether things go the way they should or not. Probably one of the most interesting parts of the first section of his book is the chapter entitled Differentiation. Welch breaks down the type of employees a company has and what their roles should be. He has a 20-70-10 theory about people. The top 20 percent are the people who get the bonuses, praise, etc. for their performances.
The middle 70 are sort of middle of the road and the majority of the employees. Some of them able to be pushed up to the top 20 and some of them are just the average but still very important to the success of the company. They must feel they are important in their own way to make a company run. The bottom 10 and the ones managers, etc. must get rid of. They will slow profits and are not helping the business in the long run. The middle 70 must be managed differently and are probably the hardest group to manage. “This group of people is enormously valuable to any company; you simply cannot function without their skills energy, and commitment.
After all, they are the majority of your employees. ” (p. 41) The last part of the first section talks about voice and dignity. It makes a point that people should be allowed to express how they feel about things and not be penalized for it. “Some people have better ideas than others; some are smarter or more experienced or more creative. But everyone should be heard and respected. ” (p. 57) Allowing people to voice their opinion could lead to a great new innovative idea that will be profitable for the company. The second section of the book is called YOUR COMPANY and one of the chapters discusses leadership.
Welch has eight rules of what leaders do on page 63 of his book. His eight rules are: 1. Leaders relentlessly upgrade their team, using every encounter as an opportunity to evaluate, coach and build self-confidence. 2. Leaders make sure people not only see the vision, they live and breathe it. 3. Leaders get into everyone’s skin, exuding positive energy and optimism. 4. Leaders establish trust with candor, transparency, and credit. 5. Leaders have the courage to make unpopular decisions and gut calls. 6. Leaders probe and push with a curiosity that borders on skepticism, making sure their questions are answered with action. . Leaders inspire risk taking and learning by setting the example. 8. Leaders celebrate. Welch believes that some leaders are born with leadership abilities but most make it. When you work in a leadership role in a company it is no longer just about you. It is now about the people you lead as well. Also in section two is hiring, managing people and also letting people go or as Welch refers to parting ways. In his chapter on hiring, Welch has many little tricks that people can use to decide if they are hiring the right person. The first is his acid test that he begins talking about on page 82 which involve three areas.
Look for people with integrity, intelligence and maturity. Having those qualities will help make a good employee. He also uses a system he calls 4Es and 1P. Those include looking for people with positive energy, those who can energize people, those who have edge, those who can execute and those who have a passion for the job. Welch also talks about characteristics you should look for in hiring for the top positions in a company. He mentions looking for a person with self-confidence and not afraid to make a decision if they need to. In managing people Welch believes that HR should have an important role in the company that allows hem to have power and help managers with the type of people they hire. People should be rewarded for what they do with money, training, and other benefits. Evaluations should be something that employees understand and Welch recommends about twice a year with face to face meetings. Welch also believes that managers need pay attention to the largest group of employees, the 70 percent who make up most of the work force. The last part of dealing with employees is the part when an employee needs to be let go. Welch believes it should be done in as nice a way possible where it is not a complete surprise to the employee.
On page 122, he lists the three main reasons that people are let go. “There are firings for integrity violations-stealing, lying, cheating or any other form of ethical or legal breach. Then, there are layoffs due to economic downturns. Finally, there are firings for nonperformance. ” With the use of candor among other qualities, Welch believes that employees should know how a company is doing. They also should know if they haven’t been performing the way they should have. It shouldn’t come as a complete surprise to them. The last two areas discussed in section two are change and crisis management.
Companies will always have to deal with change. Change comes at different stages in a company. Welch has four practices that he believes will work with change. “Communicate a sound rationale for every change. Have the right peoples at your side. Get rid of the resisters. And seize every single opportunity, even those from someone else’s misfortune. ” (p 145) As with change, there will also always be some kind of crisis that will pop up. As a leader you have to remember people are relying on you to get them through the crisis. You have to lead the company and your people through whatever comes you way.
The third section of the book is called YOUR COMPETITION and the first chapter in this section deals with strategy. Welch uses three slides when he thinks about strategy. The first slide has a company looking at who their competitors are, finding out their strengths and weaknesses and what share of the world market does your company have compared to your competitor. The second slide makes a company look at itself and define what it has done competitively over the past year and the third has a company looking at what they plan to do to stay competitive and compete in the market.
Once you have a strategy you need to act on it to make adjustments and improvements on a daily basis. The budget is the next step in this section. Welch believes there were two old standard ways to budget meetings. One he called “Negotiated Settlement” where groups meet and offer a lower percent than what they wanted to. When the company makes it go up a little both sides feel like they won. The other he refers to as “Phony Smile” where both sides come to the table and everyone says their thing. They all smile and leave and a few days later they find out they received half the funding the requested.
Welch believes there is a better way where both groups can be actively involved. They take a look at last year’s performance wand what the competition is doing. What can our company do to beat the competition? That is what they take a look at instead of just numbers. Welch believes it’s a better way to budget. There are two ways for a company to grow. One is organic growth when a new and innovative idea takes off and becomes very profitable for everyone around it. Organic growth can take a great deal of time for the profit to become noticeable. The other is to acquire other companies through acquisitions and mergers.
Mergers can be a quick way to make money. Mergers can mean change in a company. People have to make sure that a merger allows the main company to be in control but keep some of the other company’s employees and leaders involved to a degree. People have to be positive when a merger takes place or they can find themselves in a position where they may be replaced. Welch states “they are not only a necessary part of business, they have the potential to deliver profitable growth and put you in a new and exciting strategic position at a speed that organic growth just cannot match. ” (p. 43) The last chapter in this section talks about Sigma Six which is quality program followed by many companies. If followed correctly it should do three basic things: “improve a customer’s experience, lowers your costs, and builds better leaders. ” (p. 247) Using this concept can improve your competition with other companies while building basic customer satisfaction to make your company more competitive. The final section in this book is called YOUR CAREER and it begins with finding the right job. Today most people change jobs several times until they find the right mix for them.
It will take time to find the right job you are looking for. You have to feel comfortable, don’t dread going into work and make sure something is the right fit for them. Welch believes you will know when you’ve made the right choice. The more experience you have and the better you are at something will make getting that job easier. You have to like what you’re doing and who you are working for. It’s not fun to go into a job every day that you are not happy with. Once you find the right job you have a chance to be promoted. Welch talks about having the desire is half the battle.
If you don’t have the drive to get ahead, chances are that you won’t. Most promotions come from performance and even changing jobs a couple of times to get where you really want to be. If you don’t get a promotion, you can’t beat yourself up about it. You deal with it and go on or find a job at a different place. Don’t settle for a job unless it is truly where you want to be. Dealing with bosses is mentioned as a chapter in this book. Most people have to deal with people they don’t want to work for. Welch mentions that you have to evaluated how much you love your job versus dealing with a boss that you don’t like.
If you don’t want to leave then you just have to deal with it so to speak. If you are not that happy, it’s OK to go out and find another job. Also you may have to make some changes to make your boss happy at work. If you are willing to do that, it could make life more agreeable. I you are not, you may want to find another place to work. The last chapter deals with managing a work-life balance. Welch even makes that point that he gave up family time to be successful because at that time, that is what men did. Today men want to balance family and work and he believes that they can.
They have to find the right job that will allow them to have time with their family. Most companies today realize that there needs to be a balance in the work place between home and work. It is not an easy task but if you work hard enough at both ends you can achieve what you want. Welch gives a good look at what it takes to be in a leadership role at any size company. His book gave good insight to many examples of what companies did and didn’t do. Winning is a great guide for anyone to use who wants to find out how to get ahead in any kind of business.