They reflect the aggressive strategic redirection Welch unveiled soon after he became CEO. By now the story of GE’s business transformation is familiar. In 1981, Welch declared that the company would focus its operations on three “strategic circles””core manufacturing units such as lighting and locomotives, technology- intensive businesses, and services”and that each of its businesses would rank first or second in its global market. GE has achieved world market-share leadership in nearly all of its 14 businesses.
In 1988, its 300,000 employees generated revenues of more than $50 billion and net income of $3. 4 billion. GE’s strategic redirection had essentially taken shape by the end of 1986. Since then, Welch has embarked on a more imposing challenge: building a revitalized “human engine” to animate GE’s formidable “business engine. ” His program has two central objectives. First, he is championing a company-wide drive to identify and eliminate unproductive work in order to energize GE’s employees.
It is neither realistic nor useful, Welch argues, to expect employees of a decidedly leaner corporation to complete all the reports, reviews, forecasts, and budgets that were standard operating procedure in more forgiving times. He is developing procedures to speed decision cycles, move nformation through the organization, provide quick and effective feedback, and evaluate and reward managers on qualities such as openness, candor, and self- confidence.
Second, and perhaps of even greater significance, Welch is leading a transformation of attitudes at GE”struggling, in his words, to release “emotional energy’ at all levels of the organization and encourage creativity and feelings of ownership and self-worth. His ultimate goal is to create an enterprise that can tap the benefits of global scale and diversity without the stifling costs of bureaucratic ontrols and hierarchical authority and without a managerial focus on personal power and self-perpetuation.
This requires a transformation not only of systems and procedures, he argues, but also of people themselves. This interview was conducted at Welch’s office in Fairfield, Connecticut by Noel Tichy and Ram Charan. Mr. Tichy was manager of GE’s Management Education Operation from 1985 through 1987. He is a professor at the University of Michigan’s School of Business Administration, Leader Oohn Wiley & Sons, 1986). Mr. Charan is a Dallas-based consultant who dvises companies in the United States, Europe, and Asia on implementing global strategies HBR: What makes a good manager?
Jack Welch: I prefer the term “business leader. ” Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion. Above all else, though, good leaders are open. They go up, down, and around their organization to reach people. They don’t stick to the established channels. Theyre informal. Theyre straight with people. They make a religion out of being accessible. They never get bored telling their story.