HIGHLY RECOMMENDED: Jack Welch ‘Straight From The Gut’

Written by William Pauwels on November 11, 2014

I recently finished Jack Welch’s biography, Jack . . . Straight From The Gut. It’s the story of how this most successful and admired chairman and CEO of General Electric grew and developed his business philosophy and success strategies during his 40 year career at GE.

After a chapter dealing with the importance of focus, I found myself questioning my focus.  Why was I devoting time to this book?  After all, my industrial management career was behind me.  Wouldn’t it make more sense to be reading a book on wise investing, or tax avoidance, or estate planning?  However, my curiosity won out and I continued to the end.  Eventually, I came to realize that I was subconsciously looking for Jack Welch’s approval (or disapproval) of my management style and philosophy as it evolved over the years.

Happily, I’ve concluded that my “Management by Strategy, Values and Unshakable Facts” Philosophy was pretty much in sync with Welch’s approach.  However, I was definitely more permissive of dissension.  Welch required his mangers to be TOTALLY committed to his philosophy and performance standards, and to terminate those who were not TOTALLY committed, or who’s performance failed to measure up.  In fact, his 20/70/10 Human Resource’s Strategy required every manager to terminate the bottom-performing 10% of their employees every year, no exceptions.

My philosophy was different on that count.  I always valued company experience and challenged our managers to identify and protect the unique talents and motivations of every employee, and to develop them to the full.  I also saw dissension and differing opinions as the natural result of differing backgrounds, since our employees were recruited from successful positions at other companies. 

Perhaps this was a leadership weakness?  Jack would think so.  However, I wasn’t running GE, with thousands of super-talented people recruited right out of college and waiting in the wings, all preconditioned to my philosophy, and  ready to take over when someone failed.  The  companies I ran were always small, entrepreneurial, and usually short of talented leadership. I used to say you had to punch “the boss” in the nose at least twice to get fired.  In retrospect, and after listening to Jack, perhaps that was a weakness; but I’m still not quite convinced of his 10% rule . . . in a relatively small company.
I very much agree with Welch’s philosophy of providing extraordinary compensation to the top 20% of the performers in an organization.

However, I feel he over relates compensation to stock market performance.  This may be OK for CEO’s and senior corporate officers, but I personally think it is too far removed, in terms of cause and effect, from the control of the typical operating manager of a multi-national, multi-divisional company.

Early in Jack’s career as CEO, he insisted that GE be number one or two in all of their particular product-markets.  If not, they divested the product-businesses.  He eventually abandoned this philosophy as he came to realize that this strategy caused creative managers to narrowly define their markets, thus staking out job-preserving, high-maket-share positions, and reducing their true, market-potential opportunities.

(This reminded me of the last company I ran: its claim to +80% product market share when I joined them in 1982.  Broadly defined, it had only 1 to 2% of the particular market.  By redefining the market, we opened up the possibility of “make-it-happen” growth of 15% per year versus “let-it-happen,” market-share-limited growth.)

I strongly recommend this book for anyone in a business leadership position, or anyone aspiring to be an effective change-agent.

Image: http://www.feedurbrain.com/forum/showthread.php?7499-Jack-Welch-Jack-Straight-from-the-Gut


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William Pauwels
William A. Pauwels, Sr. was born in Jackson Michigan to a Belgian, immigrant, entrepreneurial family. Bill is a graduate of the University of Notre Dame and served in executive and/or leadership positions at Thomson Industries, Inc., Dow Corning, Loctite and Sherwin-Williams. He is currently CIO of Pauwels Private Investment Practice. He's been commenting on matters political/economic/philosophical since 1980.