Winning

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by Jack Welch


  BEAR WITH ME, if you will, while I talk about mission and values.

  I say that because these two terms have got to be among the most abstract, overused, misunderstood words in business. When I speak with audiences, I’m asked about them frequently, usually with some level of panic over their actual meaning and relevance. (In New York, I once got the question “Can you please define the difference between a mission and a value, and also tell us what difference that difference makes?”) Business schools add to the confusion by having their students regularly write mission statements and debate values, a practice made even more futile for being carried out in a vacuum. Lots of companies do the same to their senior executives, usually in an attempt to create a noble-sounding plaque to hang in the company lobby.

  Too often, these exercises end with a set of generic platitudes that do nothing but leave employees directionless or cynical. Who doesn’t know of a mission statement that reads something like, “XYZ Company values quality and service,” or, “Such-and-Such Company is customer-driven.” Tell me what company doesn’t value quality and service or focus on its customers! And who doesn’t know of a company that has spent countless hours in emotional debate only to come up with values that, despite the good intentions that went into them, sound as if they were plucked from an all-purpose list of virtues including “integrity, quality, excellence, service, and respect.” Give me a break—every decent company espouses these things! And frankly, integrity is just a ticket to the game. If you don’t have it in your bones, you shouldn’t be allowed on the field.

  By contrast, a good mission statement and a good set of values are so real they smack you in the face with their concreteness. The mission announces exactly where you are going, and the values describe the behaviors that will get you there. Speaking of that, I prefer abandoning the term values altogether in favor of just behaviors. But for the sake of tradition, let’s stick with the common terminology.

  FIRST: ABOUT THAT MISSION…

  In my experience, an effective mission statement basically answers one question: How do we intend to win in this business?

  It does not answer: What were we good at in the good old days? Nor does it answer: How can we describe our business so that no particular unit or division or senior executive gets pissed off?

  Instead, the question “How do we intend to win in this business?” is defining. It requires companies to make choices about people, investments, and other resources, and it prevents them from falling into the common mission trap of asserting they will be all things to all people at all times. The question forces companies to delineate their strengths and weaknesses in order to assess where they can profitably play in the competitive landscape.*

  Yes, profitably—that’s the key. Even Ben & Jerry’s, the crunchy-granola, hippy, save-the-world ice cream company based in Vermont, has “profitable growth” and “increasing value for stakeholders” as one of the elements of its three-part mission statement because its executives know that without financial success, all the social goals in the world don’t have a chance.

  That’s not saying a mission shouldn’t be bold or aspirational. Ben & Jerry’s, for instance, wants to sell “all natural ice cream and euphoric concoctions” and “improve the quality of life locally, nationally and internationally.” That kind of language is great in that it absolutely has the power to excite people and motivate them to stretch.

  At the end of the day, effective mission statements balance the possible and the impossible. They give people a clear sense of the direction to profitability and the inspiration to feel they are part of something big and important.

  Take our mission at GE as an example. From 1981 through 1995, we said we were going to be “the most competitive enterprise in the world” by being No. 1 or No. 2 in every market—fixing, selling, or closing every underperforming business that couldn’t get there. There could be no doubt about what this mission meant or entailed. It was specific and descriptive, with nothing abstract going on. And it was aspirational, too, in its global ambition.

  This mission came to life in a bunch of different ways. First off, in a time when business strategy was mainly kept in an envelope in headquarters and any information about it was the product of the company gossip mill, we talked openly about which businesses were already No. 1 or No. 2, and which businesses had to get repaired quickly or be gone. Such candor shocked the system, but it did wonders for making the mission real to our people. They may have hated it when businesses were sold, but they understood why.*

  Moreover, we harped on the mission constantly, at every meeting large and small. Every decision or initiative was linked to the mission. We publicly rewarded people who drove the mission and let go of people who couldn’t deal with it for whatever reason, usually nostalgia for their business in the “good old days.”

  Now, it is possible that in 1981 we could have come up with an entirely different mission for GE. Say after lots of debate and an in-depth analysis of technology, competitors, and customers, we had decided we wanted to become the most innovative designer of electrical products in the world. Or say we had decided that our most profitable route would have been to quickly and thoroughly globalize every business we had, no matter what its market position.

  Either of these missions would have sent GE off on an entirely different road from the one we took. They would have required us to buy and sell different businesses than we did, or hire and let go of different people, and so forth. But technically, I have no argument with them as missions. They are concrete and specific. Without doubt, the electrical products mission would have come as a comfort to most people in GE. After all, that’s what most thought we were. The global focus mission would have probably alarmed others. Rapid change usually does.

  A final word about missions, and it concerns their creation. How do you come up with one?

  To me, this is a no-brainer. You can get input from anywhere—and you should listen to smart people from every quarter. But setting the mission is top management’s responsibility. A mission cannot, and must not, be delegated to anyone except the people ultimately held accountable for it.

  In fact, a mission is the defining moment for a company’s leadership.

  It’s the true test of its stuff.

  …AND NOW ABOUT THOSE VALUES

  As I said earlier, values are just behaviors—specific, nitty-gritty, and so descriptive they leave little to the imagination. People must be able to use them as marching orders because they are the how of the mission, the means to the end—winning.

  In contrast to the creation of a mission, everyone in a company should have something to say about values. Yes, that can be a messy undertaking. That’s OK. In a small enterprise, everyone can be involved in debating them in all kinds of meetings. In a larger organization, it’s a lot tougher. But you can use company-wide meetings, training sessions, and the like, for as much personal discussion as possible, and the intranet for broader input.

  Getting more participation really makes a difference, giving you more insights and more ideas, and at the end of the process, most importantly, much more extensive buy-in.

  The actual process of creating values, incidentally, has to be iterative. The executive team may come up with a first version, but it should be just that, a first version. Such a document should go out to be poked and probed by people all over an organization, over and over again. And the executive team has to go out of their way to be sure they’ve created an atmosphere where people feel it is their obligation to contribute.

  Now, if you’re in a company where speaking up gets you whacked, this method of developing values just isn’t going to work. I understand that, and as long as you stay, you’re going to have to live with that generic plaque in the front hall.

  But if you’re at a company that does welcome debate—and many do—shame on you if you don’t contribute to the process. If you want values and behaviors that you understand and can live with yourself, you have to make the case
for them.

  IT’S IN THE NITTY-GRITTY DETAILS

  When I first became CEO, I was certainly guilty of endorsing vague, too cryptic values. For instance, in 1981, I wrote in the annual report that GE leaders “face reality” and “live excellence” and “feel ownership.” These platitudes sure sounded good, but they had a long way to go toward describing real behaviors.

  By 1991, we had made a lot of progress. Over the course of the previous three years, more than five thousand employees spent some portion of their time participating in the development of our values. The result was much more concrete. We printed them on laminated wallet cards. The text included imperatives such as “Act in a boundaryless fashion—always search for and apply the best ideas regardless of their source” and “Be intolerant of bureaucracy” and “See change for the growth opportunity it brings.”

  Of course, some of these behaviors required further explana tion and interpretation. And we did that all the time, at meetings, during appraisals, and at the watercooler.

  Since leaving GE, I’ve realized how much further still we might have been able to push the discussion about values and behaviors. In 2004, I watched Jamie Dimon and Bill Harrison work together to develop values and behaviors for the new company created by the merger of Bank One and JPMorgan Chase. The document they used to open the dialogue came from Bank One, and it listed values and their corresponding behaviors with a level of detail I had never seen before.

  Take the value “We treat customers the way we would want to be treated.” That’s pretty tangible, but Bank One had literally identified the ten or twelve behaviors that made that value come to life. Here are some of them:

  Never let profit center conflicts get in the way of doing what is right for the customer.

  Give customers a good, fair deal. Great customer relationships take time. Do not try to maximize short-term profits at the expense of building those enduring relationships.

  Always look for ways to make it easier to do business with us.

  Communicate daily with your customers. If they are talking to you, they can’t be talking to a competitor.

  Don’t forget to say thank you.

  Another value Bank One had was: “We strive to be the low-cost provider through efficient and great operations.” Some of the prescribed behaviors included:

  Leaner is better.

  Eliminate bureaucracy.

  Cut waste relentlessly.

  Operations should be fast and simple.

  Value each other’s time.

  Invest in infrastructure.

  We should know our business best. We don’t need consultants to tell us what to do.

  If this level of detail feels overwhelming and even doctrinaire to you, I can sympathize. When I first saw Jamie’s single-spaced, five-page values-and-behaviors document, I nearly fell over. But as I read it, I saw its power.

  With all the stories I have heard in the past few years from employees in companies around the world, I’m convinced you cannot be too specific about values and their related behaviors.

  AND IT’S IN THE BACKUP

  Clarity around values and behaviors is not much good unless it is backed up. To make values really mean something, companies have to reward the people who exhibit them and “punish” those who don’t. Believe me, it will make winning easier.

  I say that because every time we asked one of our high-performing managers to leave because he didn’t demonstrate the values—and we said as much publicly—the organization responded incredibly well. In annual surveys over a decade, employees would tell us that we were a company that increasingly lived its values. That made people even more committed to living them too. And as our employee satisfaction results improved, so did our financial results.*

  AND FINALLY, IT’S IN THE CONNECTION

  A concrete mission is great. And values that describe specific behaviors are too. But for a company’s mission and values to truly work together as a winning proposition, they have to be mutually reinforcing.

  It seems obvious, doesn’t it, that a company’s values should support its mission, but it’s amazingly easy for that not to be the case. A disconnect between the parts of a company’s framework probably is more a sin of omission than of commission, but it often happens.

  In the most common scenario, a company’s mission and its values rupture due to the little crises of daily life in business: A competitor moves into town and lowers prices, and so do you, undermining your mission of competing on extreme customer service. Or a downturn hits, so you cut your advertising budget, forgetting your mission is to enhance and extend your brand.

  These examples of disconnections may sound minor or temporary, but when left unattended, they can really hurt a company. In fact, in the worst-case scenario, they can literally destroy a business.

  That’s how I see what happened at Arthur Andersen and Enron.

  Arthur Andersen was founded almost a century ago with the mission to become the most respected and trusted auditing firm in the world. It was a company that prided itself on having the courage to say no, even if that meant losing a client. It succeeded by hiring the most capable, highest-integrity CPAs and rewarding them for doing work that rightfully earned the confidence of corporations and regulators around the world.

  Then the boom times of the 1980s arrived, and Arthur Andersen decided it wanted to start a consulting business; that’s where the excitement was, not to mention the big money. The company started hiring more MBAs and paying them the constantly escalating salaries that the consulting industry demanded. In 1989, the firm actually split into two divisions, a traditional accounting division, called Arthur Andersen, and Andersen Consulting. Both fell under one corporate umbrella, called Andersen Worldwide.

  Rather than valuing conscientiousness, consulting firms generally encourage creativity and reward aggressive sales behavior, taking the customer from one project to the next. In the 1990s in particular, there was a real cowboy mentality in the consulting industry, and the accounting side of Andersen felt the impact. Some of its accountants clearly got swept up in the momentum, letting go of the auditing business values that had guided them for so long.

  Throughout most of the ’90s, Arthur Andersen was a firm at war with itself. The consulting business was subsidizing the auditing side and didn’t like it, and you can be sure the auditing side wasn’t crazy about the bravado of the consulting types. In these circumstances, how could people know the answer to questions like, “What really is our mission?” “What values matter most?” and “How should we behave?” Depending on which side of the firm you pledged allegiance to, your answer would be different, and that’s ultimately why the partners ended up in court with each other, trying to figure out how to divide the firm’s profits.

  Eventually, in 2002, the house collapsed, due in no small part to the disconnect between its mission and values.

  In many ways, the same kind of dynamic was behind the Enron collapse.

  In its prior life, Enron was a simple, rather mundane pipeline and energy company. Everyone was focused on getting gas from point A to point B cheaply and quickly, a mission they accomplished very well by having expertise in energy sourcing and distribution.

  Then, like Arthur Andersen, the company changed missions. Someone got the idea to turn Enron into a trading company. Again, the goal was faster growth.

  At Arthur Andersen, auditors wearing green eyeshades were suddenly sharing office space with MBAs in Armani suits. At Enron—again, figuratively speaking—the guys in coveralls were suddenly riding the elevator with MBAs in suspenders.

  Enron’s new mission meant it focused first on trading energy and then on trading anything and everything. That change was probably pretty exciting at the time, but obviously no one stopped to figure out and explicitly broadcast what values and corresponding behaviors would support such a heady goal. The trading desk was the place to be, and the pipeline and energy generation businesses got shoved to the background. Unfortunately
, there were no processes to provide checks and balances for the suspenders crowd. And it was in that context—of no context—that Enron’s collapse occurred.

  Like Arthur Andersen’s, this story of a mission and values disconnect ends with thousands of innocent people losing their jobs. What a tragedy.

  This chapter opened with the observation that people in business talk a lot about mission and values, but too often the result is more hot air than real action. No one wants it that way, but the loftiness and the imprecision inherent in both terms always seem to make it end up like that.

  But there is too much to lose by not getting your mission straight and by not making your values concrete. I’m not saying your company will collapse in flames the way Arthur Andersen and Enron did—they are extreme examples of a mission-and-values meltdown. But I am saying your company will not reach anywhere near its full potential if all that is guiding it is a list of pleasant platitudes hanging on the lobby wall.

  Look, I realize that defining a good mission and developing the values that support it takes time and enormous commitment. There will be long, contentious meetings when you would rather go home. There will be e-mail debates when you wish you could just go do real work. There will be painful times when you have to say good-bye to people you really like who just do not get the mission or live its values. On days like those, you might wish your mission and values were vague and generic.

  They can’t be.

  Take the time. Spend the energy.

  Make them real.

  Candor

 

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