by Jack Welch
The silver lining to this difficult situation is that the existence of a middle 70 forces companies to manage themselves better. It forces leaders to scrutinize people more closely than they would ordinarily and to provide more consistent, candid feedback. It pushes companies to build training centers that really make a difference. For instance, before differentiation, our Crotonville, New York, training center was often used in the 1970s as a warehouse where businesses could afford to send their underperformers. It was like a way station on the road to early retirement.*
The rigor of 20-70-10 helped us change that. We turned Crotonville into a place where the top 20 and the best of the middle 70 talked about ideas, debated our approach to business, and got to know and understand one another a lot better. And since senior management spent several hours with each class, it also gave us a rough idea as to just how rigorously differentiation was being practiced in the field.
Another piece of silver lining is that while being in the middle 70 percent can be demotivating to some people, it actually revs the engines of many others. For the people in the top 20, for instance, the very existence of a middle 70 gives them yet another reason to pull out all the stops every day. They have to keep getting better to keep their high standing—what a rush that can be! After all, most people want to improve and grow every day.
For a lot of people in the middle 70, getting better is energizing too. Getting into the top 20 gives them a tangible goal, and having that goal makes them work harder, think more creatively, share more ideas, and, overall, fight the good fight every day. It makes work more of a challenge and a lot more fun.
Differentiation favors people who are energetic and extroverted and undervalues people who are shy and introverted, even if they are talented.
I don’t know if it’s good or bad, but the world generally favors people who are energetic and extroverted. That’s also something you learn young, and it’s reinforced in school, at church, at camp, in clubs, and usually at home too. By the time you get to work, if you are still shy and introverted and somewhat low in energy, there are professions and jobs where those characteristics are advantageous. If you know yourself, you will find them. This criticism of differentiation, which I hear now and then, is not really about differentiation, but about society’s values.
I might add that in business, energetic and extroverted people generally do better, but results speak for themselves, loud and clear. Differentiation hears them.
If you want the best people on your team, you need to face up to differentiation. I don’t know of any people management system that does it better—with more transparency, fairness, and speed. It isn’t perfect. But differentiation, like candor, clarifies business and makes it run better in every way.
Voice and Dignity
* * *
EVERY BRAIN IN THE GAME
RUDY GIULIANI HAS A SAYING: “Know what you believe.” I think he’s right, so I want to conclude this section of the book with one of my core beliefs. I mention it because it is the hinge for every principle you’ve just read about—mission and values, candor, and differentiation.
The belief is this: every person in the world wants voice and dignity, and every person deserves them.
By “voice,” I mean people want the opportunity to speak their minds and have their ideas, opinions, and feelings heard, regardless of their nationality, gender, age, or culture.
By “dignity,” I mean people inherently and instinctively want to be respected for their work and effort and individuality.
If you’ve just read the above and said, “Well, obviously,” then fine. I am assuming that most people are having that response. And maybe the belief in voice and dignity doesn’t even need to be stated, it is so widely accepted and its importance is so self-evident. But I have been surprised over the past couple of years at how often I end up coming back to this value when I talk about winning.*
Last year in China, a young woman in the audience stood and, literally in tears, asked how any businessperson in her country could practice candor and differentiation when “only the voice of the boss is allowed.”
“We, the people underneath, have so many ideas. But we cannot even imagine speaking them until we are the boss,” she said. “That is fine if you are an entrepreneur and start your own company. Then you are the boss. But some of us are not able to do that.”
I said that in the early days of GE’s operations in China, I had seen the difficulties she had just described at our factories in Nansha, Shanghai, and Beijing. But as the plants developed and business practices evolved, I had seen an enormous improvement in how the Chinese leaders who worked for GE were listening to employees. I told her that I was confident that, with China’s expanding market economy and the maturation of its management practices, a more inclusive approach would eventually spread.
But the repression of voice and dignity is hardly a Chinese problem. In fact, while the Chinese woman was very emotional in her questioning, people in every country I’ve visited share some of her frustration and concern on this matter.
Now, when you are running a unit or a division, you rarely think that people aren’t speaking up or that they’re not respected. It feels like the people around you certainly are, and your days are filled with visits, calls, and notes from people with strong opinions. But it ends up that what you experience is a skewed sample. The majority of people in most organizations don’t say anything because they feel they can’t—and because they haven’t been asked.*
That became clear to me in the late 1980s, just about every time I had a marathon session at our training center in Crotonville. Detailed questions about local business issues—questions that should have been answered back on home turf—were thrown at me from every direction. “Why is the refrigeration plant getting all the new equipment while we’re letting laundry suffer?” and “What are we moving the GE90 engine assembly to Durham for, when we can do it right here in Evandale?”
In frustration, after several such questions, I’d invariably stop the class to ask, “Why aren’t you asking those questions to your own bosses?”
The answer would come back, “I can’t bring that up. I’d get killed.”
“Why can you ask me?” I’d say.
“Because we feel anonymous here.”
After a year or so of these kinds of exchanges, we realized we had to do something to create an environment back in the businesses where people at every level would speak out the way they did at Crotonville.
The Work-Out process was born. These were two- or three-day events held at GE sites around the world, patterned after New England town meetings. Groups of thirty to a hundred employees would come together with an outside facilitator to discuss better ways of doing things and how to eliminate some of the bureaucracy and roadblocks that were hindering them. The boss would be present at the beginning of each session, laying out the rationale for the Work-Out. He or she would also commit to two things: to give an on-the-spot yes or no to 75 percent of the recommendations that came out of the session, and to resolve the remaining 25 percent within thirty days. The boss would then disappear until the end of the session, so as not to stifle open discussion, returning only at the end to make good on his or her promise.*
Tens of thousands of these sessions took place over several years, until they became a way of life in the company. They are no longer big events but part of how GE goes about solving problems.
Whether it was a refrigeration plant in Louisville, Kentucky, where employees debated faster and better paint systems, or a jet engine plant in Rutland, Vermont, where employees had recommendations on how to cut cycle time in blade manufacturing, or a credit card processing facility in Cincinnati, where employees had ideas about billing efficiency, Work-Outs led to an explosion in productivity.
They brought every brain into the game.
A middle-aged appliance worker who was at one Work-Out spoke for thousands of people when he told me, “For twenty-five years, you paid f
or my hands when you could have had my brain as well—for nothing.”
At last, because of Work-Out, we were getting both. In fact, I believe Work-Out was responsible for one of the most profound changes in GE during my time there. For the vast majority of employees, the boss-knows-all culture disappeared.
A big bureaucracy like GE needed something as systematized as Work-Out to break the ice and get people to open up. But it is not the only method to make sure that your team or company is getting every voice heard. Find an approach that feels right to you.
I’m not saying that everyone’s opinions should be put into practice or every single complaint needs to be satisfied. That’s what management judgment is all about. Obviously, some people have better ideas than others; some people are smarter or more experienced or more creative. But everyone should be heard and respected.
They want it and you need it.
YOUR COMPANY
* * *
5. LEADERSHIP
It’s Not Just About You
6. HIRING
What Winners Are Made Of
7. PEOPLE MANAGEMENT
You’ve Got the Right Players. Now What?
8. PARTING WAYS
Letting Go Is Hard to Do
9. CHANGE
Mountains Do Move
10. CRISIS MANAGEMENT
From Oh-God-No to Yes-We’re-Fine
Leadership
* * *
IT’S NOT JUST ABOUT YOU
ONE DAY, you become a leader.
On Monday, you’re doing what comes naturally, enjoying your job, running a project, talking and laughing with colleagues about life and work, and gossiping about how stupid management can be. Then on Tuesday, you are management. You’re a boss.
Suddenly, everything feels different—because it is different. Leadership requires distinct behaviors and attitudes, and for many people, they debut with the job.
Before you are a leader, success is all about growing yourself.
When you become a leader, success is all about growing others.
Without question, there are lots of ways to be a leader. You need to look only as far as the freewheeling, straight-talking Herb Kelleher, who ran Southwest Airlines for thirty years, and Microsoft’s quiet innovator, Bill Gates, to know that leaders come in all varieties. In politics, take Churchill and Gandhi. In football, take Lombardi and Belichick.
Each of these leaders would give you a different list of leadership “rules.”
If asked, I would give you eight. They didn’t feel like rules when I was using them. They just felt like the right way to lead.
This is not the last you will hear of leadership in this book. Virtually every chapter touches on the subject, from crisis management to strategy to work-life balance.
But I’m starting with a separate chapter on leadership because it is always on people’s minds. Over the past three years, during my talks with students, managers, and entrepreneurs, leadership questions invariably were asked. “What does a leader really do?” for instance, and “I was just promoted and I’ve never run anything before. How can I be a good leader?” Micromanagement often comes up as an area of concern, as in, “My boss feels as if he has to control everything—is that leadership or babysitting?” Similarly, charisma gets a lot of queries; people ask, “Can you be introverted, quiet, or just plain shy and still get results out of your people?” Once, in Chicago, an audience member said, “I have at least two direct reports who are smarter than I am. How can I possibly appraise them?”
These kinds of questions have pushed me to make sense of my own leadership experiences over forty years. Across the decades, circumstances varied widely. I ran teams with three people and divisions with thirty thousand. I managed businesses that were dying and ones that were bursting with growth. There were acquisitions, divestitures, organizational crises, moments of unexpected luck, good economies and bad.
And yet, some ways of leading always seemed to work. They became my “rules.”
* * *
WHAT LEADERS DO
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.
7. Leaders inspire risk taking and learning by setting the example.
8. Leaders celebrate.
* * *
THE DAILY BALANCING ACT
Before we look at each rule, a word on paradoxes. Leadership is loaded with them.
The granddaddy of them all is the short-long paradox, as in the question I often get: “How can I manage quarterly results and still do what’s right for my business five years out?”
My answer is, “Welcome to the job!”
Look, anyone can manage for the short term—just keep squeezing the lemon. And anyone can manage for the long—just keep dreaming. You were made a leader because someone believed you could squeeze and dream at the same time. They saw in you a person with enough insight, experience, and rigor to balance the conflicting demands of short-and long-term results.
Performing balancing acts every day is leadership.
Take rule 3 and rule 6. One says you should show positive energy and optimism, showering your people with a can-do attitude. The other says you should constantly question your people and take nothing they say for granted.
Or take rule 5 and rule 7. One says you need to act like a boss, asserting authority. The other says you need to admit mistakes and embrace people who take risks, especially when they fail.
Of course, life would be easier if leadership was just a list of simple rules, but paradoxes are inherent to the trade.
That’s part of the fun of leading, though—each day is a challenge. It is a brand-new chance to get better at a job that, when all is said and done, you can never be perfect at.
You can only give it everything you’ve got.
Here’s how.
* * *
RULE 1. Leaders relentlessly upgrade their team, using every encounter as an opportunity to evaluate, coach, and build self-confidence.
* * *
After the Boston Red Sox finally broke an eighty-six–year drought and won the World Series, you couldn’t turn on the TV or open a paper without hearing speculation as to why 2004 was “the year.” There were theories about everything, from centerfielder Johnny Damon’s hairstyle to the lunar eclipse!
Most people agreed, however, that the reason wasn’t mysterious at all. The Red Sox had the best players. The pitching staff was the league’s best, the fielders were good enough, and the hitters…well, they were sensational. And they were all bound together by a winning spirit so palpable you could feel it in the air.
There are lucky breaks and bad calls in any season, but the team with the best players usually does win. And that is why, very simply, you need to invest the vast majority of your time and energy as a leader in three activities.
You have to evaluate—making sure the right people are in the right jobs, supporting and advancing those who are, and moving out those who are not.
You have to coach—guiding, critiquing, and helping people to improve their performance in every way.
And finally, you have to build self-confidence—pouring out encouragement, caring, and recognition. Self-confidence energizes, and it gives your people the courage to stretch, take risks, and achieve beyond their dreams. It is the fuel of winning teams.
Too often, managers think that people development occurs once a year in performance reviews. That’s not even close.*
People development should be a d
aily event, integrated into every aspect of your regular goings-on.
Take budget reviews. They are a perfect occasion to focus on people. That’s right, people. Yes, you need to talk about the business and its results, but in a budget review you can really see team dynamics in action. If everyone around the table sits silent and frozen while the team leader pontificates, you’ve got some serious coaching to do. If everyone’s involved in the presentation and the whole team is alive, you’ve got a great opportunity to give immediate feedback that you like what you see. If the team has a real star or a dud in its midst, share your impressions with its leader as soon as you can.
There is no event in your day that cannot be used for people development.
Customer visits are a chance to evaluate your sales force. Plant tours are an opportunity to meet promising new line managers and see if they have the ability to run something bigger. A coffee break at a meeting is an opening to coach a team member who is about to give his first major presentation.
