WELCH'S LEADERSHIP REVOLUTION IN THE EYES OF KRAMES
When Welch became CEO, he had two strategic choices before him - either to follow prevailing scientific approach of management - pioneered by Frederick Taylor or to go for complete restructuring. Welch chose the latter to free GE from red-tapism and age-old bureaucracy. He found bureaucracy the most prominent enemy of productivity. In the pre-Welch years of 1960s and 70s, American corporations were operated more like exclusive clubs than democratized work places. Workers used to work and managers manage but there was hardly any communication between them. But Welch knew that involving everyone is the key to enhancing productivity and also ideas and intellect rule over hierarchy and tradition. Hence he promoted the idea of "Boundaryless". He sought to topple every barrier - horizontal or internal (those between functional areas), external (those between GE and its customers and suppliers), vertical (hierarchical) and geographic (between different countries in terms of tradition and cultural aspects). Boundary less is probably the best way to describe Welch's contribution to the field of leadership. Delayering the management structure became one of the key strategies of his Hardware Revolution - his first effort to make GE an agile competitor. He laid off more than 150000 workers and sold some of GE's businesses, which had been around for years. These earned him the name of "Neutron Jack" after the infamous neutron bomb that destroys people but leaves buildings intact.
But Welch's strategic vision was to transform GE from a mere conglomerate to a well-structured multi-business organization. Thus the formulated strategies like "Number One, Number Two", "Fix, Close or Sell" and "Three Circles". In 1981 he declared that those businesses, which are not the number one or number two or have no potential of being that in near future in their respective business segments, should be fixed, closed or sold. He also narrowed down GE's 350 SBUs to 3 Circles - Core, Technology and Services and said that all of GE's businesses must fit into these three circles else those will be sold off.
After his hardware phase morale at GE suffered a major blow. So to instill the self-confidence of the employees Welch started his software phase. He started this phase with Work-Out programme - the objective was to turn the hierarchy of GE upside down. Goals of this programme were to build trust and empower employees, which was very necessary to bring back confidence among them, and also to wipe out bureaucracy. In this programme managers were bound to listen to workers. Welch believed there is no hierarchy or tradition required for giving new ideas - anybody in the organization can come up with innovative ideas. Welch called them "A Ideas" and those capable of giving such ideas "A Leaders". He stated - A leaders should possess 4 leadership traits: Energy, Energizer (ability to motivate others), Edge (competitive advantage and right skills and expertise) and execution (ability to complete the task effectively).
When Welch became CEO, he had two strategic choices before him - either to follow prevailing scientific approach of management - pioneered by Frederick Taylor or to go for complete restructuring. Welch chose the latter to free GE from red-tapism and age-old bureaucracy. He found bureaucracy the most prominent enemy of productivity. In the pre-Welch years of 1960s and 70s, American corporations were operated more like exclusive clubs than democratized work places. Workers used to work and managers manage but there was hardly any communication between them. But Welch knew that involving everyone is the key to enhancing productivity and also ideas and intellect rule over hierarchy and tradition. Hence he promoted the idea of "Boundaryless". He sought to topple every barrier - horizontal or internal (those between functional areas), external (those between GE and its customers and suppliers), vertical (hierarchical) and geographic (between different countries in terms of tradition and cultural aspects). Boundary less is probably the best way to describe Welch's contribution to the field of leadership. Delayering the management structure became one of the key strategies of his Hardware Revolution - his first effort to make GE an agile competitor. He laid off more than 150000 workers and sold some of GE's businesses, which had been around for years. These earned him the name of "Neutron Jack" after the infamous neutron bomb that destroys people but leaves buildings intact.