GE's Jack Welch has been an icon for so many of us in corporate America; particularly those of us who love to talk and do organizational, leadership, and personal development in a "for profit only" environment.
On the other hand, there have been moments when we were ready to challenge Jack's title as grand wizard of corporate strategists--moments when some of us felt that what may have been perfect for his times might not win him the MVP today.
Be that as it may, Betsy Morris over at Fortune got a little blasphemous the other day (July 24, 2006). She trashed Jack's Rules that have served strategists in good stead in recent years (Big dogs own the street. Be #1 or #2 in your market. Shareholders Rule. Etc.) And claimed new realities had put these rules in eclipse.
I am still sputtering over this indignity.
It's clear to me that Welch's Rules are not outdated; but that he oversold the ones Wall Street wanted to hear. Jack understood that the metrics for NOW drove stock price. He also knew the guys at the south end of Manhattan Island cared little about the long term. So he did not bother to talk top them about it.
Jack Welch knew all about the importance of the long term. He just did not emphasize it when talking to investment types.
Yes, as Ms. Morris states, the unpredictability of the markets, global competition, and other more subtle forces seem to make Jack's game plan and touchdown plays look effective only for the sandlots in Boston in the eighties.
But sustained growth, stock price, and quarterly earnings per share were all the boys in the stands (Wall Street) were interested in anyway, then and now. They don't know how to run companies for the long run, but the likes of Jack Welch did and still do!
Jack Welch knew what made the guys in shiny suits happy. And he knew what to do to stay in business for the future, after the moths had had their way with those suits!
Hey, how can you argue against wanting to be #1? GE made a daily trek in that direction, and while the best leaders in the land today may be more philanthropic, more niche conscious, and less dogged about today's numbers, they never want to come in second place!
As far as research and development and talent performance management (the stuff I do after three decades in sales and marketing focused on getting cost effective results), areas some on the Street may look upon as "marginal," Jack comes back with this taste of reality:
[These] resources that come from being a leader-- that's what determines your future.
In other words, GE's leadership and darling status on Wall Street helped pay for the future Betsy Morris is writing about, and that which guys like me presently preach.
Sure, Jack and his assassins went after that bottom 10%, but anybody who doesn't think they make selection errors every day is naive. That cleansing helps all parties!
Niches? How did GE get into the insurance business if it weren't thinking change and opportunity?
A company would fold in the very near term if market share were the one and only directive. But don't forget, ... "It's all about the customer..." did not start in the 21st century. Jack and his team could never have guaranteed the results GE is still enjoying without the customer being served under his watch.
Yes, Betsy Morris reminds us that "deferred gratification" can reap benefits that will fuel the existence of a company well into the future. Indeed, most of us are bored with the celebrity CEO types. But, we mustn't throw Jack out with that bathwater!
In my mind, it's all about the passion and courage of the leader (and Jack would surely still be getting high grades here). In fact, this country is in grave need for leaders in many arenas who we can trust--guys like Jack who were great before corporate politics became a primary driver. (Although he was pretty good at that, too!)
Let's take a look at America and Wall Street's real lack:
- Leaders who communicate down as well as up.
- Leaders who aren't afraid to mix with the "sheep" from time to time.
- Leaders who are humble, but with wills of steel (Level 5 in Jim Collin's Good to Great).
- Leaders who are not arrogant, and who will admit a mistake.
- Leaders who can balance what Wall Street wants to hear with what the customer and the talent pool need to stay and produce. (After all, what are the managers and the talent producing, but results that makes Wall Street happy in the end.)
My advice: don't bother to give speeches to Wall Street about agility, niche marketing, the reign of the customer, looking out, being passionate, courageous, and soulful. It's the numbers with those guys. Give them what they want!
At the same time as a great corporate leader, do the other "marginal stuff" quietly with the future in mind. That kind of leadership will hit the bottom line with as much power as a mass firing, cutback, price increase, or other short term tactic that is targeted at moving that stock price.
In the end, isn't it all about winning, and isn't winning all about who's standing when the time runs out?
Jack's rules aren't rusty at all, he just didn't speak to all of us as much as he did to Wall Street!
Fortune's Morris reminds us there is much more if you're going to stay in business for the long haul. And, her comments got her on the cover! But, Betsy, throwing Jack out with the bathwater? God forgive you.
OPINIONS? Send 'em in! To Betsy Morris at bmorris@fortunemail.com. As for me, leave comments to this post, or email me at joe.cervasio@bluegreencorp.com
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