I first set sight on this book at a bookstore in Raipur. I did not purchase it then as the management entrance exams were knocking at the door and I had to prioritize   more of my time trying to brush up the rough areas of my preparation. The next time I saw the book, was when I was browsing the library to get some books which I could take home for summer holidays reading.

I first thought that the book was the usual stuff of how great CEOs turned their dying companies around. I had read two such books earlier, one was on how the big blue elephant of America did a flat turnaround in ‘Who said, Elephants can’t dance’ by Louis V. Gerstner, Jr. and the other one an autobiography by Lee Lacocca, the man behind Ford Mustang, who later went to bail out the number three car company of America, the Daimler Chrysler out of bankruptcy.

But this book ‘Jack Welch and the GE way’ speaks on how Jack Welch made a good company into a great company. The book is written by Robert Slater who has another book to his credit, ‘Get better or get beaten! 31 leadership secrets from GE’s Jack Welch.

Jack Welch was at the helm of GE’s affairs for 17 straight years. The book dwells on many of the thoughts of Jack Welch which made GE the company that it is today. I would be dwelling lightly on those areas of the book which made reading it, interesting to me.

Number 1 or Number 2:   One of the theories that he put forward is the theory of number 1 or number 2.  According to him due to economic harms like inflation “the winners would be those who insisted upon being the number one or number two leanest, lowest cost, world wide producer of quality goods and services or those who had a clear technological edge or a clear advantage in their chosen niche”. To people who failed to understand this idea of selling profitable companies solely on the pretext that it is not number 1 or number 2 in its field,  Jack Welch counters by saying  “When you are number four or five in a market, when number one sneezes, you get pneumonia. When you are number one, you control your destiny. The number four keeps merging, they have difficult times. That’s not the same if you are number four, and that’s your only business. Then you have to find strategic ways to get stronger. But GE has a lot of number ones.” This thought worked very well in the 1980s but by mid 1990s, this strategy had lost a lot of its sheen. There emerged a big flaw in this strategy, this is when it became the natural tendency of GE managers in search of market dominance, began to define markets in a way that virtually guaranteed that they were number one or number two.

GE getting into TV Channel Business through NBC

GE is mainly known for its manufacturing prowess in the manufacturing of aircraft engines, plastics, light bulbs, and running power utilities. Quite a few eyebrows were raised with GE acquiring RCA (Radio Corporation of America) and through it the famous TV channel NBC which in India is in the avatar of CNBC TV 18. The book dwells on how Welch made Bob Wright the top man at NBC and how NBC got slowly sucked into the GE Culture of being profitable and reducing wasteful expenditure.

S-t-r-e-t-c-h

Stretch is Jack Welch’s belief in doing the best possible - and then reaching beyond. He notes, “We have found that by reaching for what appears to be impossible, we often actually do the impossible; even when we don’t make it, we inevitably wind up doing much better than we would have done.”

Growth of Service Business

The book dwells on GE making a transition from primarily a manufacturing company to a services company. On being asked “Are you going to be out of manufacturing and into services?” he replies, “If you are, you are dead. If you are going to be all services and no manufacturing, you are dead. If Bill Gates didn’t have cooperation with Intel, his system wouldn’t work on their chips. It’s an integrated game.”

Jewel in the Crown - GECS (GE Capital Services)

 GECS is one of the main components of GE’s services arm. In the mid 1990s GECS comes out with 60 % of GE’s profit up from 16% in 1980. Some of its areas of operation are:

·         Finances everything from airplanes to cars.

·         Owns and leases fleets of trucks, cars, railcars, planes and business equipment.

·         Leverages technology to deliver consumers services over the internet.

·         Sells mutual funds and insurance fund products.

·         Is America’s largest issuer of commercial paper.

Six Sigma – The Quality Initiative.

The writer also dwells on the vigorous fanaticism with which Jack Welch went with implementing the Six Sigma quality initiative in the company. It also discusses on how for getting different levels of promotions in GE it was made necessary to be either a green belt, black belt or a master black belt certified Six Sigma expert.

Harvard of Corporate America – Crotonville

This was the name given by Fortune magazine to GE’s management institute.  It is a place where the company’s junior and senior managers discuss, debate, create, and recreate GE’s much boasted about management style and techniques. Basically a training centre for junior managers of GE and a brainstorming centre for the senior managers of GE.

Recognizing India as a great place to do business, here is what he said of India, “Today we like India very much, but we have to recognize that in the last couple of years India has slowed down substantially. The bureaucracy is making life more difficult in India, so we have to be realistic and take the long view for India and accept that the movement is going to be a bit slower”

To sum the book and the person on which the book is written all about, here is a quote direct from Mr. Jack Welch,

“Jack, how can you be at NBC? You don’t know anything about dramas or comedies.” Well, I can’t build a jet engine. I can’t build a turbine, either. Our job at GE is to deal with resources – human and financial. The idea of getting great talent, giving them all the support in the world, and letting them run is the whole management philosophy of GE, whether it is turbines, engines, or a network.