MGSM870 Case writeup

Jack Welch & GE

1. What leadership traits can you identify in Jack Welch?

Fairly open-ended, but arguably he possesses high self-concept, drive, integrity (in terms of
his consistency), leadership motivation to achieve socialised power (only over time, in the 2nd-
phase of transformative change as per Q. 2, he becomes less concerned with strategic content
and more with setting/providing context for his managers to lead), sound business knowledge
(long-time in GE), practical intelligence, and maybe even (after some time) some emotional
intelligence (Work-Outs provide a psychological safety for subordinates to express themselves
to managers).

2. How would you characterise Welchs leadership style(s)?

Unambiguously, as far as I can tell, he begins as very much a commander and controller
focusing on initiating structure (rather than consideration) i.e. goals, results, tasks, etc.,
personified by his singular focus on strategy (#1 or #2: Fix, Sell, or Close; 3 Circles: Services,
Technology, and Core), structure (delayering; downsizing), and systems (strategic planning
playbooks; operating budgets) - organisational hardware.
Following the initial part of the transformative change, he then becomes more consultative,
democratic, more of a premise-setter or context-creator focusing on consideration i.e.
person-, and relationship-focused and this is personified by his software initiatives: Work-
Out and Leadership Development being the main examples. His new focus is on purpose (GE
as a social institution), process (the organisation as a set of roles and relationships), and
people (human capital development; leadership development).
Work-Out created a safe environment for frontline employees to question and challenge the
status quo and take the initiative in proposing news ways of doing things. It also forced
managers to listen and role-modelled a new way of managing in GE encouraging them to be
supportive facilitators of bottom-up initiatives and proposals. It also had a culture-changing
agenda becoming a microcosm of the new organisational norms Welch wanted to embed in
GE: speed, simplicity, and self-confidence. The two-day analysis followed by the half day of
proposals and decision-making modelled speed; the face-to-face meeting that by-passed
formal approval processes and complex bureaucracy reinforced simplicity; and the structured
and safe environment for proposing radical change fostered self-confidence. Work out was
not about vague, lofty cultural slogans, but rather, operationalized and modelled in action.
Leadership development underscores Welchs commitment to GE people as their core assets -
$45 million investment in the Crotonville facility even in the midst of company-wide cost-
cutting. Equally important, he also devotes 2 days per month to go to Crotonville and lead
classeses with GEs high-potential managers. And evidence of belief in a more people-focused
culture, he also redefines reward and incentive structure to focus not just on what managers
achieve, but how they achieve it. The lack of tolerance for Type 4 managers underscores his
desire to create an open, supportive, fair environment.

3. How/why did his style change over time?

In short, and in line with contingency theory, Welch takes up the leadership of GE when
apparently - the US is in the grip of a recession and GE faced both stagnant demand and
strong price-competition from rivals. His initial style was suitable to this context. Over time,
say five years, GE businesses recovered and this style was no longer suitable, so he became
more people-oriented because he could afford to be.
Further, in order to change deeply embedded norms and values, his change programme had
to be quite bold and radical. To gain legitimacy for acting quickly and boldly, I argue that he
acted as a sense maker or meaning maker for his constituents and used the
recessionary environment as a cover or as an impetus for change. As well see in Session 9,
creating such a burning platform, a sense of urgency, etc., is a key skill of a CEO change
master. BTW, I also argue that he also was a voice of reason and an operator as per
Cynthia Montgomerys (2012) typology of leadership.

Why his style is not purely Transformational but also Managerial

I dont deny he is a transformational leader the title of the case tells us he is - I want you to
careful about applying models/frameworks. Let me explain
Although Welch assumes GEs direction in 1981 is misaligned and needs to change (even
though the reality was that it wasnt!), there is nothing macro-focused or abstract about his
actions (as opposed to his words) between 1981 and 1988, indeed, they are the opposite:
micro-focused and very much concrete, achievable, goals-focused actions fixing the
hardware of GE. More critically, apart from his vague response to a question on p. 2, there is
no real mention of Welch spending a great deal of time crafting a Vision for GE (in terms of
working on a desirable end-state where he wanted GE to get to) and then communicating it,
modelling it, and getting buy-in. He simply wanted to, and DID, change strategy, structure
and systems. The Hardware initiatives were not optional or open for discussion: he simply
set in motion a series of changes that were to radically restructure the company over the
next five years (p. 2). There was very little - if any - communication; at best, he modelled
what he had in his own mind; and there was very little - if any opportunity for buy-in.
Indeed, in 1986, he replaced 12 of his 14 business heads and replaced them with a new
varsity team consisting of managers who WERE committed to the new values, a willingness
to break with the old culture, and an ability to take charge and bring about change (p. 3).
In sum, this more indicative of a what I regard as managerial style: Welch unilaterally
decided how things were going to get done, assigned tasks, made expectations clear, and
expected people to follow instructions closely or else leave GE. He only really displays one
aspect of transformational leadership: modelling his really personal, as yet unannounced
Vision.
However, after 1988 his style become much more transformational in the sense of his
Vision expanded beyond his own mind and becomes more widely known throughout GE; and
he begins getting buy-in/commitment, and encouraging experimentation with the new
ways of doing things. Work Out speaks to this. You might also argue that at the same time
he is actually also becoming more managerial in the sense of helping employees improve
their performance and wellbeing to support current objectives and practices and his focus on
continuous development! You see, it can be argued both ways.
This case underscores the importance of not rushing in and blindly applying models and
frameworks that dont completely fit the situation (or at all). There is no one size fits all
model of leadership (or any other OB concept) so you must try and pick and mix or mix and
match and, in so doing, demonstrate a more sophisticated understanding of the
materialwhich is more likely get you more marks .