Saad Masood
In the annals of corporate philosophy, Jack Welch is generally held in very high esteem. His company, General Electric (GE), even more so. Their success makes both of them prime candidates to be evaluated against the previously defined paradigm of doctrine, policy and strategy.
GE has great pedigree. In 1889, Thomas Edison had business interests in many electricity-related companies. This is the time when, a consortium headed by J.P. Morgan helped merge those companies under one corporation to form Edison General Electric Company, which was incorporated in New York on April 24, 1889. Three years and a number of acquisitions and mergers later, General Electric was formed. Nowadays, the company operates through a lot of other segments as well. Among them are aviation, healthcare, power, renewable energy, digital, additive manufacturing, venture capital and finance, lighting, transportation, and oil and gas.
The achievements of GE and Jack Welch are no secret, and the question asked often is, what was the reason behind their success? Many have tried to provide an answer, but a comprehensive and connected riposte has mostly evaded the business world. That is where this opinion piece starts its endeavours.
As previous op-eds have mentioned, strategy – the bottom most rung in the troika ladder – is defined as ways and means to an end and assists with the execution of the policy objectives. In the case of GE, these were five-fold. First, change is good. Jack Welch stressed upon embracing change in everything and every form. From competition to market forces to consumer spending patterns. Nothing was ‘off limits’. Second, lead but don’t manage. This was key to understanding the difference between leader and managers within the organisation. The company leadership, executive branch in political parlance, was expected to decide on the high-level policy and strategic direction of the organisation and let the middle tier management deal with the execution arc. Third, follow through on vision. Nothing saps out energy from the workforce like a half-baked vision! That is why Jack Welch personally ensured that any activity or aspiration should be inspiring and energising but most importantly, run to completion. Fourth, ignore facts at your own peril! Whether these relate to consumer patterns, market trends or one’s own business – facts must always be accommodated and either taken advantage off or protected from. Fifth, maintain focus at all cost. This is so that consistency is maintained, and everything is followed up on.
That the above defined strategies worked for GE is not a surprise, the wonder is why they worked so well? That is where policy comes in. Consider.
Before the 1980s, GE was divided into silos and every division worked for itself. In those days, managers’ behaviour was oriented to their function, division, or country. In fact, financial reporting was setup in a similar way; i.e. it was measured per division. This bred an environment of competition at the cost of crucial co-operation. In many instances multiple divisions were working on similar products but at odds with each other. That was the time when Jack Welch also realised that something was needed to be done to break down these walls between divisions, people and functions. An overarching and galvanising vision was needed to set things right! What did Jack do? He presented his policy in a newly coined – and now famous – phrase, boundaryless! This perfectly provided an antidote to the siloed thinking within GE at the time. Policy is guidance that is directive or instructive; i.e. it is clear in stating what is to be accomplished. It is a galvanizing vision that describes the end goal. And Jack Welch’s ‘boundaryless’ does that in spades!
Policy generally needs to exhibit three traits to be successful. One, it must be galvanising. A dull vision doesn’t inspire anyone and never leads to the objectives it aims for. Two, it needs to be a winning notion. Policy formulation might be complex, but it should never lose sight of the basics, it needs to work for the benefit of the organisation taking into account the current circumstances and prevalent market conditions. Three, the policy has to be clear and easy to remember. There is no better way of doing that than consolidating the policy into one memorable word. The American policy during the cold war – military and otherwise – could be summed up in one word, ‘containment’. It explained the US intentions to contain the march of communism very succinctly to all. On all three benchmarks, Jack Welch’s policy comes up trumps! It is galvanising, winning and memorable.
The ‘boundaryless’ vision did two specific things for GE. Firstly, it broke down the barriers between divisions, people and functions. It allowed a better flow of information within the organisation. Silos came down slowly. Secondly, and a corollary of the original intention, it convinced the organisation that there are no limits on creativity and innovation. This played well for pioneering GE segments such as aviation, healthcare, plastics, appliances and capital where there was investment in continuous education and training. This sense of ‘boundaryless’ also encouraged GE to take gigantic leaps towards newer solutions rather than work on cautious and incremental discoveries. Ultimately, it whittled down to the search for the best idea as opposed to looking for the easy way out.
In GE’s success, Jack Welch’s personal doctrine also played a big part. As an only child, he was the exclusive beneficiary of his parents’ attention. He was also an avid sportsman which helped developed his doctrine too. Doctrine being the authoritative beliefs and principles owing to the experience of the individual. In the case of Jack Welch, it is “if you don’t know how to lose, you’ll never know how to win”. This is something he infused throughout his organisation and allowed people to take risks to gain further rewards for GE.
While in recent times some shine has waned off the GE trophy, still nothing should be taken away from how well doctrine, policy and strategy have aligned and intermingled to produce great results for GE since the 1980s. A similar approach would be viable not only for other corporations but also for militaries and governments generally as well. After all, the latter two also act as corporations in many ways. Finally – is this a recipe for everyone to follow? In these difficult and trying times, that is a definitive yes!
