Control Your Destiny Or Someone Else Will

Control Your Destiny or Someone Else Will

By Noel M Tichey and Stratford Sherman This book written in 1993 is sub-titled – 'Lessons in Mastering Change - the Principles Jack Welch is Using to Revolutionise General Electric'. It is an insider's view of the change process in action. Though it describes change in the context of a major multi-national conglomerate, the principles are relevant to all organisations.

As the authors state in the introduction … 'Life pushes us all around so much that passivity can easily masquerade as wisdom. Anybody can find someone or something to blame for unfavourable circumstances…No one has absolute control over his or her destiny. The point is to control what you can.'

This leads directly to the simple need to take responsibility. Whether the problem is a competitor making inroads on your market or a bad habit you can't shake there is a clear choice. 'Either solve the problem yourself or accept a fate you may not like.'

The approach adopted by Jack Welch in introducing massive change to GE is to continually challenge accepted orthodoxy. The authors go so far as to state that 'the ability to adapt to changed circumstances is the essence of competitive advantage.

In the context of GE as a major multinational corporation, the need for change was highlighted by the impact of globalisation. Jack Welch recognised the need when he was appointed CEO in 1981. The same imperatives, which might not have seemed so apparent then for small and medium sized enterprises, are now widely recognised.

One of Welch's basic rules is 'change before you have to', which often makes it difficult to sell the idea that change is needed. In fact the book describes many of the hurdles that he had to overcome in selling the idea that change was in fact necessary to an organisation that gave all outward signs of being profitable and successful. There are no simple answers. Uncertainty and struggle are unavoidable. Strong leadership and a clear vision is required

Many of the ideas expressed in the book are consistent with the Japanese philosophy of Kaisan or continuous improvement. One that I found particularly attractive was the concept that managers should regard their decisions and actions as experiments, which is consistent with the concept of the PDCA Cycle (Plan - Do - Check - Act).

One of the criticisms levelled at Welch is that he presided over the loss of 170,000 jobs at GE. However as the authors put it….'It would be nice if business could somehow be revolutionised without human pain, but it isn't possible.' The key in today's business environment is however that true job security only comes from satisfied customers. In reviewing operations a good question to ask is 'Would our customers be willing to pay extra for this, if they knew about it?'. Welch expounded the principle that 'Companies can't give job security…Only customers can.'

The authors describe the change at GE in three Acts -

Act 1 - The Awakening - where the organisation awakens to the need for change. Act 2 - The Vision - which creates a blueprint for the future Act 3 - Revolution as a Way of Life - the creation of structures to institutionalise the vision

Act 1 -The Awakening

In Welch's view, a strong business must consistently grow both revenues and profits; increasing revenues through a constant stream of new ideas and product innovations and increasing profits through unceasing improvements in productivity. Neither innovation nor productivity alone is enough.

At the time of his appointment GE had very strong strategic planning processes, however these were in the traditional mould. The process was centred at head office and took six to eight months of preparatory research and analysis. The complexity 'ensured that any idea, regardless of its merit, would be treated as worthless until it was entombed in a lengthy formal report.'

The ideas behind the GE revolution 'are so basic, so universal, that they apply not just to business management, but to ordinary human life.' Welch's six rules are -

· Control your destiny, or someone else will. · Face reality as it is, not as it was or as you wish it were. · Be candid with everyone. · Don't manage, lead. · Change before you have to. · If you don't have a competitive advantage, don't compete.

The authors suggest that we all ask ourselves these questions and see if our behaviour meets these standards. Though many of these rules seem simple they can be difficult to achieve. For example the need to face reality seems obvious. It is however crucial in life, not just in business for without it you can't make decisions on a rational basis.

Welch insists that GE managers learn to master paradox. In his view, an apparent conflict between two worthy goals is no excuse for not pursuing them both. He regards the simultaneous pursuit of long and short-term objectives as a basic responsibility of management. In other words you can't ignore the imperatives to generate both profits and cash flow in the short term while undergoing fundamental restructuring that will deliver benefits in the long term.

In Act 1, tyrannical behaviour can serve a useful purpose, as the awakening often requires confronting the status quo. This is done to 'arouse the emotional energy' of the organisation, which is the fuel that sustains the revolution. For example Welch's vision was that every GE business be No 1 or No 2 in its market. Though that objective might be inappropriate for most of our businesses, what clear objective could we set that simply encapsulates our vision?

An interesting aside, which is relevant to businesses both large and small, is contained in Chapter 4, which outlines the succession process that GE undertook to select Welch as CEO. The previous chairman, Reg Jones, spent 9 years selecting him from a group of highly qualified candidates. A 1997 study conducted in Australia Smyrnios, Romano and Tanewski of Monash University Melbourne, March 1997 estimated that in the following ten years businesses worth $A607 billion would change hands. Yet only 12% have a documented succession plan.

The authors identified the following selection criteria to assess potential candidates (p332 Chapter Notes) -

· Leadership style · Even-handed · Objective · Consistent · Charismatic · Decisive · Savvy · Fun · Intelligence · Balance of delegation/involvement · People judgement · Ego · Ego management · Share the credit · Long term view · Toughness

Though these characteristics will not necessarily apply universally the above provides an extremely useful auditing tool to assess both current and future leaders in your organisation. Why not assess yourself and identify areas for improvement?

Some of Welch's management ideas, which were considered unusual at the time, include -

· Practice planful opportunism. · Wallow in information until you find the simple solution. · Test ideas through constructive conflict. · Treat all subordinates as equal, but reward each strictly according to merit. · Avoid compromise when making decisions. Communication though became the key to the GE revolution. Executives have substantial power over employees, but they can't tell people what to believe, as even the most junior of employees has the power of independent thought. In a 1987 speech to employees Welch said that…'Real communication is an attitude, an environment. It's the most interactive of all processes…It involves more listening than talking.' Welch calls this 'leading while being led'. He considered that most organisations don't know how to deal with emotion and it is important to harness the vast power of workers' emotional energy.

If you find communication an issue in your organisation try to imagine what a mammoth issue it is in an organisation of almost 300,000 people. The formula Welch eventually found was simplicity, consistency and repetition. It involved having a simple, consistent message that you keep repeating until eventually that's what happens.

There are numerous examples outlined of the challenges that were faced. Some of the decisions attacked 'sacred cows' in the organisation. General Electric was established by Thomas Edison in 1879. Some of its businesses, such as the manufacture of household appliances and TV's, were considered an integral part of the GE name. However as they did not have an identifiable competitive advantage or meet the test of being No 1 or No 2 in their markets, Welch sold them. These decisions caused considerable dissent, particularly as some were sold to overseas corporations. How many products do you have that you consider are an integral part of your business? Would you make a similar decision?

Act 2 - The Vision

The vision identified for GE was that all of its businesses are to be No 1 or No 2 in their market. They would adopt a policy of fix, close or sell to ensure that this vision was realised.

A number of techniques were developed for disseminating the vision and to bring about cultural change. These include -

· It's own management training school that encouraged open debate and action workshops. · The development of a GE values statement. · Formation of a Corporate Executive Council of the thirty highest-ranking executives to discuss the most important issues facing GE.

The purpose of these programs was to inspire high levels of emotional energy and to create consensus and ownership by sharing information.

Welch believed that to meet the challenges of the twenty-first century, organisations would need to use shared values to harness the emotional energy of employees. Speed, quality and productivity will become ever more important and corporations will need people who can instinctively act the right way, without instructions. These characteristics require people with emotional commitment. 'You can't get it by pointing a gun. You can't buy it, no matter how much you pay. You've got to earn it, by standing for values that other people want to believe in, and by consistently acting on those values, day in and day out.'

One of the important tasks assigned to the training school was to establish a statement of values. These were then debated throughout the organisation. (P 172)

'When a business becomes productive, it gains control of its destiny.' The basic formula used by Welch is - profitability is a function of revenue growth and productivity. Revenue growth is the clearest demonstration of customer satisfaction and is essential to maximising long-term profits. Productivity is the best measure of efficient operation and is a never-ending process.

A number of case studies of operating division are given through out the book. An example is given of one of the interesting discoveries made by the Lighting division where it was found that 'what had appeared to be technical problems with the equipment were actually cultural problems with the people running it.' By putting foremen and manufacturing people on machines instead of design engineers they were able to reduce the cost per unit by 30%. But it is important to note that they paid as much attention to incremental changes as to quantum leaps. 'Much of the remaining productivity gain came from small- scale programs designed to get employees involved and reward them for success.'

Act 3 - Revolution as a Way of Life

GE developed a program called Work-Out, which was designed to drive cultural change throughout the organisation. Its major goals were to -

· Build trust - employees had to discover that they could speak out candidly without jeopardising their careers. · Empower employees - tap workers' knowledge and emotional energy by granting them more power. · Eliminate unnecessary work - as a result of reduction in the workforce fewer people were asked to do the work. It was therefore vital to eliminate unnecessary tasks to provide relief to overstressed workers. · Create a new paradigm for GE - Welch wanted the whole organisation to participate in defining itself as a 'boundaryless' organisation.

The essence of what GE is striving to accomplish is to create an organisation designed to demand leadership from every one of its members. As an employee noted 'We hired the arms and backs and legs of people for years, and we never knew the brains came free.'

In Summary

The final chapter contains an interview with Welch and canvases his views on doing business in the 1990's and beyond. His thoughts include - · The 'Value Decade' is upon us. Customers will sacrifice the extras they used to demand to get a lower price. These will result in a need for value-driven products. · This is partly predicated because many governments are broke. · There is too much capacity available because the world economy has stopped growing. · Only the most productive companies are going to win. · Environmental soundness is part of the value equation. · Companies have to get involved in the school system. · Employers have a responsibility to continually upgrade workers' skills through continual training. · Companies can no longer guarantee lifetime employment, but may through training guarantee lifetime employability. · The world is moving so fast that it is a futile exercise to try defining quantitatively what will happen in the next 3 to 5 years. · Instead a company should - · Define a clear vision and its destiny in broad but clear terms. · Maximise productivity. · Have the flexibility to meet massive change. · You've got to be hard to be soft. Hard decisions will often have to be made before you can address issues such as organisational values. · Productivity gains can easily be made at the start of the process, but to continue making gains you need to get people involved and excited about their jobs. · Trust is enormously important in an organisation. The best way to create it is by defining values, and then 'walking the talk'. · Companies have to find a way to engage the mind of every single employee.

The book includes detailed chapter notes that provide interesting background information. It also includes 'A Handbook for Revolutionaries'. Though not summarised here, this is a valuable resource for those contemplating or undergoing change. In summary this is a fascinating book that is very easy to read and is highly recommend for those undertaking the change process.