Fortune magazine made him “manager of the century” in 1999 but it is now finding that CEOs are no longer following his rules. A leading indicator of the demise of Testosterone Inc.? Interesting debate here.
Below, the new rules and excerpts of the article:
“He talked about being the leanest and meanest and lowest-cost, and corporate America got out its ax. Welch advocated ranking your players and weeding out your weakest, and HR departments turned Darwinian. As time went on, the mantra of shareholder value took on a life of its own.
“Cheered on by academics, consulting firms and investors, more and more companies tried to defy history (and their own reality) to sustain growth and dazzle Wall Street as Welch was doing. Accounting tricks, acquisition mania, outright thievery – executives went overboard. “It became all about ‘real men make their numbers,’ ” (…)
However,
“There is another model. In breathtakingly short order, the rock star of business is no longer the guy atop the FORTUNE 500 (…), but the very guy those FORTUNE 500 types used to love to ridicule: (…) Apple, Dell and Google.
“(…) here are seven old rules whose shortcomings have become apparent and seven replacements that point toward a new model for success. Some of the old rules are inspired directly by Welch’s teachings; others are not.
New Rules vs. Old Rules
1 Agile is best; being big can bite you. – Big dogs own the street.
2 Find a niche, create something new. – Be No. 1 or No. 2 in your market.
3 The customer is king. – Shareholders rule.
4 Look out, not in. – Be lean and mean.
5 Hire passionate people. – Rank your players; go with the A’s.
6 Hire a courageous CEO. – Hire a charismatic CEO.
7 Admire my soul. – Admire my might.
While I agree that the way GE was managed was in need of improvement, I think the “new rules article” is not accurate. It seems to me there is nothing new here (once again).
For example, “New” rule: “The customer is king.”
Yes the customer is important. GE would have said the same thing 10 years ago. Shareholders rule as the old rule? Yeah they still seem to. Few companies today, 10 years ago, 50 years ago… understand that there are many stakeholders – all of which the organization should benefit: customers, stock holders, suppliers, workers, the community… I see no evidence there has been any shift in thinking.
For more see: New Rules for Management? No!
Great post. I think you’re right on. Business is changing. By doing everything BUT innovating more and communicating better, companies find themselves ripe for layoffs and takeovers. Unfortunately the employees take on most of the burden. Simply meeting quarterly expectations has taken precedent over meeting and exceeding customer needs & desires.