I was always impressed with Jack's success at GE and for the good things he accomplished I believe he has earned great praise. However, like all good CEO's and politicians he also also managed to avoid "paying the piper" for all the negatives "rules" he helped to popularize. More specifically:
1. Make sure to be the CEO during Bull market.
2. Blatantly use the innovations of others and when the rewards are more significant due to your size, aggressively claim the credit. This is best demonstrated by 6-Sigma. Mr. Welch is and, by rights, should be proud of its success. However, few realize that Motorola was the company that coined the term and in fact was just derivative of Deming and Duran's earlier work.
3. Everyone MUST collaborate and reach consensus except the CEO. As the ultimate agent for change, the CEO is above the need for consensus. Thus Jack was able to tell many senior executives "My Way or the Highway". Not a terrible failing really, but so ironic I had to include it.
4. As a CEO if you don't really understand your business (e.g., your background is in accounting but your the CEO of a automobile company), change your business to one you can comprehend. GE was the prime example of this as during Jack's tenure it went from a world class manufacturer to a world class finance company. This was particularly good for Jack as he continued to earned stock mulitples associated with manufacturing firms rather than those of banks.
5. Don't manage your business for the long term, managed your earnings for the benefit of the stock analysts. Jack was a master of putting excess into the stock plans and withdrawing the money because they are over funded when they were needed. Review the last few years of Jack's tenure and see how many times more money was withdrawn from the retirement plan than all of GE's remaining manufacturing units produced in profit for the same time period. I realize this was Jack just operating within the rules defined by our government. But the biggest sin here, was that because Jack was such a star, everyone had to do the same thing. Suggested replacement rule: If you hit your quarterly targets every quarter, your doing something wrong. No one is that good a forecaster, so games are afoot to move money from one pocket to the next. There should be variability sometimes over, sometimes under it's the trends that should be predictable and measured.
6. Wall Street and the Government don't properly measure or understand productivity, so don't waste time on improving processes and tools. Instead dramatic results can be achieved and stock increased by two simple expedients. Change the standard work week from 40hrs/week to 60hrs/week by reducing staff but insisting on greater output. (This is the real benefit of the firing the bottom 10% each year, as Jack learned fear is a wonderful motivator.) If you can't increase the hours worked then move your operations offshore while "encouraging/forcing" your suppliers to do the same. In both cases, costs go down. Of course if anyone actually measured productivity by looking at the total hours required to produce product across the supply chain and not just the cost of those hours we might find productivity actually droppped. But then, this was the genius of this rule, no actually measures it this way because the measure productivity using money spent rather than man-hours required.
7. Implement "Darwinian" performance reviews. As mentioned above they a highly effective way to improve productivity. The second and equally valuable benefit, is that age discrimination can be conducted on a yearly basis. As a result, wages can be kept down and medical insurance can be managed. The resulting loss in experience can be overcome by forcing those selected to train their replacements.
8. Insist that employees only travel coach, especially when going overseas. Without these savings, it's not possible to afford the corporate jets required for the CEO's extensive travel schedule.
There are more such rules, but I have already taken more space than I should have. Keep in mind, Jack has received a great deal of credit for the good things he implemented, all I ask is that he receive credit for all of the bad things he brought to US management too.
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