Winning Isn't Everything

By Michael Maccoby

Research Technology Management; Volume 48. No. 5. September-October, 2005. pp 60-61.

Think about the purpose of the organization where you work. Is it to create great products for people? Is it to improve people's lives? Solve company problems? Discover useful knowledge? Is it to make money for employees and investors? Is it a mix of these purposes?

For Jack Welch, “business is like any game” and the purpose is Winning, the title of his new book written with his wife, Suzy Welch, a former editor of the Harvard Business Review.(1) Sure, all of us want to be winners rather than losers, and Welch makes winning management an art. Yet there’s something missing here. For many of the managers I meet, winning is too narrow a view of purpose. However, I do think all managers can learn from Welch’s experience if only to challenge it and clarify what they really believe is best management practice for them.

This book has a lot more practical advice and illustrative stories than his previous book, Jack.(2) I’ll describe what I’ve found most useful from Welch’s new book and then what seems to be missing in his approach.

Like the best managers of professional teams, Welch is a great judge of talent and sees his major role as developing it. His definition of leadership: “helping other people grow and succeed.” Twenty-five years ago when I defined good leadership this way (3), reviewers considered it too soft and idealistic. But Welch shows that this is what creates winning teams, and he has a great record, not only in winning, but developing fifteen current CEOs in the Fortune 500.

Welch has a gift for seeing personality differences, especially in terms of fitting the person to the job. For example, he picked a head for a commodity product business who was “in his element with people who sweated the nitty-gritty details like he did, talking about ways to squeeze efficiencies out of every process. He was a master of discipline.” In contrast, the head of an innovative, risky business required a visionary, a person who “hated the nuts and bolts of managemen... But he sure did have the guts and vision to place the big bets.”

The best professional football coaches, like Welch, know which personalities fit best in which roles. For example, the best offensive linemen typically are conservatives who uphold authority and protect the quarterback while the best defensive linebackers are rebels out to smash the quarterback. In the case of Welch and the coaches, the common denominator is a passion for winning. However, neither is much interested in other aspects of personality such as deep-rooted values that may motivate creative employees like the desire to improve people’s lives.

Compare Welch to Bill Gates, another big winner who expresses other values in his work and public service. Gates can’t boast about his management practices; his focus has been on empowering his customers and he gets Steve Ballmer to do the managing. he doesn’t write books or give public lectures on winning management; he does study books and reserach reports concerned with solving global health problems, and he has directed hundreds of millions of dollars from his foundation to this purpose.

The Human Side Leads

However, within the game he plays, for Welch, the human side is the leading edge. And it follows that for him the Human Resources VP is at least as important as finance or any other corporate function. He writes: “Elevate HR to a position of power and primacy in the organization, and make sure HR people have the special qualities to help managers build leaders and careers.” The HR VP was Welch’s partner in knowing and evaluating all the top talent at GE.

From my experience, this is a hard act to follow. Few HR professionals have these special qualities. Many of them are experts in personnel policies and practices like compensation and benefits and following the rules of equal opportunity employment. Companies with the kinds of HR executives who can play this strategic role often have been recruited from line management. The directors under them take care of the rules.

Welch’s practice of grading managers in three categories—rewarding the top group and firing the bottom 10 percent-has been controversial, and some of the CEOs he developed have not used it in their new companies. Welch writes that he learned it from baseball. There it is again. If your only purpose is winning, you don’t keep losers on your team. You want the best talent available in terms of making the numbers, staying at the top of the rankings, and you put everything you have into getting the best out of them.

This requires a boss who tells it like it is and demands candor from others. Writes Welch: “I would call lack of candor the dirtiest little secret in business…. Lack of candor basically blocks smart ideas, fast action, and good people contributing all the stuff they've got. It's a killer.”

However, you won’t get candor if people are punished for honest mistakes or they’re rewarded for "loyalty” as yes-men and -women. Furthermore, candor is not always positive. As the poet William Blake wrote, “A truth that’s told with bad intent beats all the lies you can invent.” By all means, candor even when it’s uncomfortable, but with good intentions.

According to Welch, leaders should “relentlessly upgrade their team.” No waiting for formal or 360° evaluations. Every encounter should be “an opportunity to evaluate, coach and build self-confidence.” However it’s doubtful that every encounter with Welch built self-confidence, especially with those he didn’t rate good enough for the starting line-up. I do believe Welch when he writes that his goal was to get under everyone’s skin and into everyone’s head with his vision of winning and his positive energy and optimism, to establish trust with candor and transparency, to demand, reward and celebrate winning results.

A winning team can’t be bureaucratic; Welch was a bureaucracy buster, breaking silos, challenging self-protective budgets, trying new techniques and learning; continually revising a living strategy.

Business As a Game

So where’s the weakness in this high energy, no bull, no excuses model of leadership? For me, it’s Welch’s description of business as a game. Unlike games which are limited in time and space and have an impact mainly on players, fans and concessionaires, large companies like GE spread their tentacles globally. What they do impacts people throughout the world, for good or ill. Globalization implies that increasingly companies like GE will be judged on their impact on different countries and cultures.

In his focus on results and people, Welch says very little about the value of GE’s products for people. One notable exception was his suggestion that GE design an MRI device to lessen a patient’s claustrophobia. He didn’t make this a demand, and his suggestion was ignored until Hitachi produced one. Think about the GE Welch led. What great new products come to mind? Which programs on NPC, the network Welch bought, have made a lasting contribution to the culture? In both cases, what comes to my mine are good-quality commodities.

What About Innovation?

Part of Welch’s strategy was to exit low margin commodities for higher margin finance and services. But for such an original thinking manager, Welch has hardly anything to say about innovation. Maybe that’s at least partly because the process of discovery and creating new products isn’t a game and you can’t measure creative people in labs or the entertainment world according to their quarterly results.

Notably, Welch’s successor, Jeff Immelt, is investing a lot more in R&D, and with great fanfare, he’s staked the company’s future on its ability to “define the cutting edge in cleaner power and environmental technology.” He recently announced that by 2010 GE would double its research spending on cleaner technologies to $1.5 billion annually and double its sales of environment-friendly products to $20 billion annually. By 2012, GE will reduce its emission of greenhouse gases by 1 percent; by doing nothing they would have increased 40 percent. Is this enough? Probably not ideal but a lot more than we've heard from other CEOs.

To be sure, Immelt makes clear that he’s not a soft-headed green; he’s doing this to win, to get a jump on the competition. But for most of us, there’s a mix of purposes that give our work meaning and inspire us. Creating products that improve the environment will undoubtedly increase self-esteem for GE employees and the pride that their kids feel about their parents.

Research/technology managers can learn a lot from Welch about how to hire, evaluate and fire people, how to communicate with candor and focus people on the mission. But before you buy Welch’s whole package, ask yourself about your purpose at work and ask the people you want to lead what inspires them, other than winning. To paraphrase a wise statement by Peter Drucker, the purpose of business is not winning; however, without either one there can't be any other purpose.

  • (1) J. Welch and S. Welch. New York, Harper Business, 2005.
  • (2)M. Maccoby, “Learn From Jack” Research Technology Management, March-April 2002. pp. 57-59.
  • (3)M. Maccoby, The Leader. New York, NY. Simon & Schuster, 1981.

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