Communication Best Practices at Dell, General Electric, Microsoft, and Monsanto

3. Best Practices at the General Electric Company: Benchmarking a World-Class Leadership Communication System

31 3 Best Practices at the General Electric Company: Benchmarking a World-Class Leadership Communication System The two greatest corporate leaders in this country are Alfred Sloan of General Motors and Jack Welch of GE. And Welch would be the greater of the two because he set a new contemporary paradigm for the corporation that is the model for the 21st century. (Tichy, 1998:93) In February 2001, General Electric was named Fortune’s “Most Admired Company” for the fifth year in a row and named the World’s Most Respected Company by the Financial Times for the fourth time (Immelt 2001, 1). Jack Welch is the CEO of GE and he is considered one of the world’s most successful leaders. In 1999 he was named the most important business leader of the century by Fortune Magazine , the most outstanding leader in the world by Financial World Magazine, and the Most Respected Business Leader in the World in a survey conducted in the business community by the European newspaper the Financial Times (Corrigan 1999, I). GE’s performance over the past six years is outlined in table 3.1. Why have GE and Jack Welch received such accolades? There are at least three reasons. First, Jack Welch’s twenty-year reign as CEO of General Electric has produced rather dramatic results. GE’s sales rose from $27.9 Table 3.1 GE’s Six-Year Performance Record, 1996–2001 in millions of dollars 2001 2000 1999 1998 1997 1996 Sales 125,913 129,853 111,630 100,469 90,804 79,179 Profits 13,684 12,735 10,720 9,296 8,203 7,280 Source: GE Annual Reports, 1996–2001. 32 DONALD P. CUSHMAN AND SARAH SANDERSON KING billion in 1981 to $129.7 billion in 2000; profits rose from $2.9 billion to $12.7 billion; and market value rose from $12 billion to $500 billion . By 2000 GE had become America’s fifth largest industrial corporation in sales, the first largest in profits, and the first largest in stockholder value (Moore and Brady 2000, 130). Second, GE’s competitors are among the largest and most powerful firms in the world. These global electronic and electrical equipment firms include Hitachi, Matsushita Electric, SONY, Toshiba, Mitsubishi Electric, NEC, Siemens, Royal Philips Electric, and ABB. Each year from 1990 to 2000, GE earned $1 billion more in profits than the combined profits of these nine firms. Such a performance suggests that GE has significantly more successful leadership than its industry competitors. Third, and perhaps most significant, over thirty of GE’s former toplevel executives have become CEOs of such successful global firms as GTE, Allied Signal, Goodyear Tire, Cal Pine, Fiat, Owens-Corning, Iomega, SPX, Ryland Group, Conseco, General Dynamics, Terra Lyco, 3M, Home Depot, Wang Laboratories, Sundstrand, Great Lakes Chemical, Rubbermaid, M/A Communications, Stanley Works, USF&G, Zorn Industries , Clean Harbor, Pentair, Intuit, Primedia, TRW, and Systems Computer Technology. This suggests that GE’s and Jack Welch’s leadership system is principled, systemic, and teachable, rather than a function of one man’s unique abilities. Therefore, GE’s management system warrants careful study by all corporate leaders seeking to improve. Our benchmarking study of GE’s leadership system will proceed in three stages consisting of an examination of (1) the critical success factors and backbone communications processes employed by Jack Welch; (2) the targets and implementing structures employed in achieving these critical success factors and in utilizing the backbone communication processes; and (3) conclusions regarding the benchmarking of this leadership system. Benchmarking Critical Success Factors Welch was hardly the first person to see the new world coming. His great achievement is that having seen it, he faced up to the huge, painful changes it demanded, and made them faster and more emphatically than anyone else in the business. He led managers into this new world, which we still inhabit, and just as important, he showed business people everywhere a method of attacking change of any kind. (Colvin, 1999:186) 33 BEST PRACTICES AT GENERAL ELECTRIC COMPANY In his twenty years as CEO of GE, Jack Welch led his firm through three strategic transformations. These transformations represent the three critical success factors of his leadership system. First, Jack Welch transformed GE to the most competitive and valuable firm in the world. Here he repositioned his firm into markets and businesses which were...