Jack and Suzy Welch http://blogs.reuters.com/jack-and-suzy-welch Fri, 28 Sep 2012 15:22:29 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 What Apple (and maybe you, too) can learn from the NFL fumble http://blogs.reuters.com/jack-and-suzy-welch/2012/09/28/what-apple-and-maybe-you-too-can-learn-from-the-nfl-fumble/ http://blogs.reuters.com/jack-and-suzy-welch/2012/09/28/what-apple-and-maybe-you-too-can-learn-from-the-nfl-fumble/#comments Fri, 28 Sep 2012 15:22:29 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=191

That hooting-and-hollering you heard Thursday morning? Yep, that was us, celebrating the end of the NFL strike. Or maybe you didn’t hear it…over your own ruckus.

And why shouldn’t we all be thrilled the National Football League is back in action? Pro football is the ultimate viewing experience – edge-of-seat good, heart-thumping good, and as the season comes to its climax, epic-entertainment good. Frankly, over the past decade or so, the NFL has designed the perfect product, thanks to the leveling effects of the player draft and the distribution of TV revenue.

It’s inimitable.

And that’s exactly why the NFL strike shouldn’t become the sports trivia factoid it’s destined to become starting, oh, as soon as next week, when a full schedule of well-refereed games puts the whole debacle behind us. Because the NFL strike offers a great business lesson. Not for the NFL, actually, but for every company with high market share, like, say, Apple, Google, Facebook, and most important, maybe for you.

Look, the NFL strike occurred, very simply, because pro football has become a virtual monopoly. When you need your football fix, there is no other serious major-league option. And as much as we love baseball, basketball and ice hockey, none of them offers the same superhuman theatrics, downright dazzle and consistent wow factor. That reality is a testament to the acumen of the NFL team owners and management, who have earned their dominant market share with years of continual innovation and exceptional execution.

But monopolies, and more to the point here, most companies approaching monopoly status because of sustained success, almost invariably become breeding grounds for arrogance, complacency and my-way-or-the-highway mindsets. That has to be what happened with the NFL’s ordinarily smart and savvy owners, who successfully settled their differences with the players in 2011 and later that same year signed TV deals worth some $27 billion through 2022. Otherwise, there’s no explanation for why the commish, Roger Goodell, and the owners to whom he reports took on the refs without a viable game plan, i.e., without a cadre of proven replacements.

Regardless, enter negotiations the NFL owners did, only to quickly encounter another immutable law of business: You can’t aggravate your customers. It saps goodwill. It damages trust. It hurts the product. It undermines the brand. It’s just bad business.

Aggravated customers are one sure-fire way you become vulnerable. Goodell must know that now. Maybe that’s why in announcing an agreement with the refs, he apologized to the fans.

Because of its dominance, the NFL will recover from this ball-dropping blunder. But most high-market-share companies wouldn’t have the same luck. High market share is not the same as forever market share. Indeed, even if you own 75 percent of your market, you need to constantly keep believing in your bones, feeling in your skin, and reminding yourself at every turn that somewhere a competitor is out to eat your lunch. It could be a scraggly group of engineers in a garage three miles away. It could be a well-funded company in India or China just waiting for a chance to erode your hegemony. You may think you’re inimitable. They’re betting their future on the fact that you’re not.

Eighteen years ago, legendary Intel CEO Andy Grove coined the phrase, “Only the paranoid survive.” Its meaning, simply put: fear the competitors you don’t see more than the ones you do, and always, always, always put your customers first.

That credo, it could be said, doesn’t really apply to the NFL with any kind of urgency.

But the NFL strike is a great reminder that it applies to nearly everyone else.

PHOTO: An NFL referee rubs his eyes before the Cleveland Browns play the Baltimore Ravens during their NFL football game in Baltimore, Maryland, September 27, 2012. REUTERS/Patrick Smith

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(Business) haters gonna hate – but who gets hurt? http://blogs.reuters.com/jack-and-suzy-welch/2012/09/14/business-haters-gonna-hate-but-who-gets-hurt/ http://blogs.reuters.com/jack-and-suzy-welch/2012/09/14/business-haters-gonna-hate-but-who-gets-hurt/#comments Fri, 14 Sep 2012 11:59:22 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=177 “You didn’t build that.”

“Corporations aren’t people.”

With the first, a revealing gaffe, and the second, a wildly cheered campaign refrain, one party has certainly made it clear how it feels about American business these days.

It ain’t good.

Well, big surprise, we don’t agree. We consider entrepreneurs American heroes and, as we’ve opined recently, we think many corporations brim with humanity. Business can’t operate unfettered, of course, without any form of oversight or control. But our view, essentially, is that business is a source of great good for society, with the power to create hope and opportunity like no other institution going.

Indeed, the positives so outweigh the negatives that lately we’ve been trying to identify why some people hate business so fervently. After all, the risks of this movement’s efforts to demonize business are frighteningly high.

Here’s where we’ve landed.

First, there’s clearly a group of people that disdains business because they support some or all of the fundamental leveling tenets of socialism. This ideology is too multifaceted to summarize here and is well-known in any regard, but suffice it to say that its adherents believe, as the president once put it, “You’ve got to spread the wealth around.”

Then there are people who hate business not because of ideology but because of personal experience – they’ve been wrongly fired, endured a dreadful boss, or watched a schmoozer get the promotion that, by rights, belonged to someone better. Whatever the specifics, these individuals see business as a place where good people get burned.

For still others, their hostility derives from the recent financial meltdown, when the sheer negligence of many financial institutions and rating agencies, they believe, resulted in blameless Americans losing their jobs and their homes and threatened to bring down the entire economy.

Finally, and perhaps most pernicious because of its outsize influence, is the hostility toward business that radiates from the intellectual elite – the opinion leaders in journalism, academia and government. To them, business is rotten because it’s just so completely unfair. Otherwise, how do you explain the success of the party animal who lived down the hall in college?

You know what we mean. With the intellectual elite, you have a group of people who, once upon a time, took their studies very seriously, ran their college newspapers and clubs and protested for social justice in their free time. After graduation, they took jobs where they felt they could fight the good fight, even if it meant financial sacrifice. That was all well and good until 10 or 15 years out, when they started hearing stories about the obnoxious loudmouths in their college dorms who majored in playing the angles and minored in beer pong. These “lightweights” (in their view) had, horrifyingly, struck it rich on Wall Street. And not by making the world a better place. No – simply by showing up and chumming around.

O.K., so maybe that is enough to make you hate business.

Except, you shouldn’t. First of all, even if Wall Street allows some former party animals to make a fortune, Wall Street is but a piece of American business. It may show up in movies and on TV as the archetype, but far more of U.S. business consists of consumer and manufacturing companies making and selling real stuff, family-run enterprises, startups, farms, sports teams, ice cream shops, art galleries, summer camps, record labels – you name it. American business is what America does every day.

But just as important, you shouldn’t vilify American business because it’s our only road back to a thriving country, free of the noose of debt and offering opportunity to all who are willing to work, create, compete and grow.

Everyone knows that our economy must improve, but it can only improve in an environment that encourages business – and, yes, even loves it. Atmosphere matters. When hostility reigns, big enterprises worry about the regulations coming down the pike that might crimp operations and profits, and most hunker down on the capital spending front, human and otherwise. Entrepreneurs worry it’s not the right time or climate to expand, borrow on their credit line or hire, and they do the same.

Look, if you want jobs – and who doesn’t? – you have to come to terms with reality. Hating business doesn’t just hurt business.

It destroys the way forward for everyone.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTO: An Occupy Wall Street activist takes part in a march in downtown Manhattan in New York, July 11, 2012. REUTERS/Eduardo Munoz

 

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Picking the right one to run with Romney http://blogs.reuters.com/jack-and-suzy-welch/2012/07/03/picking-the-right-one-to-run-with-romney/ http://blogs.reuters.com/jack-and-suzy-welch/2012/07/03/picking-the-right-one-to-run-with-romney/#comments Tue, 03 Jul 2012 14:09:08 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=170

Several months ago, we met a CEO who had one main complaint about his job. It wasn’t foreign competition or fickle consumers. No, it was loneliness. “I make every decision by myself,” he moaned.

“That’s nuts!” was our immediate reply. “You can’t run the place that way!”

Every leader needs a team, and every leader benefits enormously from having a wingman, a partner who can be counted on to counsel, goad, provoke, listen, and on and on. It’s true in business, and it’s true in politics. A great person in the No. 2 spot can make the person at No. 1 decidedly stronger, smarter and more effective.

So, Mitt Romney, don’t blow the VP thing.

Fortunately, that would be pretty hard at this point. The current short list of contenders easily passes muster in terms of intellectual heft and leadership experience: Florida Senator Marco Rubio, Senator Rob Portman of Ohio, Representative Paul Ryan of Wisconsin, Governor Chris Christie of New Jersey and Governor Bob McDonnell of Virginia. There’s not an iffy option in the bunch.

So how should Romney choose among them? To answer that question, we’ve put together a scorecard that rates each candidate against six criteria we consider essential in a vice-president.

Of course, it’s possible none of these individuals will be Governor Romney’s final pick. Both Dan Quayle and Sarah Palin took most everyone by surprise, to put it mildly. But even if Romney were to select a wild card like Condoleezza Rice – who has loudly disavowed any vice-presidential aspirations – the selection criteria should remain the same:

First, a VP must be able to be president, not eventually, but from Day One. The main, unfortunate reason for this doesn’t need to be said. But such a requirement is also about creating confidence in government. The right VP pick sends a message to America and the world: No matter what happens, the bottom will never fall out of our system.

Again, all of the current VP contenders could serve in the Oval Office without hesitation, but Portman’s nearly 20 years of government service and Christie’s and McDonnell’s tenures as chief executives of their states give them an edge on this count.

Second, a VP can’t be a clone of the president. There’s just no point. A VP’s value comes from bringing different skills and abilities to the table – as meaningful as they are complementary. Rubio, for example, would contribute inspiring oratory to Romney’s repertoire; Ryan an intricate understanding of the more-important-than-ever budget options; and Portman a thorough understanding of Washington’s inner workings. Christie would add a level of excitement and humanity to the White House. Bottom line: With the exception of McDonnell, who’s very similar to Romney, the candidates are all about equal on this criterion.

Third, a VP has to have guts. Why? Because it’s every No. 2 person’s profound responsibility to look their boss squarely in the eye and deliver the hard, awkward, unpleasant and even painful messages that no one else can. “This is what people are thinking but not telling you.” Or, “You might have come off too strongly in that meeting. To some people, it probably looked like you weren’t listening.” The VP, in other words, needs a certain fearlessness, an attitude born of self-confidence and candor. And here, while everyone under consideration certainly seems up to the challenge, the advantage has to go to Christie, who, to our knowledge, has never managed to mince a word in his life.

Fourth, a VP has to project gravitas and be a significant presence, but cannot overshadow the president. This criterion is (again) about confidence in the system. The leader needs to be the focal point for the nation – fully aware and in charge. Optics matter. And on this count, only Christie, with his unfettered personality, poses a real problem for Romney.

Fifth, the VP has to be a real partner to the president – keeping confidences and blocking any attempts from below to divide and conquer. Remember, the White House is an organization like any other, filled with politicking and intrigue. And, as in any organization, you cannot have a presidency where the VP’s office is a place to shop ideas or slip initiatives through. Even if they disagree in private – which they should – in public, the VP and president must stand as one. Again, Rubio, Portman, Ryan and McDonnell seem comparable on this front; Christie is just too used to being No. 1.

Finally, a VP should ideally help bring a critical constituency into the fold. This is an election, after all! That said, no one really knows if Rubio can capture the Hispanic vote in significant numbers, or if Portman can guarantee a return of Ohio to the GOP, or if Ryan and McDonnell can help in what will be very close races in their states. We’re not pollsters, but giving it our best guess: advantage Rubio.

Put it all together, and as you can see from the graphic, our criteria suggest that Rubio and Portman are the best choices for vice-president, but only by a fraction. If he picks from the current crop, we’d say Romney really can’t go wrong.

PHOTO: U.S. Republican Presidential candidate Mitt Romney speaks to Virginia Governor Bob McDonnell (L) at an election rally in Sterling, Virginia, June 27, 2012. REUTERS/Jason Reed

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Dear Summer Intern: This is an audition for your future http://blogs.reuters.com/jack-and-suzy-welch/2012/06/14/dear-summer-intern-this-is-an-audition-for-your-future/ http://blogs.reuters.com/jack-and-suzy-welch/2012/06/14/dear-summer-intern-this-is-an-audition-for-your-future/#comments Thu, 14 Jun 2012 12:54:43 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=158 Once upon a time – i.e., eons ago – one of us had a summer internship that mainly involved playing golf with the boss, who appreciated the company of a college kid with a single-digit handicap. Not much work got done, but it didn’t seem to matter, particularly to the boss. The other one of us (the one whose handicap is so obscene it can’t be printed in a family publication) once had a summer job that revolved around asking, “Would you like your eggs bagged separately?” It was boring, sure, but the hours were great if hitting the pool is your kind of thing.

As the song goes, “Those were the days, my friends. We thought they’d never end….”

Well, they did. They really, really did. Today, due to economic conditions that need no explanation, most college grads have to fight and claw for entry-level jobs in their chosen fields, and many, perhaps as many as 25 percent, aren’t even able to get a well-shined shoe in the door.

So say goodbye to your father’s, or even your older brother’s, summer internship, when the office was, for all intents and purposes, where you passed the time between weekends at  Cape Cod, and the best thing about going to work each day was that it meant – hallelujah! – you weren’t going to classes or taking exams.

Say hello instead to a summer that offers what might be your best hope of landing a real, live job upon graduation. That is – if you can just remember two little things.

O.K., maybe they aren’t little.

The first is to be keenly aware of who is courting whom this summer. Sure, the cheerful hiring people might have assured you that your internship is designed to introduce you to the company’s wonderful staff and culture and help you gain valuable industry experience, which is all well and good. Take that stuff in. But the bottom line is that, whether you’re working at an investment bank or a radio station, your summer internship should be more about giving than getting. Indeed, it should primarily be about you giving a helluva performance, over-delivering, making an impression with your insightful, unexpected ideas and terrific, sweat-the-details kind of output that prompts people to say, “Holy Cow, this kid really wants it.”

You need to do stuff that makes your boss look like a hero. Suggest a small process improvement, come up with a cool packaging idea, offer deep-dive insights into a customer segment. Do something, anything, that might make your boss think, “It would really stink if this kid worked at one of our competitors.” That’s the kind of wow you’re after…every single day.

Our second “little” piece of advice is both easier and simpler. Be likable. Just that. Fun, upbeat, friendly, authentic, filled with positive energy, happy, agreeable, chit-chatty about sports and the weather and The Avengers, or frankly, whatever everyone at your company likes to be chit-chatty about. Get in the game and play, even literally, if there’s a softball game to be had. Let people know you. Let them hear you laugh. Let them see your humanity. Sure, some people are so freakishly smart, their personalities don’t matter and they don’t have to make the kind of nice we suggest. But those people are rare, and most of them don’t need summer internships anyway because they’re millionaires by age 18, with a couple of patents or apps to their name.

Finally, we would be remiss if we didn’t mention one last summer to-do item, which is not to take place at work but rather in the privacy of your own cheap rental. The pastor and author Terry A. Smith makes the case that people are happiest when they are working in their “Area of Destiny” – that gorgeous piece of emotional and intellectual real estate that exists at the intersection of what you’re uniquely good at and what deeply interests and excites you. We couldn’t agree more; indeed, we talk about “Area of Destiny” so often with our own college-aged kids that they’ve been known to greet us by saying, “My area of destiny is fine today, thanks, how’s yours?”

They’re joking, but it’s not a bad question to ask yourself. So this summer, while you’re over-delivering and winning likability points in extremis, also think long and hard about whether you’re on the road to a career that someday will give you the chance to simultaneously do what you’re good at and what you love. Because that is the place you want to land. It’s where you belong.

And the first step in that direction, dear summer intern, is getting an A on the job right now.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTO: Nora Barnett, an intern for House Energy and Commerce Committee Chairman Henry Waxman (D-CA), waits with stacks of paperwork in anticipation of a committee meeting to mark-up health care legislation titled “America’s Affordable Health Choices Act of 2009,” on Capitol Hill in Washington, July 29, 2009. REUTERS/Jonathan Ernst

 

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Mr. Biden, here’s the truth about private equity http://blogs.reuters.com/jack-and-suzy-welch/2012/05/30/mr-biden-here%e2%80%99s-the-truth-about-private-equity/ http://blogs.reuters.com/jack-and-suzy-welch/2012/05/30/mr-biden-here%e2%80%99s-the-truth-about-private-equity/#comments Wed, 30 May 2012 17:41:04 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=152 Time was you worked in private equity and people just sort of shrugged when you mentioned it. You were in finance sort of; you invested in companies, you made deals. Whatever.

Now, you’re in private equity, and well, hello. You’re a heroic job creator – or no, wait, you take pleasure in firing people. You’re a savvy executive who knows how to grow the economy – or get outta here, you’re a vulture capitalist with leadership skills, as Vice-President Joe Biden recently put it, that are no better than a plumber’s.

Hello, indeed, and with all due respect to the vice-president, and certainly with no offense intended toward plumbers, we have a question.

Mr. Vice-President, where in the world are you getting your ideas about private equity?

Because we have an entirely different take, and we can tell you where ours comes from – experience, 20-plus years of working with PE firms and 11 years of working for one. And given that experience, and given how private equity is at the epicenter of the political debate now, we’d say it’s time for a reality check about what private equity really does and what kind of leaders it tends to produce.

Let’s start with what private equity firms do, which is actually very simple. They buy troubled companies with the intention of fixing them up. In time, they hope, that will result in a big payday when the new-and-improved business goes public or gets sold to an eager strategic acquirer. Yes, sometimes these turnaround efforts fail, and companies and jobs are lost. And yes, on occasion PE firms have bought in and overleveraged a business’s assets. Then, as a result of an economic downturn, the company has tanked, while the PE firm has gotten out whole.

But the norm is different. Typically, that’s not what happens. It’s just not. Indeed, research conducted under the auspices of the World Economic Forum in 2010 shows the practice of  “strip and flip” during PE-led turnarounds is rare. What’s far, far more common is this: PE firms buy “orphan” divisions that no longer are a good fit with their big corporate owners and have been left to fade away, or they snap up stand-alone businesses that have lost their way and are almost in the throes of death.

The key point here is that PE firms virtually never buy jewels – happy, fast-growing companies with glistening profits. After all, such companies have access to other kinds of capital; they don’t need private equity. And frankly, private equity is generally not in the business of polishing things up for a low-multiple return. It’s in the business of reinvention and rebirth, with fireworks at the end.

During this kind of overhaul, do jobs get lost? Unfortunately, in the early stages, they often do. It’s nearly impossible to massively improve productivity by keeping everything the same. But are companies saved? Again, yes. That’s the whole point of private equity. You’re trying to get a business from terrible to terrific, from dying to thriving. In the process, some jobs may go, but in the best-case scenario, with success down the road, many more will be created. And by preventing a company from going under, jobs will certainly be saved.

Now let’s talk about the leadership traits private equity’s most successful practitioners tend to exhibit.

Every private equity acquisition begins with a sophisticated negotiation between the PE firm, the corporate seller and the employees of the business being sold. Usually, several firms are vying for the business, but it’s not accurate to assume price is the sole determinant of who wins. Many times, just as critical is the case each private equity firm makes for itself, along with its ability to bring contentious stakeholders to a shared vision of the future. In short, most successful private equity managers have well-honed skills in the art of getting tough deals done.

Next, because of their familiarity with turning around broken companies, private equity managers usually have a very clear understanding of what it takes to establish a workable balance sheet, how to develop strategy and how to execute that strategy. Moreover, private equity managers tend to be very, shall we say, un-academic about these pursuits. In the private equity environment, fatheaded theories don’t get you very far. Realism does.

Top private equity leaders also are typically very good at talent management. You never hear that, but it’s true, and here’s why. Everything about a successful turnaround depends on people – picking the right ones to resurrect the broken company and placing them in the right jobs from top to bottom to get it all done. Think about it. In a well-run company, people make all the difference. Imagine how much more important they are in a rescue scenario. Which is why private equity people end up being smart about building great teams – and doing so quickly.

Finally, when you’re trying to save a company these days, rarely does the solution lie in hunkering down and keeping it local. Rather, to regain your health, you need to globalize your sourcing efforts, enter new markets, form a joint venture abroad or set up a foreign R&D operation. Thus private equity firms often goad their acquisitions into the borderless world, which explains why most successful PE leaders tend to have global mindsets about business, regulation, growth and geopolitics.

Which brings us back to Vice-President Biden’s remarks. Sophisticated negotiation skills, balance-sheet management, strategy development and implementation, talent selection and a global mindset sure seem like tools you’d want any president to carry, don’t they?

Only politics would say it ain’t so.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTO: U.S. Vice-President Joe Biden gestures after giving a speech regarding the Obama administration’s foreign policy record at New York University in New York, April 26, 2012. REUTERS/Lucas Jackson

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JPMorgan: Jamie Dimon and the horse he fell off http://blogs.reuters.com/jack-and-suzy-welch/2012/05/24/jpmorgan-jamie-dimon-and-the-horse-he-fell-off/ http://blogs.reuters.com/jack-and-suzy-welch/2012/05/24/jpmorgan-jamie-dimon-and-the-horse-he-fell-off/#comments Thu, 24 May 2012 12:30:28 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=137 If there’s one person you probably don’t envy right now, it’s Jamie Dimon.

In the past week, the JPMorgan CEO has been summoned to testify before Congress and learned that his company is facing investigations by an alphabet soup of federal agencies, from the CFTC to the FBI to the SEC. He’s also had to spend a lot of time in the middle of a media feeding frenzy, offering mea culpas and referring to himself and members of his team as “stupid,” “sloppy” and “dead wrong.”

In short, Jamie Dimon has been knocked off the large, white horse he rode through the financial crisis.

Now, echoing the general consensus, nothing illegal appears to have occurred in the course of JPMorgan’s $2 billion-plus trading loss. No taxpayer money was involved, and the investigations, it seems, are largely pro-regulation, political grandstanding with a dose of schadenfreude thrown in. At least so far, nothing has happened that’s actually going to seriously damage the bank’s long-term value to shareholders. It’s just that – well, it’s just that JPMorgan made a mistake.

Guess what? It happens all the time, from Wall Street to the factory floor. Work is hard, fast and complicated. People make mistakes. God knows we’ve both made them, and if you’ve got a few years of work under your belt, so have you.

Which leads us to our main point, which is really not about JPMorgan at all, or at least not about it alone. Rather, it’s about one of the most common crucible moments in leadership – a big messy failure. Thankfully, very few screwups will garner the same level of public attention as JPMorgan’s trading loss. But the principle we’re getting at is the same. Over the course of your career, you won’t be measured just by how many mistakes you make, because you’ll make your fair share, but you’ll be measured, as importantly, by how well you recover from them.

Look, a mistake can do two things to you when you’re a leader, no matter what your level in an organization. It can define you, or it can galvanize you.

The right choice is obvious, but unfortunately, far too often, the defining thing happens anyway. The mistake becomes a leader’s identity. Stricken by guilt or self-doubt or both, he enters something of a vortex, obsessing over the blunder, searching incessantly for all the reasons it could have happened, conducting endless meetings to go over processes and procedures to prevent it from ever happening again, talking to everyone who feels affected in any possible way, and letting the breast-beating go on and on and on.

Some of that is fine, of course – indeed, some of it is absolutely necessary, especially the “autopsy.” You definitely don’t want the same mistake to happen twice! But that darn vortex of self-defeat is always around – and it only goes in one direction, down.

That’s why it’s critical for you in the post-mistake period to move swiftly from self-examination and self-flagellation to resilient renewal, to getting your people refocused and re-energized. “The past is over,” you need to say to your troops as many times as it takes. “What matters now is the future. Here’s what it looks like, here’s how we’re getting there and what’s in it for you.” The picture painted has to be exciting in its reach and vivid in its detail. And it’s got to feel real – even gritty. No platitudes or generics. People can smell, well, let’s just call it “baloney,” a mile away.

The all-too-human complication in this, of course, is that after a mistake happens, you might not be emotionally prepared to get your team all psyched up again. You may be feeling the searing discomfort of upper management’s skeptical gaze on your back, not to mention a tighter leash around your neck. You may be wondering if you really have what it takes to lead your people. Your people, in turn, may be feeling beleaguered and increasingly doubtful themselves.

And so, the vortex beckons.

Just don’t go there. Own your mistakes, analyze their causes, learn from them and clean them up – of course. But then, let them go and get back to the future. If you’re a leader, that’s where your head and your heart – and your people – belong.

And as for Jamie Dimon? Given his long record of success, we’re confident he’ll soon be back in the saddle. And years from now, we assure you, relatively few people will remember JPMorgan’s trading blunder. But everyone who works for him around the globe, a quarter-million strong, will know that he dusted himself off, got back on his horse and rode on – stronger and a whole lot wiser.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTO Jamie Dimon, chairman and chief executive of JP Morgan Chase and Co, speaks at the 2012 Simon Graduate School of Business’ New York City Conference in New York, May 3, 2012. REUTERS/Keith Bedford

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The Wal-Mart mess: Everybody does it (and we don’t mean bribery) http://blogs.reuters.com/jack-and-suzy-welch/2012/05/01/the-wal-mart-mess-everybody-does-it-and-we-don%e2%80%99t-mean-bribery/ http://blogs.reuters.com/jack-and-suzy-welch/2012/05/01/the-wal-mart-mess-everybody-does-it-and-we-don%e2%80%99t-mean-bribery/#comments Tue, 01 May 2012 20:53:57 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=128 “Ignore him, he’s a whack job.”

“She’s just bitter she didn’t get promoted.”

“He’s been shooting his mouth off for years – and it’s always nothing.”

Those lines sound familiar? If you work in business, they probably do – it’s how people talk about whistleblowers. Shocking? It’s just the truth. Even though whistleblowers may have a noble reputation in the media, gracing magazine covers and prime-time TV spots, when they surface within a company, management almost always brushes them off with a discrediting back story or a little piece of history that explains away all their annoying accusations. And here’s why that happens: In the vast majority of cases, whistleblowers are, to some degree, crazy or vengeful or both.

Until, one terrible, awful day when, speaking out of vengefulness or ethical earnestness, the whistleblower also happens to be telling the truth. And then, well, you get a crisis like the one Wal-Mart finds itself tangled in today.

Now, make no mistake. We think Wal-Mart is a great company. It’s created upward mobility for thousands of people and a million-plus jobs around the world, and it remains the American consumer’s greatest ally in the war against inflation. Furthermore, the recent accusations against Wal-Mart are just that – accusations.

But those allegations, proven true or not, still offer an important lesson to everyone in business, and we don’t mean the one that’s being widely bandied about right now – that big companies like Wal-Mart, because of their size and power, engage in corruption because they can. We don’t think that’s generally true. Nor do we think the biggest take-away from the Wal-Mart story is how hard it is for American companies to do business abroad without bribery. Actually, it’s perfectly possible to operate globally – and win – while playing by good old American rules and regulations.

No, to us, the Wal-Mart story is most importantly a reminder of the pervasive, even understandable, impulse within companies to ignore whistleblowers because they’re so often time-wasters. And it’s a reminder of why you can’t turn your back on them.

Ever.

In fact, the only way to deal with a whistleblower’s accusations – again, every single time and often against your own instincts – is with a hyper-bias toward believing that the informant is onto something big. Such a bias must impel you to investigate every claim ferociously. You may think it’s a waste of time and money, and will go nowhere; you should be so lucky. And for goodness’ sake, don’t let the investigation be conducted by the boss who’s been accused of wrongdoing! Bring in an outside agency to do the sleuthing, or at the very least, executives outside the scope of the alleged problem, with no relationship to the people involved. Yes, you may hate the whole mishegaas and so might everyone it touches. But it’s the only way to overcompensate for the propensity to wish whistleblowers away with the perfunctory spot check or the “Everything O.K.?” kind of look-see that usually occurs.

Now, in the months ahead, Wal-Mart will very likely experience the five steps that characterize virtually every organizational crisis. First, the company will quickly come to see that its problem is actually much worse than it originally appeared. That’s the nature of these kinds of things; the first report of wrongdoing is usually just the tip of the iceberg. Second, Wal-Mart will find there are no secrets in this world. Every last detail of the Mexico situation – and of the corporate cover-up, if there was one – will eventually seep out. Third, Wal-Mart’s handling of the crisis will be depicted in the press in the worst possible light. Being vilified goes with the territory. And fourth, there will be “changes.” That is, someone at Wal-Mart will be fired for what’s happened, and maybe many more “someones” will share the fall.

Finally, though, Wal-Mart will become a better company for it. That’s the good news about every ugly crisis. It teaches you something your organization desperately needed to know and usually ensures the same mistake will never happen again.

It’s too bad, though, that this crisis had to happen in the first place. And it wouldn’t have, if Wal-Mart had done a very hard, very necessary thing.

Taken every whistleblower at his word.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTO: A general view of a Wal-Mart store in Mexico City, April 24, 2012. REUTERS/Edgard Garrido

 

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Today vs. GMA: What doesn’t kill you makes you stronger http://blogs.reuters.com/jack-and-suzy-welch/2012/04/27/today-vs-gma-what-doesn%e2%80%99t-kill-you-makes-you-stronger/ http://blogs.reuters.com/jack-and-suzy-welch/2012/04/27/today-vs-gma-what-doesn%e2%80%99t-kill-you-makes-you-stronger/#comments Fri, 27 Apr 2012 12:06:46 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=113 Pick any hot topic over the past decade or two – tax policy, Social Security, nuclear power, American Idol, you name it – and if you put a dozen people in a room, you’d get a cacophony of opinions.

But ask those same people, “So, what morning show do you watch?” and you’d just as likely get one big chorus back, saying, “Today, of course!”

The Today Show’s ratings domination is legendary.

Actually, make that “was” legendary. During the week of Apr. 9, the program drew 13,000 fewer viewers than its longtime (and formerly distant) rival Good Morning America. The loss, as was so gaspingly reported, broke Today’s epic 852-week winning streak.

To which we say, “What a lucky break!”

No – not for GMA, but for Today, because its loss means something very exciting is about to happen. The show is about to start experiencing business as it should always be experienced by every organization: as if each and every day were the last quarter of the Super Bowl.

Gordon Gekko famously proclaimed greed to be the central tenet of business. What tripe. The real, galvanizing truism about business is that competition is good. In fact, it’s great.

Look, competition is what makes work more than clocking hours and turns it into something powerfully exhilarating, something about pushing harder, reaching farther and building the future. How? By making companies think smarter, run faster and operate more sharply. By driving teams to coalesce and getting people to share ideas across all sorts of boundaries. By sparking innovation in everything from product design to process engineering.

But perhaps best of all, competition transforms work because it takes people’s focus off the Byzantine internal workings of a company – who’s got the bigger cubicle, who went to lunch with the boss on Tuesday – and puts it where it belongs, on the external world of customers and market dynamics. It replaces the all-too-human proclivity for office politics with a much more productive fixation on results, as in, “Let’s promote that new guy Sam right away. Sure he’s a little rough around the edges, but the customers adore him.”

Competition, you see, is all about having the guts to make status-quo-busting decisions on a daily basis. It’s about playing as though you’re not winning even if you are. Yes, that’s hard, especially when your numbers are all right. And especially when you’ve been comfortable for a good long while. But if you ever hear yourself saying something like, “We’ve got things under control,” slap yourself. If you don’t operate in a heightened state of paranoia about even the competitive threats you cannot yet see and don’t want to imagine, you’re asking to decay, or worse, to be demolished. Just ask RIM, Nokia, Circuit City, Sony and Best Buy.

Of course, it practically goes without saying that the biggest beneficiaries of heightened competition are consumers. When companies are trying to outdo each other, obviously the customer experiences the upside of the fray. (Indeed, to see the reverse of this theory in action, all you have to do is visit your local DMV to witness the mind-numbing effects of monopolies in action, so to speak.) The good news is, when consumers win, so do many of the companies creatively competing to serve them. It’s the ultimate virtuous economic circle.

So, sure, the people on the Today team must have felt disappointed when their winning streak hit a wall. But to repeat, we’re excited for them. We’re excited for any company that gets to experience that kind of exhilaration – and the flat-out fun that a good competitive fight brings to the game of business.

And like millions of other customers, we can’t wait to enjoy the results.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTO: ‘Today’ show host Ann Curry talks with fans during Meredith Vieira’s final show in New York, June 8, 2011. REUTERS/Brendan McDermid

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Romney vs. Obama: Leadership and the enemies list http://blogs.reuters.com/jack-and-suzy-welch/2012/04/11/romney-vs-obama-leadership-and-the-enemies-list/ http://blogs.reuters.com/jack-and-suzy-welch/2012/04/11/romney-vs-obama-leadership-and-the-enemies-list/#comments Wed, 11 Apr 2012 16:52:29 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=103 Remember that incompetent boss you used to have? He was a good guy and all, but he just couldn’t make decisions or prioritize. Perhaps worst of all, he tried to make everyone happy, resulting in almost everyone being angry or confused or both. And remember how long it took management to move him out – and how aggravating that was?

Of course, at the time, you sort of understood why the Bigs had promoted the guy in the first place, and why they held out hope for so long. He’d been a superstar salesman. Best the company had seen in ages. But in the end, it turned out that all the things that made him great as an individual performer made him lousy as a people manager.

It happens all the time at work. A brilliant engineer promoted to run R&D. A gifted reporter elevated to editor. A cutting-edge scientist made head of the lab. First cheers. Then, after a bit, confusion about organizational direction, mixed signals about values, hurt feelings left and right and, eventually, chaos.

Look, in business, some people can really knock it out of the park in their current jobs. They just can’t lead.

Smart companies get that reality. In fact, most have learned the hard way that actually being a great leader involves unique skills that even the most promising candidate for a leadership job simply may not possess.

But do the American people get that reality, too?

You have to wonder. Because there’s an awful lot of noise out there right now about campaign styles. President Obama has a reputation built on his soaring oratory, while Mitt Romney, clearly no fan of crowd scenes, can’t seem to get through a week without an awkward (or worse, foot-in-mouth) moment.

The president really knows how to run for office, the pundits note. Romney – not so much.

As if it matters.

It doesn’t, of course. Just as in business, in politics, being very good at one job (like delivering well-written speeches from a teleprompter) doesn’t necessarily make you very good at the next (like leading the free world).

What voters need to do right now is stop focusing on stump skills, or lack thereof, and start fixating on which candidate will be the better president once the campaign is long over. They need to stop asking, “Who’s more appealing on TV?” and start asking, “Who’s got the right stuff to get America working again?”

Yes, in some part, every person’s answer to that question will be driven by the issues – from healthcare to taxes to energy policy. And in this election, the ideological divide is stark indeed, with Obama supporting government centralization that borders on European-type socialism and Romney in favor of decentralization, state and individual rights and free-market capitalism.

Stark, too, is the difference between the candidates’ leadership styles.

Over the past three years, Obama has taken a sort of divide-and-conquer approach, amassing a list of enemies that would make Richard Nixon proud – bankers, healthcare insurance providers, oil companies, wealthy taxpayers, Congress and, most recently, the Supreme Court. Surely his supporters must think this particular tactic is effective, but there can be no denying that the country is more polarized than when Obama took office.

Without doubt, Romney is not the model leader (his apparent lack of authenticity can be jarring), but he has a quality that would serve him well as president – good old American pragmatism. Perhaps that’s the businessman in him. Or perhaps you just learn to do what you’ve got to do when you’re a GOP governor in the People’s Republic of Massachusetts or the man charged with salvaging the scandal-ridden Salt Lake City Olympics. If Romney’s long record suggests anything, it’s that he knows how to manage people and organizations to get things accomplished without a lot of internecine warfare.

Look, Obama may be a great campaigner and Romney (to date) somewhat the opposite. But neither man is running to be Campaigner-in-Chief.

In politics, as in business, the leader’s job needs to be filled by a leader, and no effective leader, regardless of ideology, keeps an enemies list.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTOS: U.S. Republican presidential candidate and former Governor of Massachusetts Mitt Romney speaks during a campaign event in Wilmington, Delaware April 10, 2012. REUTERS/Tim Shaffer U.S. President Barack Obama speaks about tax fairness and the economy at Florida Atlantic University in Boca Raton, Florida, April 10, 2012. REUTERS/Kevin Lamarque

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Goldman and the culture-killing lesson being ignored http://blogs.reuters.com/jack-and-suzy-welch/2012/03/23/goldman-and-the-culture-killing-lesson-being-ignored/ http://blogs.reuters.com/jack-and-suzy-welch/2012/03/23/goldman-and-the-culture-killing-lesson-being-ignored/#comments Fri, 23 Mar 2012 12:08:15 +0000 http://blogs.reuters.com/jack-and-suzy-welch/?p=91 In the great, collective gasp that followed Greg Smith’s blistering public resignation from Goldman Sachs, one reaction struck us as particularly prophetic. It was a comment from James Gorman, CEO of Morgan Stanley. Don’t exploit Goldman’s woes, he said a few days after Smith’s letter ran in the New York Times: “There but for the grace of God go us.”

Some took Gorman’s remark as an admission of sorts – as if he were saying, “Hey, Smith’s criticisms could’ve been leveled at any firm on Wall Street.” Others took Gorman at his word when he explained that he meant all companies are vulnerable to a disgruntled employee who joins forces with a simpatico media outlet.

But we have a third interpretation that, to our minds, is far scarier than either of those takes. The Greg Smith case is a harsh reminder that most companies don’t face up to one of the most immutable rules of business: Your soft culture matters as much as your hard numbers, and if your company’s culture is to mean anything, you have to hang – publicly – those in your midst who would destroy it. It’s a grim image, we know. But the fact is, creating a healthy, high-integrity organizational culture is not puppies and rainbows. And yet for some reason, too many leaders think a company’s values can be relegated to a five-minute conversation between HR and a new employee. Or they think culture is about picking which words – do we “honor” our customers or “respect” them? — to engrave on a plaque in the lobby. What nonsense.

An organization’s culture is not about words at all. It’s about behavior – and consequences.

It’s about every single individual who manages people knowing that his or her key role is that of Chief Values Officer, with Sarbanes-Oxley-like enforcement powers to match. It’s about knowing that at every performance review, employees are evaluated for both their numbers and their values, and that only four outcomes exist.

First, for employees with good numbers and good values – onward and upward.

For those with bad numbers and bad values – you’re outta here.

As for employees with good values but mediocre numbers – the stance should be, we’ll give you another chance with more coaching. Your behavior has earned you that.

Which leaves the type of employee who most commonly brings companies to their knees: the one with the great numbers and crummy values. The employee who doesn’t share ideas with co-workers, who belittles customers behind their backs, who kisses up to the hierarchy but kicks down his own people – all while bringing in the numbers.

Ninety percent of the time, managers give these people a big fat pass. “I know Jim can be a real jerk,” they say, “but I just need him until the economy stabilizes.” Or “Sure, Sally’s attitude upsets everyone, but I’ve spoken to her. I think she’s going to come around.”

Actually, all Jim and Sally are doing is sending a big fat message to every other employee: Our company’s values are a joke. And the only antidote is to send Jim and Sally home, and not with the usual “They want to spend more time with their families” BS out of the lawyers and HR, but with the truth. “Jim and Sally had great numbers,” everyone needs to be told, “but they didn’t demonstrate the values of this company.” We guarantee such a public “dis play,” to put it more politely, will have more impact than a hundred “Our values really, really matter!” speeches by the CEO.

The Smith case occurred on Wall Street, but to be clear, we’re talking about a problem that exists well beyond the canyons of lower Manhattan. “Values drift” is pervasive in companies of every ilk, from sea to shining sea. Employees either don’t know their organization’s values, or they know that practicing them is optional. Either way, the result is vulnerability to attack, from inside and out, and rightly so.

Look, it’s Management 101 to say that the best competitive weapon a company can ever possess is a strong culture. But the devil is in the details of execution.

And if you don’t get it right, it’s the devil to pay.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTO: A Goldman Sachs sign is seen on at the company’s post on the floor of the New York Stock Exchange, January 18, 2012. REUTERS/Brendan McDermid

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