Confidence: “Instilling confidence” and “spreading it” around the organization was the most important thing he did, Welch insisted. After making so many dramatic changes in his hardware phase of the 1980s (layoffs, restructuring, divesting), Welch knew that he had a demoralized workforce. Through initiatives like Work-Out, he sought to instill confidence into the psyche of GE employees and managers. Confidence has been a constant theme throughout Welch’s tenure, and many of his initiatives had the added benefit of instilling self-confidence into the organization. Six Sigma, for example, gave GE employees far more confidence in the quality of their products and services. The e-Initiative added speed and confidence to the organization, as workers became more secure in the knowledge that an upstart dot-com would not steal sales or market share from GE. Declared Welch: “A manager’s job is to fundamentally pump self-confidence into people so they have the courage to dare, the courage to dream, the courage to reach and do things they never thought possible.”
THE ORIGINS OF WELCH’S CONFIDENCE
Welch says that he started to build self-confidence at an early age and often gives credit to his mother for being so well grounded. His mother certainly instilled a sense of reality into her son, Jack. Months before his retirement, Welch spoke of how she taught him early on to see things as they are:“Never see the world the way you wished it would be. Always see the world as it is.” In other words:“Don’t kid yourself.” It was a common retort from Jack’s mother, and his first lesson in facing reality.
Welch also regales interviewers with his boyhood tales of the “Pit.” That was where he played sports and learned lessons that would prepare him for the world of business. One journalist called the Pit a “Darwinian laboratory of sorts,” since that was where “Welch and his buddies learned to win, lose, fight, compromise, and charm.”Welch has often decreed “sports are everything” and attributes his early years to shaping his leadership abilities.
Another factor Welch pointed to in building confidence was his attending a state school rather than a more rigorous institution like MIT: “I’m a firm believer that all of these experiences build these self-confidences in you: your mother’s knee, playing sports, going to school, getting grades.”After graduating from the University of Massachusetts, he received his master’s and Ph.D. before starting at GE. He was in a small lab with only one other person, and he thought it more like “a family grocery store.” There was no bureaucracy, just excitement, as Welch built the business.
Later, at age 33, he would become an executive responsible for a $1.5 billion components and materials group. Once he moved up the GE ladder, he was exposed to all of the things he would fight later on, including bureaucracy, layers of management, turf battles, etc. By working in such a small operation in his earliest days at GE, Welch knew that it was possible to work for a vast corporation and still have it run like a small store. Throughout his career, Welch felt that “pumping self-confidence into people” is one of the fundamental tasks of every manager.
THE SIGNIFICANCE OF WELCH’S CONFIDENCE BUILDING
In placing such a premium on confidence, Welch helped instill a sense of pride and ownership into the fabric of GE. Before Welch, no one had bothered to ask employees what they were thinking. Few workers felt that confidence was important, and it was a scarce commodity at GE. So much of what Welch did was designed to add confidence to the organization. Even in the early 1980s, by firing strategic planners and handing the reins back to the business leaders, Welch was giving his vote of “confidence” to the people who ran the businesses. Later, with his software phase, Welch sent another important message: not only do we want to hear from you, we want to make General Electric more engaging, and we will need you to make that happen.
With boundarylessness and the focus on GE values, Welch put more emphasis on the individual, infusing more confidence into the company. Over the years, confidence has been of immense importance to the GE chairman, as he felt that only an organization rich in confidence would perform at extraordinary levels. Welch felt that genuine confidence was quite rare, but that never stopped him from working tirelessly to embed it deeply into the psyche of General Electric.
Lessons in building confidence
1. Build strong businesses: Welch spent his first years as CEO rebuilding GE’s portfolio of businesses. He knew that employees would never have confidence unless they worked for a company that was competitive and winning. The hardware revolution was a crucial step in laying the foundation for the global juggernaut that GE would become in the 1990s. It was during this period that Welch built strong, stand-alone businesses that could compete on a global basis.
2. Let employees know that you value their ideas: In implementing Work-Out and making GE’s values such prominent parts of the culture, Welch was sending a vital message: things had changed. Although it hadn’t always been the case, GE was now interested in hearing from every employee. Thanks to Work-Out, someone on the shop floor could come up with an idea that would transform a process or help the company win a new contract. That was a powerful and important sea change, and almost all of Welch’s initiatives were designed to harness the collective intellect of the organization.
3. Push decision-making down the hierarchy: The effect of many of the Welch ideas was to empower people, putting more authority into the hands of those closest to the work. Before Welch’s hardware phase, GE was awash in layers and approvals and red tape. After simplifying the organization, the people who ran the businesses could control “their own destinies.” By having P&L responsibility over businesses that were growing, Welch instilled self-confidence into the GE management team. Welch always wanted employees who would have enough confidence to make their own decisions.
4. Use learning to build confidence: Welch’s learning culture ensured a steady diet of new ideas and initiatives. By viewing GE’s businesses as hundreds of “business laboratories,” he was creating an atmosphere that nurtured good ideas and pursued Best Practices. That high involvement culture enhanced the company intellect, thereby fostering self-confidence.