While it seems perfectly clear to me, sometimes folks have a difficult time connecting the dots when I rail against Wall Street, the outsourcers, the academic elite and the ‘by the numbers’ execs. The destruction their twisted views of business and value is wreaking on American manufacturing can be hard for some to see, I guess. I owe a debt of gratitude to the Arizona Daily Star, Jack Welch and MIT for making the matter a lot clearer. Please read the sobering article to which this link takes you.
All finished? Any questions? In case there is any confusion, this is the architect of the downsizing of GE’s vast Appliance Park in Louisville by about 75%; and GE’s sprawling aircraft engine plant in Cincinnati by about the same; and the outsourcing of virtually every phase of locomotive manufacturing in Erie except for final assembly; and the conversion of GE from what was once, perhaps, the world’s greatest manufacturer to what is now predominantly a finance company.
"Don’t fall in love with your employees," he says. "If you have sixteen employees, at least two are turkeys," he says. "And don’t bother trying to improve the performance of underachievers in the bottom 10 percent of the company’s work force, he said. Tell them they’re not suited to their jobs, and give them a way out."
This wretched excuse for a manager has boiled people down to numbers in the name of tough management. If you have sixteen employees, at least two are turkeys – sight unseen, no questions asked – don’t bother trying to help them. Worst of all, this wretched excuse for leadership is the darling of Wall Street, and the author of a management book that skyrocketed to the best seller lists. He didn’t just talk the talk either. He walked the walk to the ruination of thousands of families of hard working, dedicated GE employees.
The basis for the worship? Increased market value for the stock of GE. I suggest that the owners of that stock sell soon because he gave away GE’s value adding capability for the long haul in order to create that paper wealth. (Thanks CNN for the GE stock chart to the right that shows just how short lived Jack’s management success has been for his Wall Street friends) In fact, the utter inability to understand and manage manufacturing at a
level even remotely close to Toyota’s drove his strategy of turning factories into paper. As the CNN chart shows, this "management guru" sold GE’s soul – its manufacturing capability – to the devil for a few years of riches.
His 70/70/70 strategy – outsource 70% of everything GE does, with 70% of that outside the US, and 70% of that to India – decimated thousands of families. Same deal – do it by the numbers – 70% sight unseen, no questions asked, no exceptions. When you are slashing people’s lives, I suppose there’s no point in stopping at the 10% at the bottom.
And there he is at MIT – at the Sloan school of management, no less – which is quite appropriate. Alfred Sloan would have loved Jack Welch. By the numbers, people are the enemy of the company. Take care of the immediate financial lust of Wall Street – long term and all other stakeholders be damned. Yeah, Jack is Alfred’s kind of guy.
And MIT will crank out another classroom full of America’s best and brightest imbued with the belief that business is nothing more than a mathematical endeavor aimed at dismantling factories and families as fast as possible in order to funnel as much cash as possible, as soon as possible into the hands of a few managers and brokers.
Some kind of leader, Jack. You got personally rich by turning Thomas Edison’s legacy manufacturer into a loan sharking outfit, and now you are teaching the next generation of managers how to follow in those shallow footsteps.
And MIT? Is the shadow of Sloan so long that you would invite this abomination of a manager in, rather than a senior executive from Toyota who could explain to the fresh, young minds how building plants and committing to people yields greater long term results for all concerned?
Note: After posting this, I realized that I had failed to show Mark Graban over at the Lean Blog the profesional courtesy of noting that he had already unleashed his own venom at Mr. Welch over the same article. I aplogize for going right into the rant mode without doing my normal due diligence. I urge the reader to visit the Lean Blog where Mark has asked the rhetorical question, "Is Jack Welch A Turkey?" Of course he is – it’s a stupid question – but Mark has written a great piece in spite of the title.
Spencer McDonald says
These are great points you make about Jack Welch. He seemed like a brilliant leader, well to those on Wall Street who were looking only at the numbers. Truth be told, the real way to run a successful long term business is by making your employees family. And a family will always protect those in the circle from evil events. This is a key philosophy of Toyota’s. So, if an American corporation thinks that out sourcing, and living and dying by the numbers alone will get you as a leader recongnized, let me say to you you are living in a house of cards. Those cards may look good and in the end they will fall and so will you sterling leadership.
Bryan Redd says
Strangely, at one point Deming apparently admired Jack Welch as a manager. How can that be, when JW’s view of employees is in such stark contrast to Deming’s? Deming said it was management’s responsibility to improve the system and enable each employee to perform their jobs better. Deming recognized that in any stable system (in statistical control) 50% would be performing above average and 50% below average, and there would be employees at both ends of the performance curve—and nothing can be done to change that. What can be done—and it is MANAGEMENT’S responsiblity— is to continuously improve the system so its overall performance improves and when that happens the performance level of all employees, from the on both ends of the performance curve will be improved.
“Short-termitis” (the focus on short-term financial results) is the primary source of the destructive trends in American companies, including manufacturing. Unless we alter that, I’m afraid that our future is going to be very different that our past.
Mark Graban says
Bill, I don’t blame you for finding it hard to control your ranting. Rant on!! There’s plenty of things that can be said about this turkey.
Jon Miller says
Amen, Bill.
Barry "aka the Hillbilly" says
Thanks for the post Bill and Mark over at the Lean Blog.
I think one of the most telling quotes of Jack’s was the following.
‘I don’t think integrity is a value. How can you measure it?’
Sounds to me like ole Jack might not have a lot of characteristics that you can’t measure as he put it. This quote speaks volumes about Neutron Jack.
Well integrity is a value and its also valuable. It also seems to be in short supply recently in the Corporate Boardrooms of America. The mess at HP being only the most recent example!
What has gotten into these so called Leaders. When in the past was it acceptable to basically dismantle and obliterate whole economic portions of a community (Louisville’s Appliance Park, Cinncinatti’s GE Engines). In some twisted sort of way people who do these things today are looked up to as models of Leadership. What’s the world coming to?
Well Warren Buffett had the following to say about Integrity in managers. I get the impression that Warren still thinks Integrity matters.
“Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy, and if they don’t have the first, the other two will kill you!”
I guess I will have to say that I don’t agree with Mark’s question. Is Jack a Turkey? The American Turkey is an intelligent and majestic bird. Ben Franklin thought a lot of the Turkey. No I think that might be an insult to the Turkey, Jack’s more closely related to the birds of the Vulture family.
Bill Waddell says
You’re right, as usual, Barry. Calling Welch a turkey does a great injustice to innocent poultry. I apologize to turkeys everywhere.
And his attitude toward integrity tells the whole Jack Welch story – if it can’t be boiled down to numbers, it doesn’t matter.
Mark Graban says
What is the ROI on integrity???
Barry "aka the Hillbilly" says
That’s an easy one Mark.
It’s Supercalifragilisticexpialidocious !
Mark Graban says
Here’s a fun one — go to google and search for
jack welch turkey
Mark Graban says
I’ll point out more specifically — my blog post on him being a turkey comes up #1.