The Welch Legacy

Jack Welch achieved extraordinary results with uncanny consistency. He achieved double-digit growth year after year, helping to build his reputation as an iconic business leader who could do no wrong. He was a role model for others to emulate: Double-digit annual growth became the benchmark for all CEOs and corporations in America. Welch debunked many of the most common myths of management—for example, that the command-and-control model is the best way to run a large company. But his ultimate legacy is that he created a learning culture within a mammoth corporation that had an amazingly diverse business portfolio.

Welch defined a learning organization as an organization in which employees and managers soak up good ideas from everywhere. He felt that the organizations that would ultimately achieve a sustainable competitive advantage were those that continuously learned, and then translated that learning into action. He observed frequently that it was a badge of honor to learn from someone else. "You need to believe that you are a learning institution," he once commented, "and to constantly challenge everything you have."

In a learning organization, employees are given access to critical information and are expected to search out creative solutions to problems. This model is the antithesis of Frederick W. Taylor's scientific management, a hierarchical system based on the notion that the primary function of workers is to perform specific routine tasks endlessly. Since the early years of the twentieth century, scientific management had been regarded as the most efficient way to get things done within a large corporation.

However, this assumes that managers know how to break a system down into its component parts and run that system most efficiently. At the heart of any learning culture, in contrast, is the assumption that the company and its managers don't have all the answers. Before Welch, relatively few GE managers saw good reason to look outside the company for better answers. Welch put an end to the "not invented here" arrogance. He felt that it was every employee's responsibility to seek out the best ideas, regardless of their origin. He proclaimed:

The hero is the one with the ideas.

At GE, said Welch, it was not the "stripes on one's shoulder" that determined someone's worth to the company, but the quality of one's ideas. For example, during a trip to the United Kingdom in 1999, a GE manager told Welch about a "reverse mentoring" program in which the youngest people in the organization taught the oldest how to use the Internet. "It was the best idea I ever heard," said Welch, who implemented the idea with his top 1000 managers within 2 weeks.

The GE chairman made sure that he practiced what he preached, getting a mentor of his own. "We celebrate ideas," he later said, referring to his budding computer literacy. "We put them online."

To begin to inculcate this learning mind-set into your own organization, try implementing the following:

• LEAD BY EXAMPLE BY IMPORTING THE BEST IDEAS INTO YOUR ORGANIZATION. Never stop scanning the marketplace and the competitive environment to get new ideas. Consider inviting leaders from competing companies and other organizations to speak to your managers.

• REWARD THE EMPLOYEES WHO BRING IN THE BEST IDEAS. To reinforce your commitment to learning and adopting a Best Practices mentality, consider offering added incentives to those employees who bring in ideas that add to revenues and/or productivity.

• CELEBRATE NEW IDEAS. Welch said that GE celebrated new ideas. Honor the best ideas by putting them online or in the company newsletter. This will underscore the company's commitment to an idea-oriented culture.