In the early 2000s, Jack: Straight from the Gut was the first of two books I read that was either authored or co-authored by Jack Welch. Search for greatest CEOs, and he will show up on most lists. This book is an autobiography of Welch's business life. Now, over 20 years since he retired from business and since I first encountered the book, does Jack's story still have resonance today? I decided to listen to the audio book on a recent business trip to re-visit someone who inspired my career.
On this second time with the book, here were some of the highlights that resonated with me:
- Chapter 11 is entitled "The People Factory". Jack Welch was a big proponent of differentiation when it came to employees. He suggests breaking up your staff into 3 buckets: the top 20 percent who carry most of the weight in a team, the middle 70% who are essential to a company's success, and the bottom 10% who should be move on. In the first year of weeding out low performers, managers are OK with this strategy. The following year, it gets harder. Who is "bottom 10%" from the group who is left after the first round? Who do you replace in year 2? This was a hard thing for me 20 years ago, and still is today, even as I embrace the idea of differentiation. If we have a low performer who is not a productive part of the team, we need to make sure that person moves on to another position or career that is a better match for who they are. At SchoolPictures.com, we have two school representatives who are both former photographers. They are both doing a great job. I want and need both of them to continue their pursuit of excellence. In our photography department, we have about 30 photographers working for us now. In our weekly External Team meetings, I will often inquire about our top 5 or 6 photographers. I listen intently -- the future of our company is in that top 20%.
- Related to above is Jack's recognition of the three pillars of success: People, Strategy, and Execution. If you do not have the right people in place, NOTHING else matters. After that we need a good strategy and we must execute on that well. Strategy for me comes in two flavors. "How we will win" is the critical component. Setting goals for the future of the business is not strategy, per se, but it is part of the strategy process for me as it helps chart the course for the future of APM
- The other chapter worth visiting is Chapter 24, "What This CEO Thing Is All About." This chapter is potpourri of insights on what being a leader was all about. Bullet points include things like "The CEO sets the tone of the company," "People first, strategy second," and "Aligning rewards with measurements." This chapter was a simple checklist of business ideas that will feel obvious to most leaders, and Jack's take on them. Each one of those could have been a chapter. Indeed, in his next book, Winning, he does something very similar to this.
- Jack's friendship and working with Larry Bossidy. I had not remembered this aspect. Bossidy left GE at the age of 55 to become CEO of Allied Signal. The reason this stuck out to me is that Bossidy went on to co-author (with Ram Charam) two business books that had a profound impact on me: Execution and Confronting Reality. I will also be re-visiting those books in the near future as well.
- Jack quotes Peter Drucker: “Your back room is somebody else’s front room." This is reminder to outsource any function where your company does not add value. At American Photo Marketing, we do an excellent job of helping schools create yearbooks. We have a great design team, and we print softcover books in-house. However, we stop there. We outsource our hardcover books and the many manufacturing demands to our friends at Studio Source. There are many facets of our company where we have chosen NOT to outsource so that we have end-to-end control over manufacturing. The team we have in place is so good that the value we create is greater the cost to outsource those functions.
- Welch often regretted moving too slowly, and rarely remembered moving too fast. I can relate to this. I often have a sense of urgency to move forward in business to create a better work environment for employees, adapt to changing market conditions, or ensure we are creating the most value for our clients and customers. I don't think my team would claim I want to move too slowly. In face, it is often quite the opposite. Change can be a hard thing to navigate. I strive to balance the need to grow and change with the ability of the team (including me) to shake up long-held work routines. I often will say, "Nothing is too hard for the person who does not have to do the work." Often, that person is me. I can initiate the change, but I am not left doing the work. I try to be mindful of this as I initiate change at our company.
- Measure your variance, not your average. In the chapter on his implementation of Six Sigma, Welch talked about reducing variance in your manufacturing process rather than measuring averages. At American Photo Marketing, we have been measuring the average time to get proofs to graduates (about 36 hours in 2021). The problem with "average" is that I can have one foot in a block of ice while the other foot is in boiling water and the "average" temperature is just fine. In this scenario, the variance from the ideal temperature is what matters. Now, how to implement this? It will be yet another change that I'm looking to implement ...
