WHARTON LEADERSHIP CONFERENCE:  Insight from the Top

In less than two months, on June 18, some 300 managers, executives and professionals will gather at the Wharton School’s Huntsman Hall to hear from some of today’s top leaders. Here are brief updates on several of the speakers (click here for a complete list of speakers):  

Peter Cappelli, director of the Wharton School’s Center for Human Resources, has a new book due out April 10 from Harvard Business School Press: Talent on Demand: Managing Talent in an Age of Uncertainty.

Joe Nocera, business columnist for The New York Times, wrote an insightful essay in The New York Times Magazine about how philanthropists are exercising a greater leadership role in their charitable giving. 

And to find why Denzel Washington crosses a restaurant to meet American Express CEO Kenneth Chennault, read this Business Week profile tracing the earlier days of Chennault’s career. For more recent profiles, see USA Today’s “A CEO and a Gentleman,” and U.S. News & World Report, which named Chennault as one of the best leaders of 2007. Chennault’s own thoughts on leadership appear in Knowledge@Wharton.

Register now for the 12^th annual Wharton Leadership Conference on June 18.  
 

PHYSICIAN AND LEADER: How Surgeon Larry Kaiser Navigates Two Different Worlds

Larry Kaiser, chairman of the department of surgery and surgeon-in-chief for the University of Pennsylvania Health System, is responsible for more than 110 surgeons in his own department, and he leads one of the largest thoracic services in the country. Mike Useem recently spoke with Kaiser about the challenges of playing a leadership role -- not just in a major medical center, but also in a health care environment that has experienced radical changes over the last decade. An edited transcript of the conversation follows.

Useem: I'm going to begin with your own experience in a leadership role as chairman of the department of surgery since 2001. If you could talk through briefly the actions that you have taken to expand the university's surgical services during your years in this position: What have been the critical steps, and what kind of resistance or conflicts have you encountered along the way?

Larry Kaiser: I think in terms of critical steps, one thing that I might bring up [is that] to ascend to a role like this, there is no specific preparation that surgeons have, or for that matter any physicians have, that necessarily prepares you for a leadership role. So those of us who come to these roles come to them in different ways. From our standpoint, I took over a department that had been led by the same individual for 18 years. When my predecessor took on this job, being a surgical chair was a lot different; the priorities and expectations were different. Specifically, because we are so influenced by the reimbursement rates determined for us, not by us, the landscape had changed significantly. When my predecessor took over, the money was flowing in and there was no issue with professional fees. By the time I took over in 2001, professional fees had been reduced significantly. The Balanced Budget Act of 1997 was well into play. Hospitals were having a difficult time. I took over when the health system was just in the midst of beginning a recovery from a very difficult time in the 1990s.

But we had a vision, which I think I articulated fairly well to the faculty as to where I wanted to see us go, and we set out doing that. It required some significant changes in leadership. For instance, my predecessor was the chairman of the department. He was also the chief of the division of vascular surgery, chief of the division of transplant surgery, and program director for the general surgery residency. So I was immediately faced with making these appointments -- and not without some opposition, I would say. There were clearly people in each of those divisions who felt that they should be the division leaders. Right away I was faced with making some critical decisions that I knew would have a major influence as we moved forward.

From there it was really a matter of setting the tone, which under my leadership was significantly different than that of my predecessor. I, [unlike] many surgical chairs in the country, still maintain a busy clinical practice, and at the time I had a very busy clinical practice. In terms of leadership in a department of surgery like this, the credibility that one gains by still being a busy practicing surgeon can't really be overestimated. People see what you're doing, they know I'm in the operating room, I'm doing the same things that they're doing. It's very easy for chairs of clinical departments to remove themselves from the clinical piece and really be seen, I think, by their faculty somewhat as an outsider. So I had some credibility coming into this job.

In terms of the kinds of resistance, I think that my constituency, that is a group of surgeons, tends to be a fairly difficult group to work with. I don't think you could find a greater accumulation of cynics than you would find in a department of surgery and certainly in this department of surgery. One of the first things that I did was put into place an organizational structure that previously didn't exist in this department, and that included things like having regular meetings of the faculty -- which previously had not been held -- and meetings of the division chiefs on a bi-weekly basis, something that had never been done. I also had hired a chief operating officer who came with a considerable amount of experience and who really helped in terms of my own leadership development as well as in formulating the organizational structure that previously had not been in place. I think having put together an organizational structure that was transparent and had clear reporting relationships as much as anything set us on the right path.

Useem: Let me pick up on your observations about the style of the people that you are working with here. To the outside world, surgeons are often seen as a well paid, hard charging, fairly authoritative group of people. As they walk into the operating room, to what extent does this, at least this perception that many people have of surgeons, if true, get in the way of the teamwork and the flexibility required in the operating theatre?

Kaiser: I think you correctly point out that all surgeons, whether on the surface hard charging or not, must have some basic leadership ability. Something as simple as seeing a patient, recognizing what they need to have done, putting a team together to do an operation on a patient requires some leadership skill, albeit not the same as leadership skills when looking at the bigger picture. But still, the surgeon is the leader of the team, and any day a surgeon is in the operating room, he or she is leading a team. So right off you're dealing with people who see themselves in leadership roles and, by definition, do come with some skepticism of being told what to do by others and, for that matter, being led by others. Many of them are quite independent, and that independence is fostered on a daily basis. 

So I think the challenge for someone leading a department like this is really just to be able to set the course and then to engage people in that vision and [get them] to join you in really pursuing the course. One of the things that I did at the beginning was to make it very clear where I thought this department needed to go, the kinds of things that I thought we needed to do, recognizing that we had some tremendous advantages here. We had a large research endowment that had been built up over many, many years. The first endowed chair of surgery in the country is the chair that I now hold, so the endowment goes back to the mid 1800s. There's really no other department of surgery in the country that has the type of resources that we have in terms of endowment income that we can use for research purposes. 

Useem: Let me ask about the experience of your own and your fellow surgeons in the operating room with teams that are constantly changing. So as you walk in, it may be a different anesthesiologist from the day before. The residents, the technicians, the nurses working with you are ever changing. To establish your own authority, to build the teamwork needed to work with this team in the operating room, what does it take? What are the leadership qualities that are essential to make that happen?

Kaiser: It takes somebody who is very confident in [his or her] own abilities. I think you're correct in your perception that often we are working with different people on a daily basis. The problem is that much of what we do is based on teamwork, and we've had a major emphasis in this department as well as other departments around the country on patient safety. To really achieve optimal patient safety, especially in the operating room, does take a team approach. So on the one hand, if we're working with different people each day, one has to very quickly be able to form a team, work closely with that team, but we do that by standardizing a lot of the things that we do in the operating room. 

Ideally, there is some consistency on the team, even if it's not every member. For instance, I work with one scrub nurse essentially every day I'm in the operating room despite the fact I may be working with a lot of other different people, certainly different anesthesia people, different residents, different anesthesia residents, different technicians. So, yes, there are a lot of people who are different, but then we try to maintain some level of consistency on the team as well. And often that individual is the one who's saying, "Here's how we do it." Yes, it is a challenge, but it's a challenge that we need to meet every day because of the tremendous emphasis we place on patient safety.

Useem: Two separate questions here: What's the most challenging part of being in the operating room, again from a leadership standpoint? And then, really a separate question, what's the most challenging aspect of your service as department chair and surgeon in chief?

Kaiser: There are different challenges that we face in the operating room each day. For me, one of the challenges is I have a lot of issues going on outside of the operating room, and I need to be able to put those behind me as I go into the operating room, recognizing that I'm going to be out of commission with respect to leading the department. On the other hand, things don't happen minute-to-minute leading a department like this, but they do happen minute to minute in the operating room. So the challenge is working in different environments, totally different environments. Working as a department chair outside of the operating room, working inside of the operating room, are really two different roles, yet I think the leadership piece bears a lot of similarities. 

I learned that lesson early on when I was asked a question about a surgical pathology issue, even before I had officially started the job as chairman. I made a statement about the surgical pathology service. It got around and it came back to me that the department of surgery had spoken, not Larry Kaiser, and I learned quickly that one has to be fairly careful how you phrase things because it's now the department of surgery speaking as opposed to just one individual speaking. Whereas in the operating room, yes, I'm functioning as an individual as part of a team, but outside of the operating room I'm really functioning as the department of surgery as such, and I'm seen as representing that department. 

Useem: Surgeonshave often been seen as one of the engines of income for a hospital, an engine of growth, if you will. With the government cracking down on Medicare payments, is this still true? Will it be true in the future? What's the role of the department of surgery here and elsewhere in serving as a major source of income for hospitals?

Kaiser: There's absolutely no question that procedural specialties, especially departments of surgery, still are the major driver of margin for hospitals, and they are the major drivers of revenue. It's the activity in the operating room that drives the revenue of health care organizations. There's absolutely no question about it. That being said, we have to differentiate between revenue being generated on the hospital side and revenue being generated by professional fees [that come from] the practice of surgery. 

On the one hand, we've seen some significant decreases in reimbursement for the professional service side of things, but hospitals by and large are still doing well based on revenue from procedures. Specifically, the dominant procedures are those that occur in the operating room as well as in the cath labs and other places. You then have to look at the direct costs that are involved in supporting those activities, but by and large if you look at the services that drive hospital revenue, it is still the surgical services that do that. I think that's going to be the case for a long time to come.

Useem: Looking back over the last decade, thinking about surgery as a specialty, what are some of the changes in the profession that you have been part of, have witnessed, have seen? Second part to the question: Is surgery as appealing to medical students as it has been historically? Is it still as appealing now? Third question here is the entry of more women into surgery. Is there a trend that you've seen over the last couple of years of more women coming into surgical specialties?

Kaiser: I think in terms of how the specialty has changed -- and when we talk about surgery as a specialty we're talking about really multiple areas of specialization -- [it comes down to] the improvement in technology. What we've seen is a marked shift in the kinds of things that we're able to do, especially in high priced technology.

If you look at what has occurred over now the past almost 20 years with the shift toward more minimally invasive approaches to operative procedures and the technology that's involved in that: We are now doing many operations with robotics. Very expensive piece of equipment, yet what that's allowed us to do is to work through very small incisions, allowing patients to leave the hospital early, allowing patients to have less pain following a surgical procedure. The classic example of that is prostatectomies. Now with robotic prostatectomies you have a very expensive piece of equipment, but it also allows one to do that operation where the pain from the operation, the recovery from the operation, is significantly quicker, and it's really a better operation. But it comes at a price.

You had asked me a little bit about medical students: Just briefly, 50% of medical school graduates these days are women. Surgery in the past had been a field where women had not, at least in general, been attracted to it. One of the things that we've worked on is making the field more attractive to women. Family issues are particularly important for both men and women, and when you survey medical students, lifestyle issues really are the key to choosing a specialty. We have worked very hard to try to convince people that one can have a very active and satisfying lifestyle and yet still be a surgeon. There are a number of specialties in surgery that one can choose from, and we hope to continue making our specialty as appealing to as many people as possible. 

But the numbers show that fewer people, far fewer people, are entering surgery now than in the past, especially certain areas. We've had a tremendous problem in cardiothoracic surgery, in attracting people into the specialty, and that really is one of the biggest challenges that we face in that field.

Useem: To what do you attribute that decline?

Kaiser: Again, I think the lifestyle issues. There's a perception that the lifestyle in cardiothoracic surgery may be somewhat limiting. Also, one has to deal with the issue that reimbursement is not what it was. People are looking at perhaps 10 years of training following medical school. When the rewards are not quite what they used to be and you can do other specialties and have a much nicer style of life, the other specialties are just attracting more people who used to be interested or who previously would have gone into cardiothoracic surgery.

Useem: Two final questions here to wrap up. Looking back at your last six or seven years as chair of the surgery department, what's the best part of the job? What's the toughest part of the job?  

Kaiser: The best parts of a job like this are being able to work with a tremendously talented group of people and seeing them excel and seeing how well the department can do. When you take a job like this, you have to be willing to sacrifice your own personal goals for the goals of the department. One has to derive the major satisfaction from seeing how the department itself does, how other individuals do. I've been tremendously satisfied to see us produce some incredible individuals here as well as to see this department do extremely well.

I think the most challenging parts of this job [stems from the fact that] I serve a lot of different masters. I have the health system where I have concerns. I have the school of medicine where I have concerns. I have my own patients where I have concerns. So I think you have to be willing to be able to deal with multiple constituencies. Certainly not everybody sees things the way I do. It's been a challenge to work with various groups of people. It's a very satisfying challenge, but it's clearly a challenge. 

The other thing, of course, is we have a lot of non-surgeons who are employees in this department, and we've got to create an environment where people want to come to work. None of us could do this without having administrative assistants and nurses and technical people who want to work with us. I'm pleased to say we've really created an environment here where people like working. We have very low attrition. So I think that's the most challenging part.

Useem: One final question for you here. If a professional friend were to call you up who has had an offer to become chair of a surgical department at a major medical center or hospital around the country or abroad for that matter, in light of your experience in leading this department and this university medical center, what advice would you have? What personal guidance would you provide the person?

Kaiser: Well I've certainly been called upon to offer that advice. I think it's a great job for the right individual. I don't think being a chair of a major department is right for everybody. What I'm looking for if somebody asks me that question is what that individual's motivation really is. If they truly are motivated by the desire to surround themselves with talented people and to get their satisfaction by how the department does and how other individuals do and they're willing to put their own individual needs behind them, then I think it's a great job. 

But if somebody is in the midst of a tremendous research career and they think that they can continue being successful in their research career just as they had been and yet still lead a major department, I think it's probably not the right job. They would find some significant frustration. So I think for the right individual who's at the right point in their career, it can be tremendously satisfying. I get up every day looking forward to coming to work. It's a great job. For me, it's ideal.

Note: This interview was first published March 13, 2008 in Knowledge@Wharton.
 

CRUCIBLES OF LEADERSHIP: When Experience Isn’t Enough

By Robert J. Thomas 

Robert J. Thomas has spent a lifetime exploring what makes leaders great. The 2002 book he co-authored with Warren Bennis, Geeks and Geezers, investigates how age and values shape leaders and has been translated into 11 languages. Thomas is executive director of the Accenture Institute for High Performance Business, as well as a professor of leadership at the Fletcher School of International Affairs at Tufts University.  In his new book, Crucibles of Leadership: How to Learn from Experience to Become a Great Leader, published in March by Harvard Business School Press, he examines how challenging experiences, both on and off the job, are the raw material of leadership. Below is an excerpt:  

Are you the most effective leader you can be? 

Most people will admit they aren’t. They read books and articles and attend the occasional workshop. In moments of doubt, they will search out a coach or a mentor. Like Tony Soprano, a surprising number watch the History Channel, hoping to glean some insight about how leaders are born and grown. Their intentions are good, but still they struggle to find a way to increase their leadership acumen—and that frustrates them. 

The struggle is understandable. Time is scarce. People in management roles, whether in business, in government, or in nonprofits, work so hard and so long that they just don’t have time to spare, even for things that they might truly value, like developing themselves as leaders. It’s hard to learn just from books and seminars. A classroom is a sterile environment, and the half-life of most training is notoriously short. Learning styles vary enormously, and too often there isn’t a good fit between teaching style and learning style. Off-site workshops may be good for clearing the head, and a barefoot stroll over hot coals may boost self-confidence, but it’s tough to keep the learning fresh when you go back to a situation that’s completely unchanged. And finally, it’s difficult to learn just through observation. Too often people say they can only snatch a glimpse of good leadership in action; and hearing someone deliver a great speech is not the same as sitting them down and picking their brains about how they do what they do. 

Still, some people do grow and improve as leaders. Like consummate actors and athletes, they find ways to take it up one notch and then another and another. If they’re not reading more or attending more classes or they don’t have loads of free time to reflect, how do they become more proficient? The answer is experience. For all the wide-ranging theories of effective leadership, almost everyone agrees that anyone who seeks to lead must get firsthand experience: get their feet wet and their hands dirty, seek out challenging assignments, volunteer for foreign postings, work for great leaders (and even for bad ones)—and learn as much as possible. 

But there’s a hitch. Two people can have the same experience and come away with profoundly different reactions: one may blossom and grow while the other is unchanged or even depleted. The same can be said for any pair of fired CEOs, successful project leaders, failed entrepreneurs, rookie supervisors, and those on international duty. 

Experience by itself guarantees nothing. 

To complicate matters, many memorable leadership experiences don’t occur at scheduled times or in convenient places, like work or school. For instance, when pressed to identify an experience in which they learned something important about leadership or about themselves as leaders, the men and women interviewed for this book rarely pointed to events experienced in conventional training courses and MBA curricula. Instead, they described transformative events that occurred outside their professional lives as often as they cited ones that happened on the job. The most profound among those experiences—the crucibles that led to a new or an altered sense of identity—were nested in family life, wartime trauma, athletic competition, and/or personal loss far more often than in work assignments. 

What exactly is a crucible? In medieval times it was the vessel in which alchemists attempted to turn base metals into gold. In a leadership context, then, we can think of a crucible as a transformative experience from which a person extracts his or her “gold”: a new or an altered sense of identity. A crucible is not the same as a life stage or transition, like moving from adolescence to adulthood or from midlife to retirement. Life stages can be stressful, even tumultuous; but, unlike crucibles, they tend to be gradual, reasonably predictable, and patterned. Crucibles are more like trials or tests that corner individuals and force them to answer questions about who they are and what is really important to them. 

Consider Bob Galvin, Motorola’s visionary former CEO and chairman of the board, who shepherded the company from analog to digital technology and into the coveted status of preferred supplier to auto giants like Toyota. When I asked him to tell me about a time when he learned an important lesson about leading, Galvin remembered an event from his early years when he worked in one of his father’s factories. 

Galvin was just seventeen, and he’d just made his first big mistake—one that shut down an assembly line. He knew that the plant supervisors could easily have had great fun at the expense of the boss’s son. Instead, they helped him resolve the problem in minutes and said something that encouraged him to keep learning for the rest of his life: “I overheard one foreman saying to another, ‘No problem with Bob. If he happens to screw it up, we can point it out to him, and we can get on and get the job done right. Hopefully he does it right most of the time.’” A small compliment, perhaps, but one that had a lasting effect on Galvin and on the company. Galvin credits that factory foreman for helping him gain the confidence to make mistakes and to learn from them. 

The moral of Galvin’s story? While experience matters, what matters more is what one makes of experience: how a person comes to recognize in a crucible experience that something new or important is happening, to see beyond the discomfort, perhaps even the pain, of new and unexpected information and to incorporate that information as useful knowledge, not just about the world but, as likely, about oneself. Extracting insight from experience is a competence especially relevant to men and women in leadership positions in business and government, and to those who aspire to leadership, because their professional lives so often consist of complex, uncertain, and fluid situations for which there is no practical guide and where resolution depends on the exercise of judgment. Judgment can only be acquired through experience. 

What distinguishes men and women who grow through a crucible experience is not breeding or intellect. Talent plays a role, undoubtedly, but it is a supporting role. No amount of native talent can prepare a leader for the infinite variety of circumstances she will face or the challenges she must surmount. No gene for resilience ensures that gems of wisdom will suddenly appear amid the turmoil of a crucible. 

Instead, what sets these leaders apart is their approach to learning. Rather than wait for the right moment to arrive, they discover and exploit learning opportunities. Rather than partition their lives into periods of action and periods of reflection, they do both, often on a daily basis, sometimes in precisely the same moment. Rather than complain about the scarcity of time to learn, they make time. Like accomplished performers in sports or music or the arts, they practice as strenuously as they perform. And when, as often happens to organizational leaders, they find themselves onstage much of the time, they learn how to practice while they perform—not simply to learn by doing, but to learn while doing. 

This is a book about leaders who are skilled at transforming crucible experiences into lessons that make them personally more effective and that, more importantly, result in improved performance on the part of the organizations they lead. But this is a book for anyone who aspires to leadership. I say that because one of the most important findings of the research on which this book is based is that the ability to mine crucible experiences for insight can be learned. In fact, intensive, long-term conscious practice at it can trump native talent. Practice establishes a state of continuous preparedness: awareness of oneself and one’s capabilities and alertness to important events, like crucible experiences, so that they can be learned from. 

Crucible experiences are not only defining moments; they can also be a valuable starting point for discovering a form of practice closely attuned to an individual’s aspirations and motivations—something I refer to as a Personal Learning Strategy. That is, crucibles trigger a search for meaning: Why did this happen? Why did it happen to me? What should I learn from this for the future? Handled properly, crucibles can catalyze a vigorous and sustained interior dialogue that leads to deeper self-understanding and enhanced performance. 

By paying close attention to the words and stories of a wide variety of leaders, we can gain skill in recognizing the context and the trajectory of a crucible experience. Moreover, we can become alert to the “warning signs” of an impending crucible and identify the skills necessary to cope, respond, and learn.  

Note: The above passage was excerpted from Crucibles of Leadership: How to Learn From Experience to Become a Great Leader by Robert J. Thomas. Copyright © 2008 Harvard Business School Publishing Corporation; All Rights Reserved.
 

FIVE SYMBOLIC ROLES OF LEADERSHIP: Jack Welch’s Letters to GE Shareholders 

By Mark Hanna

The art of leadership requires mastering the tools of rhetoric. Open any leader’s bag of tricks and you’ll find language and figures of speech endowed with powerful cultural resonances. Handled skillfully, these special forms of language can produce a captivating if not magical effect upon an audience, like watching Arizona Diamondbacks pitcher Randy Johnson throw a no-hitter or New York Yankees batter Alex Rodriguez slam a home run. 

A recent article in the interdisciplinary journal Human Relations explores how master communicator Jack Welch used such language in his communication with General Electric shareholders. The December, 2007, article, “The transformational leader as pedagogue, physician, architect, commander, and saint: Five root metaphors in Jack Welch’s letters to stockholders of General Electric,” authored by Joel Amernic, Russell Craig, and Dennis Tourish, examines the body of Welch’s annual letters to shareholders from the years 1981 to 2000 and explores how Welch’s rhetoric advances his goals of transformational leadership.   

Five Symbolic Roles

According to the authors, “transformational leaders seek to transform attitudes, values and behaviors by projecting ‘extremely high levels of self-confidence, dominance, and a strong conviction in the moral righteousness of his/her beliefs.’” In the service of this strategy, leaders use a variety of theatrical and rhetorical devices to communicate with their followers. One key device is the metaphor, a figure of speech comparing two ostensibly unlike things and implicitly revealing their commonalities.  

To harness the power of language, leaders often seek to embody certain symbolic roles. Martin Luther King, Jr., in the final speech of his life, for example, said to his followers that he had “seen the promised land,” even though he might not get there himself — a clear metaphor likening himself to the biblical prophet Moses, who led his people to the promised land but died before reaching it himself. Similarly, Welch adopted roles that resonated deeply with his readers.  

The authors identify five symbolic roles Welch assumed in his writing: pedagogue, physician, architect, commander, and saint. 

Pedagogue:  Throughout his tenure as CEO, Welch frequently took on the role of teacher, speaking about achieving excellence in management control and strategy. His syllabus included topics such as reducing GE’s bureaucracy, using financial measures to motivate employees, and increasing quality through the use of his famous “Work-Out” sessions (corporate “town meetings”) and the adoption of a Motorola-style Six Sigma program. Welch teaches about the desirable features of corporate social responsibility in the 1980s, important macroeconomic policies America should pursue the importance of competitive values, the desirability of speed and change, and the three initiatives that fuel powerful growth: globalization, services, and Six Sigma. As a teacher, he was skilled in the arts of definition, making complex matters simple, and most of all, telling a good story to drive home a point about GE culture. 

Physician:  In the twenty letters, Welch occasionally took on the guise of a physician, someone expert in diagnosing corporate health and prescribing cures. One cure was “differentiation,” a three-tiered system of evaluating and rewarding employees. The top 20 percent were to be honored and promoted with large raises, the middle 70 percent nurtured and encouraged with solid pay increases, and the bottom 10 percent encouraged to find greener fields elsewhere. For Welch, the beauty of differentiation was that, when handled with candor and transparency, it gave employees a clear idea of where they stood and allowed the cream to rise to the top. It also improved company morale down in the trenches by ensuring that non-contributing employees were moved out of the organization. Given the unparalleled success GE has had in nurturing and promoting leaders, some of whom moved on to become heads of other iconic companies like Chrysler and Boeing, Welch’s doctoring proved effective. 

Architect:  In more than a few letters, Welch took on the mien of architect. The authors note: 

As the ‘architect’ in charge of GE, his view is that GE’s ‘social architecture’ should engage ‘every mind in the company’ and remove ‘organizational and functional obstacles to the free and unimpeded flow of ideas; be ‘more high-spirited, more adaptable and more agile than companies of fraction of [its] size’; be ‘lean and agile’; and ‘move faster, [and]…pare away bureaucracy.’  

They go on to note that Welch frequently used architectural language such as “built,” “plan,” and “foundation.” In a 1995 letter Welch wrote, “Our dream, our plan, well over a decade ago was simple…we wanted to build a hybrid.” He makes numerous references to the need to remove “an entire layer of upper management structure,” and to “layers.” Building tall and narrow organizational structures was not on Welch’s agenda. 

Commander:  Welch routinely uses the language of a commander. The authors observe: 

Welch assert that he engages in ‘major moves,’ ‘tasks,’ and ‘strategy.’ His objectives include ‘focusing on being number one or two in fifteen critical businesses’ in a world in which he conceives definable ‘winners and losers.’ 

Like a good four-star general, he uses terms like “heroic effort,” “impossible targets,” “hits or misses,” “trajectory,” “momentum,” “camaraderie,” “esprit,” and “liberation and empowerment.” Welch uses such language so frequently that it is second nature for him. 

Saint:  The authors observed that Welch enhanced his rhetorical stance by “assuming a ‘saintly’ demeanor—in essence, by asserting that his orders are rooted in positive human values and [that he is] articulating the real best interests of those to whom they are directed.” Under Welch, GE is “portrayed as having the saintly virtues of compassion, and as imbued with a fervor to engage in a ‘program of liberation and empowerment.’” They go on to say that GE is a company capable of “creating ‘the spirit and soul of a small company,’ of never putting one foot ‘outside the line of absolute integrity,’ and of always behaving ethically. Welch asserts a ‘commitment to ensuring ethical behavior by all employees in business dealings with the government…and to continue [GE’s] policy of voluntary disclosure of problems to governmental authorities.” As Welch freely admits, GE has had its share of legal transgressions over the years, and as the man sitting in the CEO’s chair, he had to continually reinforce the norm of integrity. Furthermore, he instituted a number of educational reforms and management processes to make sure employees were fully aware of what constituted unacceptable behavior. 

The Interplay of Roles

Having laid out the five symbolic roles that Welch assumed, Amernic and his colleagues then analyzed how often Welch used each one over the 20 years of annual shareholder letters. For certain technical reasons laid out in the paper, the authors decided to look at the number of instances of symbolic role language in the first 10 occurrences of the keyword “we.” Over the entire span of his career, Welch tended to favor the three roles of pedagogue (78 instances), commander (53), and architect (19). His least favored roles were physician (7 instances) and saint (2). Using this particular approach, it is interesting that over the three major phases of Welch’s career at GE, he was remarkably consistent in the preference orderings of these roles, even though a finer-grained analysis did show some usage variation dictated by his strategic goals at the time. 

Welch’s 1993 annual letter promoting the idea of “boundaryless behavior” shows the sophisticated interplay of Welch’s five root roles.  The authors describe Welch’s virtuosity this way: 

He began by adopting the saintly pose of committing himself to ‘empower’ GE staff. Then, as an architect, he makes it known that under his leadership, GE will empower employees by adopting three operating ‘foundations’—‘boundarylessness,’ ‘speed,’ and ‘stretch.’ As a pedagogue, he justified his decision by then proceeding to teach us about the harmful effects of ‘layers’ in organizations; and then, in the guise of commander, he explains how it is incumbent on him to pierce ‘the walls of 100-year-old fiefdoms and empires called finance, engineering, manufacturing, marketing and gathering teams from all those functions in one room.’ Welch the physician is on display immediately thereafter in describing how boundaryless behavior ‘shows up.’ So, what Welch engages in is a coordinated assault, drawing upon all of the root [roles] to achieve a rhetorical agenda.

Final Observations

Annual letters to shareholders fall into the classical rhetorical category of epideictic discourse, a formal style of communication that praises, blames and inspires — and has license to be more ornate than everyday business writing. This style is found in ceremonial speeches, like Lincoln’s Gettysburg address, or the President’s annual State of the Union address. In the annual letter to shareholders, the CEO must address both the company’s greatest fans and sharpest critics in a way that they accept the message and allow him or her to move the strategic agenda forward, no easy feat. 

A key factor for assuring that the message is well received is alignment. When addressing shareholders, the CEO’s language must align with reason, appropriate emotions, and character. The matter of character is of such primary importance that Quintilian, the famous Roman rhetorician, defined the ideal orator as a “good man skilled in speaking.” Through his inspiring example, Welch shows us the way. 

Note:  Mark Hanna is a freelance business researcher and writer based in Cedar Rapids, Iowa. He can be reached at markhanna@mchsi.com.

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 University of Pennsylvania