November, 2001, Volume 6, Number 2

By Arjun Ramaprasad, Wharton MBA Student (WG ’02) 

Under the sponsorship of the World Affairs Council, Jack Welch, the recently retired chief executive of General Electric, visited the Wharton School on November 19th to promote his recently published book, Jack: Straight from the Gut.  His commentary touched on a range of topics: 

On leadership:  Mr. Welch said that leaders should realize that an organization cannot succeed through the efforts of one person.  They should try to boost their employees’ self-confidence and give them a chance to try and succeed.  Once people succeed, they will gain confidence and come back for more.  He noted that the leadership qualities that cannot be easily taught are passion and the ability to energize others. 

On customers:  Mr. Welch believes that one of the main reasons for his success at GE was due to his constant interaction with customers, many of whom he personally met during the spring and fall of each year.  

On bio-technology:  Mr. Welch suggested that one of the hottest areas of the economy in the future will be in biotech and diagnostic imaging, and he regretted the fact that he as CEO of GE did not have the courage to purchase a biopharmaceutical company, fearing stock dilution.  

On shareholders:  Mr. Welch said that during tough economic times, companies must take measures to differentiate themselves, and that Wall Street cares most about credibility and delivery.  He observed that it is quite difficult for corporate leaders to “eat while you dream” – planning for the long-term while delivering results in the short term – but they must do so.  

On employees:  He urged his managers to deliver results for their employees – who hold a significant portion of GE’s stock – rather than focusing on delivering results to investment managers.  He added that jobs should be rewarding to both the soul and the wallet.  GE’s culture stresses the respect of human dignity and that every employee’s ideas count.  

On globalization:  Mr. Welch spoke in support of globalization and believed that it is the only sure way to let the “have-nots have what the haves have.”  Speaking about GE’s successes in Hungary, India and China, he said that companies should look at developing markets and their people as supply-chain partners and intellectual capital rather than simply a mass of potential customers.  

On acquisitions:  Responding to a question about the European Commission’s (EC) rejection of the Honeywell-GE merger, Mr. Welch noted that the organization was not that old and has a steep learning curve ahead.  He added that the King of Sweden and the President of France had backed other merger deals that were also rejected by the EC, and as an Irish man from Boston he thus found himself in good company.  In negotiating an acquisition, Mr. Welch said that it is always good to leave something on the table for the other side, especially if you are building a long-term relationship.  

On opportunities:  Mr. Welch advised new graduates to avoid opportunities that may seem lucrative in the short run but were not really what they wanted to do in the long run.  He advised graduates to be themselves and take jobs about which they were passionate, saying that foregone income in the short-run will be more than made up for in the longer term.  He felt encouraged by the fact that young people are more eager to follow their own passions, especially after the disaster of September 11, 2001. 

On responsibility:  Mr. Welch asserted that people should not be embarrassed about winning since companies that prosper can give back to society.  General Electric has helped some 20,000 employees become millionaires, and it has facilitated the involvement of more than 50,000 employees in community service.  

On mentoring:  Mr. Welch ascribed much of his personal success to his mother, who always gave him the confidence that he could succeed despite his early shortcomings. 

“Getting the right people in the right job is a lot more important that developing a strategy.” 

“I’m over the top on lots if issues, but none comes as close to the passion I have for making people GE’s core competency.” 

“When people make mistakes, the last thing they need is discipline.  It’s time for encouragement and confidence building.  The job at this point is to restore self-confidence.  I think ‘piling on” when someone is down is one of the worst things that any of us can do.” 

“There is probably nothing worse in business that to work for a boss who doesn’t want to win.  This can happen anywhere, at any level – and probably occurs more often than we think.” 

“Over the years, I called Reg [Reginald Jones, the previous chief executive] a lot.  I never did a major thing without letting him know – even though he left the board the day I became chairman.” 

“Making initiatives successful is all about focus and passionate commitment.  The drumbeat must be relentless.  Every leadership action must demonstrate total commitment to the initiative.”  

“I’ve learned in a hundred ways that I rarely regretted acting but often regretted not acting fast enough.”  

“When all is said and done, teaching is what I try to do for a living.”  

Source:  Jack Welch with John A. Byrne, Jack: Straight from the Gut (New York: Warner Books, 2001).

Petróleos de Venezuela, PDVSA, is one of the largest oil producing companies in the world. To help attain its mission in a highly competitive environment, PDVSA has developed an educational strategy that is implemented through the Centro Internacional de Educación y Desarrollo (CIED) – the International Center for Education and Development – the company’s corporate university. 

CIED has developed an educational program for high potential personnel.  The program – “Educational Proposal to Leverage Organizational Alignment Processes” (“Propuesta Educativa para Apalancar Procesos de Alineación Organizacional”– aims to create a learning environment that allows fast learners the opportunity to acquire knowledge and know-how and to provide them with opportunities to test and experience directly what they have learned, emphasizing their ability to quickly use the acquired tools. Through action learning, the program is intended to develop and focus the company’s intellectual capital around its business strategy, and ultimately to help its  business units remain competitive in a more challenging market.   

The PDVSA Gas Human Capital Development Program provides an example of the model’s application.  This business unit has been assigned more complex and demanding responsibilities, and consequently its management ranks required a more market-driven approach to its business.  Accordingly, the training program has emphasized the mastery of basic tools for managing a more commercial enterprise, including strategy, finance, marketing, and trading.   

The program has been designed to 1) build effective interpersonal skills, team awareness, and active listening; 2) develop a strategic view of the gas industry worldwide and PDVSA’s positioning within it, 3) create more flexible ways of thinking and faster and more efficient ways of learning; and 4) improve self-awareness and a willingness to make commitments and take responsibility.   

This program brings together high-level managers and specialized senior advisors from all work divisions and geographic regions of the PDVSA Gas Business.  The first management group that opened the program in October, 2000 averaged 37 years of age and 12 years work experience in the organization.  The group underwent 230 hours of training, including monthly classroom meetings, distance learning in between, and an action project whose results were due at the end.  The program encouraged participants to apply their new knowledge and skills along the way.  

The main lessons from the program include:  

o A key success factor is obtaining top management commitment, shown by its approval of the required resources, support of the administrative guidelines, and the attention to the follow-up indicators.   

o It is critical to focus in detail on designing the educational program to serve precisely what a business unit such as PDVSA Gas wants, and for this it is essential for the central training staff at CIED to work closely with the business unit staff.   

o It is important to provide participants with personal learning objectives and on-the-job mentoring and training during the program. 

What Makes a Leader:  From the Harvard Business Review 

The Harvard Business Review has assembled eight recent articles on leadership from its pages.  Published between 1998 and 2001, the articles offer fresh insight into “what makes a leader”: 

Daniel Goleman:  Emotional intelligence helps, including self-awareness, self-regulation, motivation, empathy, and social skills. 

Michael Maccoby:  Self-absorbed executives can bring exceptional vision and courage to the office, but narcissistic manages will need a trusted associate to keep them rooted in reality. 

Daniel Goleman:  Leadership approaches must fit the situation, and among the distinctive styles that work in some circumstances but not others are those that are coercive, authoritative, affiliative, democratic, pacesetting, or coaching.  

Thomas H. Davenport and John C. Beck:  Getting the attention of your employees if your message is to stick, and engaging their emotions is a powerful avenue for doing so; reminding employees of potential threats to the firm and creating internal competition among them helps.  

Dan Ciampa and Michael Watkins:  Executive successors must do their due diligence on the person they are replacing before they step in.  

John Peterman:  Make your vision unambiguous, the company mission precise. 

Robert Goffee and Gareth Jones:  Authenticity counts, and for that it helps to reveal your weaknesses, draw on your intuition for timing and action, and give people what they need, not necessarily what they want.  

Eric Schmidt:  When times are especially tough, avoid over-cautiousness and overcome a culture of fear.   

Source:  Harvard Business Review on What Makes a Leader (Boston: Harvard Business Review Press, 2001).
 

By Willis Chandler, Wharton MBA Student (WG ’03) 

Facing volatile markets, discerning consumers, and demanding shareholders, organizations are pressing for leaders at every level to navigate today’s more turbulent waters.  As part of ongoing efforts to meet these evolving company needs, the Wharton School has created a mentoring program to bring MBA students into sustained contact with mid-career alumni.  The goal is to help MBA students develop the skills necessary to succeed as both corporate and community leaders. 

Initiated in August and co-sponsored by the student Wharton Leadership Development Club and the school’s Leadership Program and Center for Leadership and Change, the program has selected fifty first-year MBA students on the basis of their readiness for personal leadership development.  

The students’ initial task is to identify their own leadership strengths and weaknesses, and then to build a plan for working with Wharton alumni who have volunteered to serve as leadership coaches.  Meeting or talking on a frequent basis, the mentors are to guide the students in their continuing self-development.  The students also meet monthly with other students in the program to share and build upon their collective experience, and they periodically complete online self-assessment of their own leadership during the course of the year-long exercise. 

Mentoring consultant Margo Murray chronicles the value of mentoring in her book, Beyond the Myths and Magic of Mentoring, and established leaders often report that one of the most formative experiences in their own development was the personal coaching by one or more mentors along the way.  Leadership author and consultant Blaine Lee in The Power Principle writes that the “leader who exercises power with honor will work from the inside out,” starting with himself or herself, and the Wharton Leadership Mentoring Program has been designed to assist that inside work through the personal guidance of those who have already mastered the art of effective leadership.