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What Made jack welch JACK WELCH

What Made jack welch JACK WELCH

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Written by Stephen H. BaumAuthor Alerts:  Random House will alert you to new works by Stephen H. Baum and Dave ContiAuthor Alerts:  Random House will alert you to new works by Dave Conti

  • Format: eBook
  • Publisher: Crown Business
  • On Sale: August 21, 2007
  • Price: $13.99
  • ISBN: 978-0-307-39558-0 (0-307-39558-8)
Also available as a hardcover.
EXCERPT

1

A Leader Is Like a Cake

How Shaping Experiences Mold Successful Leaders

A leader is like a cake. Sure, you need all the ingredients. But it is shaped uniquely by all the steps and exposures in the recipe, until it is finished.

--Gordon Bethune, Continental Airlines

Florida Power & Light (FPL) was in trouble. Turkey Point, one of its nuclear plants, had for the second time been put on the Nuclear Regulatory Commission's watch list of badly performing plants. The reactor had failed inspection, and operational violations were severe enough and numerous enough that the NRC was threatening to shut it down.

The NRC did not make such threats lightly. As the regulatory cop of the nuclear power industry, it is responsible for protecting the public against shoddy plant operations. It would not hesitate to pull the facility's license, forcing a shutdown that could last for as long as three years. Such a move might protect the public against a radiation risk, but it would also impair FPL's ability to satisfy electricity demand, to say nothing of the big hits that its earnings and its reputation would take. It would also be an unwelcome blot on the record of Jim Broadhead, five months into his new position as chairman and CEO of the utility's parent holding company, FPL Group, even though the problem had been festering long before his arrival. The NRC report was so disparaging that Jim believed the regulators would soon shut down the plant. Yet he was getting no information, no warnings, and no calls for help from the executives responsible for the unit.

Jim was an outsider to the energy industry and especially to the insular world of nuclear power. As head of the holding company, he was afforded what amounted to a bird's-eye view of its many diverse subsidiaries, which at the time included insurance and real estate businesses, cable television, and even Florida citrus fruit production. Jim himself had most recently been president of GTE, a telephone communications company.

Jim found himself in the middle of a high-stakes game with very few cards to play. New to the job, an industry outsider, unfamiliar with the ins and outs of nuclear power, he looked for answers but was unable to get satisfactory ones from anyone in the nuclear subsidiary. Intensely loyal to the old guard, some of whose members were still in power, the executives resisted his authority. They were unwilling to cooperate with Jim and unable, he believed, to solve the reactor's problems themselves. With no trustworthy insider providing him with the needed information, Jim could not fully calibrate the actions needed to get off the watch list or assess the probability of a nuclear accident. He began to meet with outside experts and his own attorneys, and he read every related report he could get. He came to believe that both the public and his company were at risk.

Jim decided to take action. As he tells it, "The plant was a potential danger to the public and to my company. We were on the watch list, and the regulators had the authority to shut our nuclear plants down completely. The problem was keeping me up at night. We weren't making any progress solving the problems--the people in charge of the nuclear operation were either unwilling or unable to discuss the situation with me. I didn't know whom to trust. I knew it was make or break for the company. I had to do something. I told the operating guys I was stepping in."

Against the advice of his senior managers, against established industry practice, betting the future of his company's nuclear power program, Jim decided to do what had never been done before. He decided to go to Washington, D.C., meet with the regulators, admit he had a problem, air his own preliminary conclusions, and ask their advice.

Jim had no desire to be seen as a loose cannon by his company, however. In order to be effective in the action he was taking, he knew he needed the support and agreement of his own boss--the company's board of directors. So before taking his drastic step, he explained to them the situation, his concerns, his motives, and the results he was working toward. As Jim puts it, "Because I was new in the job, and because what I was planning to do was so unusual, I alerted the board in a phone call. I revisited the situation with them, the options, and my preferred course of action. It took some explaining, but they supported my plan. I went ahead."

Jim met first with Victor Stello, executive director of the NRC and his staff. Skeptical about why Jim had really come to Washington, Stello began the meeting with a threat: "If you have one more problem, I will shut you down." Jim again did the improbable--instead of protesting, he offered the official a metaphoric olive branch, replying, "You probably expect me to say that we're doing everything possible and will comply. I won't tell you that." Jim went on to explain the actions he was prepared to take and asked for Stello's help and counsel in cleaning up the facility.

Admitting something was wrong in his company--that he had a major problem that could affect the public--was an incredible move on Jim's part, and it could have easily been used against him by the regulators. But Jim's response struck a chord with the NRC official. He even called Jim's attitude "refreshing." Once Stello realized that Jim had not come to him to posture or threaten or to get the NRC to back down, the commissioner relaxed his hard facial expression and rewarded Jim's forthright honesty with sound advice.

Jim's approach even earned him a private meeting with Stello, a highly unusual event in the world of nuclear energy production, where chief executives simply did not meet privately with public officials and ask for their advice in off-the-record sessions.



They discussed the situation at FPL, and Stello provided Jim with some wise counsel about the problems, even suggesting the names of people who could help solve the mess and get the reactor up to standards. He was taking a major risk himself in providing such information and advice to Jim. Any of it could have easily been used against him if things went wrong, but happily nothing did.

Stello suggested that Jim share his plan with the chairman of the NRC (the commissioner's boss), which he did the following week. Jim and the regulators were so joined in spirit and plan that Jim earned some wiggle room in how and when he would implement his plan, something that would have been impossible otherwise.

Jim hired Jerry Goldberg, one of the experts mentioned by the commissioner, fired or eased out several of the uncooperative old guard, and kept a close watch on progress at the plant. In time, the nuclear facility was upgraded, taken off the NRC's watch list, and improved to the point that it became a benchmark for others in the industry.

Throughout this episode, Jim Broadhead exhibited the strength, self-assurance, and determination that define good leaders. He relied on his instincts and seemingly unrelated experiences to create his own solution to a baffling problem. Overruling his nuclear "experts" and their bosses who operated the utility day to day, breaking the established rules of decorum in his industry, meeting alone with an agency normally treated as an adversary, and laying all his cards on the table were unprecedented steps. His actions could have cost him his job and damaged his company, and he knew it.

What prepared Jim for this moment? What would prepare any of us for such a moment?

The foundation of Jim's ability to get the job done and done well is found in his strong, well-developed leadership core--a powerful set of traits common to good leaders. How and why did the traits develop so markedly in Jim? It was experience, long years of shaping experiences that molded him, nurtured him, and developed him. The same is true for every good leader I have ever known.

The traits that Jim displayed in the nuclear reactor episode included these: He showed good character by recognizing the broader ethical context of the situation and his possible choices within it. He was "extro-spective"--seeing a larger perspective beyond himself and his company. In a further sign of good character, he acted with good purpose, taking personal risk on behalf of the public and the company. He showed confidence by transcending self-doubt (after all, he was a newcomer to the world of nuclear energy), by taking the initiative, by seeing the value to be had from the risk he was taking. He proved he had the capacity to act by doing his homework and then going with his informed gut. He showed the ability to engage and inspire when he pre-sold the board of directors on his unusual course of action, laying out the choices with common sense, directness, and a lack of focus on himself. Jim's refreshing openness allowed him to engage and connect with the NRC commissioner in a manner that was crucial to the resolution of the problem.

Such traits and the strong leadership core they form are absolutely vital to your makeup if you aspire to be in charge of an organization or to take command of any group banding together in a common endeavor. Knowledge about the details of the job--the nitty-gritty specifics--simply isn't enough. Jim's nuclear "experts" knew plenty about reactors--far more than Jim--but they did not see the bigger picture and couldn't handle either the corrective actions or the crucial communications necessary to get the company out of its bind. What Jim had that they didn't were shaping experiences that over his lifetime had worked to develop his strong, vital leadership core.

Let's take a closer look at the traits that make up the leadership core. Then we'll turn to the shaping experiences themselves, the critical events in the lives of men and women that cause those traits to develop and are the source of a leader's abilities. When we're done, I'm sure you'll agree that leaders are made, not born.

Core Leadership Traits

Extraordinary leaders possess five kinds of traits, and the possessors of these traits are generally the most effective and the most successful people in any organization. These folks can run just about anything--any sort of business or organization. These traits carry them much further than will any specific knowledge or nuts-and-bolts know-how of a job.

The Appetite to Take Charge

The appetite begins to take shape as an occasional interest in taking the lead in situations where personal satisfaction or gain can be achieved. Rather than being a passenger, you want to take the wheel and drive. At some point, this interest becomes an enduring preference to be in charge. You become convinced--and good leaders are usually right in their conviction--that you will have a positive effect on the direction of an activity and on the world around you. Leaders often tell me that the very act of leading engenders a sense of being intensely alive. Incidentally, it's a feeling they never want to lose, so they continue to take on leadership roles all their lives. For example, Arthur Martinez, the highly regarded former chairman of Sears, Roebuck & Co., after "retiring" stepped into the breach when Martha Stewart went to jail. He played a key role in holding together her company, Martha Stewart Omnimedia. He's also played important postretirement roles as chairman of his local Greenwich, Connecticut, hospital and as acting CEO of International Flavors and Fragrances when leadership vacuums developed in both organizations.

Character

Character means doing the right thing when no one is there to see as well as when your actions are visible or will likely be revealed to the world at large. Integrity is an important part of character, as is the desire to treat others with dignity, respect, and humanity. If you exhibit good character, you are always willing to go the extra mile in your work to get things done well. But you also understand the need for balance--the role of work in life and life in work. You show unfaltering good purpose for the company or group you lead as well as for the individuals in it.

Confidence to Seek Challenges and Embrace Risk

Leaders are able to transcend their own fears and self-doubt when facing challenges. Being ready to lead means being able to confront issues and make decisions without regard to your own insecurities and self-limiting beliefs, your personal job security, or your reputation. You simply do what you believe is right in order to achieve the right outcome. You develop the confidence to believe that you can do it as well as anyone--and better than most--in the most trying circumstances. You learn to love to compete. You see the value in taking risk, and you understand that you will fail at times. But you know that failure is rarely fatal and more often an opportunity to learn something. When you succeed, you hunger for more success. You pursue a "virtuous cycle" of trial, reinforcement, setback, and recovery. You are able to invoke positive thoughts and emotions at moments of choice. You avoid debilitating, negative emotions. And you are able to help the people you lead to develop similar positive attitudes.

Capacity to Act

Leaders learn to act quickly and wisely and lead in the face of life's many surprises. As a leader, you not only exhibit the emotional readiness to act when others avoid or recoil from the risk and stress that action would entail, but you also exhibit the critical thinking ability to do so wisely. In any given situation, you are able to recall similar situations--events that serve as analogies--from past work experiences or even as long ago as childhood that may apply and help you today. You are able to distill a situation to its basics, understand what similar experiences apply, know where to go and whom to trust for input, weigh the risks and rewards, and choose a way forward.

Ability to Engage and Inspire

Leaders learn to articulate a vision in a way that resonates with others. You learn to create a climate in which others will commit to their vision because you have deeply connected with them as human beings. You know how to tap the energy in the enterprise (detecting who has it and who does not and liberating it).

Shaping Experiences

Your leadership core is nurtured and grown out of shaping experiences you encounter and often pursue throughout your life. I've identified ten archetypal shaping experiences that mold people into leaders, developing their leadership traits and providing the knowledge and skills crucial to operating in a highly effective manner. Yes, there are ten, and no one of them provides the skill, talent, inherent ability, or single moment of inspiration that makes a leader.


From the Hardcover edition.

Excerpted from What Made jack welch JACK WELCH by Stephen H. Baum with Dave Conti Copyright © 2007 by Stephen H. Baum. Excerpted by permission of Crown Business, a division of Random House LLC. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.