Jack Welch on Candor and Differentiation

I am a huge fan of Jack Welch, former CEO of General Electric. I have been a follower of Jack Welch since a young kid when my father went to work for General Electric in the 80′s and our dinner table discussions often included talk about Neutron Jack, Six Sigma and how he was changing GE.

While traveling this weekend, I visited a used bookstore while waiting on a friend who was shopping down the road. While in the store, I stumbled upon and started reading a used copy of Jack Welch’s book “Winning” published in 2005. I later left the book at the store making a mental note to add it to my must read list for later.

But like a good song that repeats itself over and over in your head, the content from “Winning” that I had summarized while in the store held my thoughts captive. After returning home, I made a trip to the local library and checked it out.

Tonight, I read (more like devoured) the 2nd and 3rd chapters each titled Candor and Differentiation, respectively. Like his other books, I was impressed by his ability to articulate complex business subjects in such easy to digest detail.

In chapter 2, Welch discusses how valuable candor is in today’s fast and global business but how rare it actually is. My favorite Welch quote from chapter 2 is “since retiring from GE, I have come to realize I underestimated its (candor’s) rarity. In fact, I would call lack of candor the biggest dirty little secret in business.”

Then in chapter 3, Welch summaries his passion and love for Differentiation, a management method in which employees along with business divisions and product lines are separated into the top performing 20%, middle 70% and bottom performing 10%.

The best lines from Chapter 3 are “I learned it (differentiation) on the playground when I was a kid. When we were making a baseball team, the best players always got picked first, the fair players were put in the easy positions, usually second or right field, and the least athletic ones had to watch from the sidelines. Everyone knew where he stood.” Welch continues by saying “middle players worked their tails off to get better, and sometimes they did, bringing up the quality of play for everyone. The kids who couldn’t make the cut usually found other pursuits, sports and otherwise that they enjoyed and excelled at.”

Q: On a side note, how did Jack Welch get the name “Neutron Jack?”

A: From 1981 to 1985, Jack Welch cut 100,000 GE jobs, an act so painful to employees that they began referring to him as ”Neutron Jack,” after the nuclear bomb that vaporizes people but leaves buildings standing.