CNNMoney/Fortune: Tearing up the Jack Welch playbook

[DeepModem Mom]

Tearing up the Jack Welch playbook
The Six Sigma master was once the undisputed authority in management. But Fortune is finding that today's smart CEOs are following a different set of rules.
By Betsy Morris, Fortune senior writer
July 11 2006

NEW YORK (Fortune) -- Once upon a time, there was a route to success that corporate America agreed on. But in today's fast-changing landscape, that old formula is getting tired.

New Rules vs. Old Rules

1 Agile is best; being big can bite you. / Big dogs own the street.
2 Find a niche, create something new. / Be No. 1 or No. 2 in your market.
3 The customer is king. / Shareholders rule.
4 Look out, not in. / Be lean and mean.
5 Hire passionate people. / Rank your players; go with the A's.
6 Hire a courageous CEO. / Hire a charismatic CEO.
7 Admire my soul. / Admire my might.

....What came to be known as Jack's Rules are by now the business equivalent of holy writ, bedrock wisdom that has been open to interpretation, perhaps, but not dispute....Corporate America needs a new playbook. The challenge facing U.S. business leaders is greater than ever before, yet they have less control than ever - and less job security. The volatility of the markets is so unpredictable, the pressure from hedge funds and private-equity investors so relentless, the competition from China and India so intense, that the edicts of the past are starting to feel out of date....The practices that brought Welch, Goizueta, and others such success were developed to battle problems specific to a time and place in history. And they worked. No one questions today that bloated bureaucracy can kill a business. No one forgets the shareholder - far from it. Yet those threats have receded. And they have been replaced by new ones. The risk we now face is applying old solutions to new problems....

***

Cheered on by academics, consulting firms and investors, more and more companies tried to defy history (and their own reality) to sustain growth and dazzle Wall Street as Welch was doing. Accounting tricks, acquisition mania, outright thievery - executives went overboard.... In breathtakingly short order, the rock star of business is no longer the guy atop the FORTUNE 500 (today Rex Tillerson at ExxonMobil), but the very guy those FORTUNE 500 types used to love to ridicule: Steve Jobs at Apple.

The biggest feat of the decade is not making the elephant dance, as Lou Gerstner famously did at IBM, but inventing the iPod and transforming an industry. Dell spectacularly upended Compaq and Hewlett-Packard, yet few big companies paid close enough attention to see that new technologies and business models were negating the power of economies of scale in myriad ways. Nobody has proved that more than Google....

http://money.cnn.com/2006/07/10/magazines/fortune/rules.fortune/index.htm?cnn=yes

[Loge23]

1. Great read!

Thanks for sharing.
This has been a hot topic for me for some time now, as I am a rare breed - an MBA who never embraced the Welshian philosophy. I got into a blogument over at Workforce some time ago regarding my opinion of Mr. Welsh.
The bottom line for me is leadership - which begins with a personal committment to exemplify the type of behavior you wish to see at your business. It's really all about people. If you don't understand that, you really can't justify it by quantifying it.