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 / Fourth Quarter 2002 / Issue 29(originally published by Booz & Company)


Best Business Books 2002: Leadership

Welch then relates the story of how managers of GE’s Power Systems took up his challenge: Previously, the division had defined itself into a low-growth corner with 63 percent of a $2.7 billion market in repairs and spares of its own products; as a result of Welch’s prodding, the managers then were able to create tremendous upside potential by redefining their position as only a 10 percent share of the total ($17 billion) market for power-plant maintenance. This anecdote illustrates several aspects of leadership Welch stresses in the book: relentless questioning and repetition of initiatives, leveraging the brainpower of the organization, frequent and thorough appraisals, dispelling self-delusion, and openness to ideas. It is also significant that the incident occurs at Crotonville because Welch stresses the practical applications of managerial development throughout his book in much the same way Bennis models the process in his new volume. Welch talks about selection, development, and assessment processes built around the “four Es” of GE leadership: “very high energy levels, the ability to energize others around common goals, the edge to make tough yes-or-no decisions, and finally, the ability to execute and deliver on promises.”

Here Welch is on track with Bossidy. Welch also offers a touch of Heifetz when he warns that bosses shouldn’t “pile on” subordinates who have just made big mistakes; instead, leaders should help followers learn from their errors. And he includes many ideas Collins would agree with, the most important of which is that a key role of chief executives is to rid their management teams of delusions about their businesses.

Yet Welch and Collins disagree on a few practical issues: Welch says he “never saw a business fail because it cut costs too quickly,” whereas Collins praises his 11 CEOs for their patience in introducing change at a pace followers can assimilate. Welch’s GE did not make the cut in Collins’s selection of “great” companies, although GE’s financial record was strong enough to keep it in the running with 19 other “good” companies until the third, next-to-last round. (AlliedSignal, where Bossidy served as CEO, was cut in the first round, as was Honeywell, where Bossidy also served briefly as CEO after a merger.)

We also note that not all of Collins’s 11 great companies sustained their “built to last” performance through the current recession and bear market, although nine of them fared quite well. Moreover, we suspect Welch and Bossidy might not have been honored to be ranked among the “Level 5 Leaders” whom Collins describes as “quiet, humble, modest, reserved, shy, gracious, mild-mannered, self-effacing, understated, did not believe their own clippings.” Instead, from the rather muscular way in which Welch and Bossidy describe themselves, they each sound more like the quintessential “Level 4 Effective Leader,” who, Collins writes, “catalyzes commitment to and vigorous pursuit of a clear and compelling vision, stimulating higher performance standards.”

Although there is growing consensus on what leaders do in terms of questioning, challenging, and developing followers, there is still considerable difference of opinion about the values and ultimate purposes of this important endeavor. Yet, on one key point, all our various authors are in complete accord: They say that great leaders draw lasting lessons from transforming events. So the $64,000 question for leaders today appears to be, What lessons are they learning, variously, from the high-tech meltdown, the prolonged recession, the events of September 11, 2001, and, especially, the recent spate of corporate governance scandals? If our authors are correct, the next generation of great leaders will be those who learned the most from these sobering experiences.  

Reprint No. 02407

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