Welch upbeat on future

These were the views of Jack Welch when he addressed the 750-strong audience at the Leaders in London event on Thursday last week.

“Capitalism will get back on the tracks and in 2010 you’ll start to see the flowers blooming,” concluded the former chairman and CEO of General Electric.

Voted Manager of the Century by Fortune magazine, the hall of CEOs and senior executives listened attentively as Welch delivered his view on the currents crisis and how organisations need to manage their way through it. During Welch’s 20-year tenure at GE, market capitalisation rose from $13bn to $400bn, and he saw the giant through several recessions, so his views are always eagerly digested.

At the event where there was much talk of the worst crisis in living memory, Welch reminded us that we had seen worse in the Eighties. “This recession is not as bad – at least in the US, and I think globally – as it was in 1980 to 82, when unemployment in the US reached 10.5pc, the prime rate for borrowing was 21pc, inflation was 14pc,” he said. “We don’t have that problem. We have a different problem that we should be able to get out of. Governments have had to step in, and they have stepped up – you’ve got to give the UK credit for the action they’ve taken, and the US.”

“Some people say we don’t need governments to step in, but the free market capitalists have lost the right to be free market capitalists for a while because they need the governments to get them back in the ring.”

In the meantime, Welch had no shortage of advice to organisations to get them through these troubled times. He advised that leaders continue to look after their best people. “Put some money aside to be sure you take care of your best people, to reward the best stars you have as you go into this battle, to have in place the leadership you need to carry on in these tough times.”

Ryanair’s Michael O’Leary would have approved of his comments on seizing opportunities from others’ difficulties. “You’ve got to be looking at your competition saying buy or bury. Prices have never been so good. You can make an acquisition today like you’ve never been able to buy something before.”

Not one to mince his words, Welch suggested alternatively that organisations look to ‘bury’ their competition by going out and poaching their best people, and extending credit when possible, and better service, to their clients.

Strong communication was also key to getting through this, he said. “Communicate like you’ve never communicated before. Be out on the floor talking to your people. Be sure they know why they’re doing everything they are doing. Don’t sit behind closed doors. And secondly, be sure you have enough compensation for your best people, be sure they know you love them, that you’re going to pay them, and they’re going to stay with you through the struggle.”

He believes the best organisations will see the current crisis as an opportunity to grow stronger and better. “We’ve got to have innovation, we’ve got to have leaner cost structures and we’ve got to have more customer focus. All of us need that. You know, you can’t let a crisis go to waste. This is what we can get out of this crisis. We can emerge stronger than ever in our industrial base in all countries.

“I think the fact that we have to do it is new – the fact that the pace of change is now upon us. People can’t give speeches about change. People have to act. I think the sense of urgency that’s brought about by this is good.”

So do we need a whole new kind of leadership and management style? “There are no new tricks,” says Welch. “The old tricks still work. No one’s going to invent a new module for management, but they can accelerate all the known techniques to make themselves much more rigorous about building great teams and great organisations.”