“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” —Charles Darwin
CEOs must not only embrace change but also lead change during both normal and turbulent times. Being prepared to change mentally helps them avert turbulent times within the organization. As such, CEOs must have organizational agility to achieve organizational adaptability.
When we look at CEOs who have led change successfully through organizational adaptability, Jack Welch, the former CEO of General Electric, comes to mind. Here is a look at Jack Welch and his management principles and philosophies, and leadership tools and techniques that made GE one of most respectable companies in the world.
Organizational Adaptability and Antennae
The dean of leadership, Warren Bennis, once remarked that adaptability is the key factor for leadership effectiveness and success. Adaptability is the key to a CEO’s success in the current global business environment.
Most CEOs can manage organizational threats arising from the internal business environment. However, they often find it challenging to anticipate and manage external threats arising from the external environment. Thus, they must have organizational agility and adaptability to act swiftly to absorb the sudden shocks and setbacks to ensure organizational stability. Just as individuals encounter both internal and external threats, so do organizations. Internal threats can be anticipated and managed. However, it is difficult to anticipate external threats. Organizations, like individuals, must have resilience to survive and succeed. The present global business environment is so highly dynamic that it often cannot be predicted, even by experienced leaders.
Any leader can sail the ship when the sea is calm. But it requires extraordinary leaders and CEOs to sail the ship smoothly and successfully when the sea is facing a storm. Organizations must have their antennae tuned to signals of change from the external business environment.
Global Companies that Failed to Adapt to Change
Eastman Kodak was a leader for many years before filing for bankruptcy in 2012. Likewise, Blockbuster Video became defunct in 2013. Similarly, Borders, which was one of the largest book retailers in U.S., went out of business in 2011. Why did these companies with such great brands initially ultimately fail? Because they failed to adapt to change. Additionally, they failed to unlearn and relearn.
Although it is well known that the only constant in the world is change, people resist change due to various reasons, including the fear of failure, criticism, and the unknown. They often think the known devil is better than an unknown angel. They settle for the status quo and ultimately become extinct. Similarly, companies that fail to change with the times and technologies find themselves on the road to extinction.
A Blueprint to Embrace Change Effectively
“Greatness is not in where we stand, but in what direction we are moving. We must sail sometimes with the wind and sometimes against it—but sail we must, and not drift, nor lie at anchor.” —Oliver Wendell Holmes
Leaders must adopt tools and techniques to adapt to change. Here is a blueprint to embrace change effectively:
- Keep your vision right and straight, and articulate it effectively.
- Create an organizational culture that is conducive to bringing about change.
- Communicate clearly about the need to change.
- Enlighten people about the implications of the status quo.
- Show them the benefits once the change is implemented.
- Coordinate all stakeholders effectively.
- Remove the roadblocks by allaying apprehensions.
- Show people small gains to ensure that entire change takes place smoothly without any resistance.
Jack Welch—Be Adaptable
Jack Welch once remarked, “The Jack Welch of the future cannot be like me. I spent my entire career in the United States. The next head of General Electric will be somebody who spent time in Bombay, in Hong Kong, in Buenos Aires. We have to send our best and brightest overseas and made sure they have the training that will allow them to be the global leaders who will make GE flourish in the future.”
Jack Welch is noted for his extraordinary leadership style. He coined new management concepts and adopted innovative leadership tools and techniques. Under his leadership, revenues grew five-fold from $25 billion to $130 billion; income grew ten-fold from $1.5 billion to $15 billion; and the company’s market capitalization had a 30-fold increase of more than $400 billion. He adopted the Six Sigma quality program from Motorola and applied a forced ranking system that divided employees into three distinct segments: the top 20 percent of performers, the middle 70 percent, and the bottom 10 percent, which is known as GE’s “20-70-10” system. He advised, “You should take the top 20 percent of your employees and make them feel loved. Take the middle 70 percent and tell them what they need to do to get into the top 20 percent.” Managing out the bottom 10 percent of performers is necessary not only for the organization’s continued success but also for the sake of employees affected by the rigorous appraisal system. “People need to know where they stand,” Welch said. “Failing to differentiate among employees —and holding on to bottom-tier performers—is actually the cruelest form of management there is.” He emphasized effective performance appraisal system and feedback.
Jack Welch was dubbed as “Neutron Jack” in the early 1980s. Later on, he reinvented himself and proved himself one of the most highly respected CEOs in the world. Fortune magazine named him the “Manager of the Century.”
Leadership Lessons from Jack Welch
Jack Welch is a trendsetter. He led by example. He is straightforward and a master strategist who believed in brutal execution. He emphasized stretch goals to encourage employees to come out of their comfort zone to contribute their best. There are a number of lessons leaders must learn from him to tide them over during the turbulent times.
- Keep things simple and straight.
- Break bureaucratic bottlenecks and create a flat organization.
- Avoid micromanagement. Give tasks, allow breathing space, and encourage employees to do their tasks effectively. Offer advice only when asked.
- Delegate and empower. Manage less and lead more.
- Break boundaries to keep things less formal.
- Perform or perish.
- Treat change as an opportunity, not a threat.
Jack Welch once remarked, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
So accept change before the change is thrust on you. If people don’t perform, they perish. If companies don’t innovate, they become obsolete. If we had not changed, we would have remained in the Stone Age. To conclude, cultivate a flexible mindset to embrace change effectively to ensure organizational excellence. Benjamin Disraeli rightly said, “Change is inevitable in a progressive society. Change is constant.”
Note: This article was adapted from Prof. M.S. Rao’s book, “21 Success Sutras for CEOs.” Visit: http://www.amazon.com/21-Success-Sutras-Ceos-Rao/dp/162865290X
International leadership guru Professor M.S.Rao, Ph.D., is the “Father of Soft Leadership” and founder of MSR Leadership Consultants, India. He is a leadership educator, executive coach, speaker, and consultant. He has 36 years of experience and is the author of 36 books, including “21 Success Sutras for CEOs” (http://www.amazon.com/21-Success-Sutras-Ceos-Rao/dp/162865290X). His book, “21 Success Sutras for Leaders (http://www.amazon.com/21-Success-Sutras-Leaders-ebook/dp/B00AK98ELI) was ranked as one of the Top 10 Leadership Books of the Year – 2013 by San Diego University, USA. His book, “Success Tools for CEO Coaches: Be a Learner, Leader, and Ladder” (http://www.amazon.in/SUCCESS-COAHES-LEARNER-LEADER-LADDER/dp/9351102491) is the Community Award Winner for 2014 by Small Business Trends, USA. He is passionate about serving and making a difference in the lives of others. His vision is to build 1 million students as global leaders by 2030 (http://professormsraovision2030.blogspot.in/2014/12/professor-m-s-raos-vision-2030-one_31.html). His vision program was ranked as one of the Top 10 Finalists in the Not-for-Profit category of Leadership 500 Excellence Awards 2015. He received 10th International Prestigious Sardar Patel Award―2015 for Lifetime Achievement in the field of “Excellence in Youth Development.” Prof. Rao was honored as an upcoming International Leadership Guru by Global Gurus (http://www.globalgurus.org/leadership/upcoming.php). He serves as an advisor and judge for several international organizations, including Global Leadership Awards in Malaysia, Middle East Business Leaders Summits & Awards in Dubai, and Small Business Book Awards in the United States. Most of his work is available free of charge on his four blogs http://professormsraovision2030.blogspot.in, http://profmsr.blogspot.com, http://professormsrao.blogspot.com, and http://professormsraoguru.blogspot.com. E-mail him at email@example.com and follow him on Twitter at @professormsrao.