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Book Summary: Jack Welch, ‘The’ Man Who Broke Capitalism?

June 23, 2022 By Nagesh Belludi Leave a Comment

The Man Who Broke Capitalism (2022) by New York Times columnist David Gelles contends that the pernicious greed spawned by former General Electric CEO Jack Welch is exceptionally responsible for exposing the structural failings of capitalism in recent decades.

The danger inherent in any ideology grows stronger when it starts to thrive because it swiftly morphs into temptation—a voracious appetite for ever better “returns” in the present case. Welch was indeed the most visible catalyst and a much-imitated champion of brutal capitalism. But Gelles’s narrative draws his book’s lengthy subtitle (“How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America”) excessively, thrusting ad nauseam the well-founded thesis against Welch’s ploys and “the personification of American, alpha-male capitalism.” See my previous articles (here, here, and here) about how the faults of Welch’s strategy become evident many years after his retirement.

Gelles does an agreeable job of outlining the socioeconomic paradigm that has made modern western capitalism’s shortcomings ever more apparent. Starting with influential economist Milton Friedman’s decree in the ’70s that the one and only social responsibility of a business is to maximize profits, Gelles explains the revering of Welch’s “downsizing, deal-making, and financialization” strategy. Without balance, it provided short-term benefits for shareholders, but the long-term well-being of corporations and society lost out. A sense of restraint is most pertinent to the power of capitalism.

Summary of 'The Man Who Broke Capitalism' by David Gelles Capitalism isn’t irretrievably bound to fail, as Gelles rightly argues, but it needs to be rethought. It’s morally incumbent upon the social order to inhibit the embedded incentives that create powerful tendencies towards short-termism. Gelles offers no more realistic, objective insights than the familiar solutions prescribed by our career politicians.

Overall, Gelles’s pro-Fabian polemic falls short of a fair-minded assessment of the epoch’s economic forces. Indeed, many of Welch’s tactics were timely and necessary, but he pushed them farther and longer. Too, Gelles fails to study counterexamples of many corporate leaders who’ve thoughtfully copied Welch’s playbook and helped their businesses and communities prosper, not least because they were restrained enough to avoid Welchism’s blowbacks.

Recommendation: Speed Read The Man Who Broke Capitalism for a necessary reappraisal of the legacy of Jack Welch. There isn’t much eye-opening here, but author Gelles affords a relevant parable about the power of restraint and the time- and context-validity of ideas.

The Checkered Legacy of Jack Welch, Captain of Wall Street-Oriented Capitalism

March 16, 2020 By Nagesh Belludi Leave a Comment

The legendary Jack Welch, the former Chairman and CEO of General Electric (GE) 1981–2001, died two weeks ago.

Welch was the most prominent business leader of the post-war era. Under his leadership, GE metamorphosed into one of the world’s largest, most profitable, and best-admired companies. He expanded GE’s market capitalization from $12 billion to $410 billion on the back of the steady economic expansion of the 1990s. Welch also became the poster child for “new globalization,” and GE led American companies in gaining access to new markets and lower-cost labor. (Note: GE Medical Systems was one of my first consulting clients out of college.)

For nearly three decades, until his star faded away in about 2008, Welch was the talk of corporate America. He was lionized for streamlining the industrial giant’s top-heavy bureaucracy and empowering managers to spot problems and make changes promptly.

Welch became the font of all sorts of pearls of management wisdom. He was the exemplar after whom American managers patterned themselves—“What Would Jack Do?” became a familiar business mantra. Companies borrowed six-sigma, rank-and-yank, stretch goals, and his other managerial innovations. In 1999, Fortune magazine designated Welch as the “manager of the century.”

Jack Welch Legacy #1: The Messy and Embarrassing $180 Million-Divorce

In 2002, Welch’s reputation took a first big hit when his wife Jane Welch exposed his extramarital affair with Harvard Business Review editor Suzy Wetlufer (later his third wife.) The affair started when she was interviewing him for her publication. Jane, a sharp corporate lawyer whom Jack had extolled as “the perfect partner” in part for taking up golf and playing with his business associates, had even confronted Wetlufer over the phone and cast doubt on her journalistic objectivity.

Welch’s private life became fodder for gossip, and he became a regular feature in New York’s supermarket tabloids. The proceedings of the divorce divulged the extravagant pension benefits that Welch had gotten for himself. Among other lavish allowances, he had kept a company plane and an apartment in New York’s Central Park West—just these cost GE some $1.7 million a year. GE would supply Welch with fresh flowers, wine, dry cleaning, and even vitamins. After a public outcry, Welch was forced to forfeit many of these retirement benefits.

Jack Welch Legacy #2: The Aura Deflated

Welch transformed GE into a super-conglomerate and a Wall Street-darling during his 21-year tenure as CEO. Sadly, Welch’s business model became overly complicated, and many of the mistakes of his strategic deals manifested years later. The most consequential case in point was GE Capital, the finance division that delivered the parent company a near-fatal blow during the 2008 financial crisis. Welch had overconfidently let GE Capital grow unchecked during his tenure, and its easy profits had masked problems at GE’s core industrial divisions.

After a much-publicized “Super Bowl of CEO succession planning,” Welch bequeathed his successor Jeffrey Immelt with a puffed-up corporation. Welch retired in September 2001, and the “house that Jack built” started to crumble right away in the wake of the 9/11 attacks. After failing to curb GE’s sagging profits, Immelt was fired in 2017 following his ill-timed deals for GE’s power division.

All told, Welch’s undoing was his exceptional obsession with shareholder value. He made countless deals—many unrelated to GE’s traditional core competencies—and championed corporate efficiency to the detriment of initiatives that may have sustained GE’s long-term competitiveness.

GE is now a derelict shadow of its former self. Its market capitalization has fallen from a peak of $600 billion in 2000 to $82 billion today.

Jack Welch Legacy #3: The “GE Man” Turned out a Dud

Welch’s other legacy was going to be the “GE Man.” Trained at the knee of Welch, GE’s vast managerial talent was commonly recognized as one of the world’s best. Its leadership development program, headquartered at the famed Leadership Center in Crotonville, New York, was the best training ground for future executives. In April 2005, Fortune magazine noted,

When a company needs a loan, it goes to a bank. When a company needs a CEO, it goes to General Electric, which mints business leaders the way West Point mints generals. … One headhunter estimates the company harbors another dozen execs of FORTUNE 500 caliber.

Alas, Welch’s protégés were mostly disappointments. Much of the long line of managers whom he had mentored at GE has failed to achieve runaway success in running big firms—3M, Boeing, Chrysler, Home Depot, Honeywell, Pentair, ABB, and, undeniably, GE itself.

John Flannery, another “GE Man” who succeeded Immelt, was fired after just 14 months. Flannery was replaced by Larry Culp, the first outsider to run GE in the company’s 126-year history!

Jack Welch Legacy #4: “Jack’s Rules” for Management Success

Welch and his management style earned much criticism for insensitiveness and abrasiveness. Yet, some of his leadership techniques are worth emulating.

Nurture a “boundaryless” culture. Cultivate an open organization by removing the barriers that inhibit people and organizations working together. Foster an informal culture that expedites the free flow of ideas, people, and decisions.
Involve everybody to enhance productivity. Welch instituted a brainstorming process called “Work-Out” that enabled frontline employees and workers to propose improvement ideas to the bosses who are required to take action “on the spot.”
Empower people. Delegate and get out of the way. “We now know where productivity-real and limitless productivity-comes from. It comes from challenged, empowered, excited, rewarded teams of people.”
Embrace meritocracy. Let ideas and intellect rule over hierarchy and tradition. “The quality of the idea is determined by the idea, and not the stripes on your shoulder.”
Eliminate bureaucracy. “Anything that you can do to simplify, remove complexity and formality, and make the organization more responsive and agile, will reduce bureaucracy.” Welch once called bureaucracy “the Dracula of institutional behavior,” since red tape and rules and regulations tend to rise from the dead every few years.
Simplify. Drop unnecessary work. Work with colleagues to streamline decision-making. “The way to harness the power of these people is not to protect them … but to turn them loose, and get the management layers off their backs, the bureaucratic shackles off their feet and the functional barriers out of their way.”
Focus on continuous improvement. “Don’t sit still. Anybody sitting still, you can guarantee they’re going to get their legs knocked out from under them.”
Act with speed. “Speed is everything. It is the indispensable ingredient in competitiveness.”
Get good ideas from everywhere. Study competitors. Abandon the “not invented here” mindset and embrace best practices that are “proudly found elsewhere.”

Welch’s playbook has been studied in dozens of management books, including the three best-sellers he wrote: Jack: Straight from the Gut (2001,) Winning (2005; with wife Suzy Welch,) and The Real-Life MBA (2015; also with Suzy.)

Jack Welch: Captain of Capitalism Whose Star Faded Away

Welch’s most significant legacy will be the Wall Street-orientation of business corporations. He promoted an obsessive focus on creating shareholder value, and in so doing, helped incite the current fixation on quarterly earnings. That, and the burn out of the General Electric that Welch left behind, is testimony to the potential after-effects of sacrificing the long-term well-being of corporations to meet short-term targets.

General Electric’s Jack Welch Identifies Four Types of Managers

February 6, 2008 By Nagesh Belludi 5 Comments

Jack Welch's Four Types of Managers

Four Types of Managers

Jack Welch, former Chairman and CEO of General Electric Jack Welch, Chairman and CEO of General Electric from 1981 to 2001, described four categories of managers in General Electric’s year 2000 annual report.

Type 1: shares our values; makes the numbers—sky’s the limit!

Type 2: shares the values; misses the numbers—typically, another chance, or two.

Type 3: doesn’t share the values; doesn’t make the numbers—gone.

Type 4 is the toughest call of all: the manager who doesn’t share the values, but delivers the numbers. This type is the toughest to part with because organizations always want to deliver and to let someone go who gets the job done is yet another unnatural act. But we have to remove these Type 4s because they have the power, by themselves, to destroy the open, informal, trust-based culture we need to win today and tomorrow.

We made our leap forward when we began removing our Type 4 managers and making it clear to the entire company why they were asked to leave—not for the usual “personal reasons” or “to pursue other opportunities,” but for not sharing our values. Until an organization develops the courage to do this, people will never have full confidence that these soft values are truly real.

Live by Corporate Values

Keep the company values front and center in people's mind Organizations face the challenge of developing and sustaining a culture that is both values-centered and performance-driven. They begin by developing mission and value statements that, in due course, become little more than wall decorations because the organization’s leaders and managers fail to uphold these values.

Nothing hurts morale more than when leaders tolerate employees who deliver results, but exhibit behaviors that are incongruent to values of the company. For instance, an organization that thrives on teamwork will suffer, over the long term, if a manager habitually claims all credit for his team’s accomplishments.

Idea for Impact: Core Values Matter!

As a manager, drive accountability. Hold employees responsible for their behaviors. Reward employees for proper behaviors and publicly discourage behaviors that do not uphold values. Do not make exceptions—exceptions signify your own indifference to the upholding of values.

As an employee, understand that an essential requirement for your success in your organization is your fit. Your behaviors must be congruent with the character and needs of your organization. Even if you are talented, you will not fare well if your behaviors are inconsistent with the values of your organization. Reflect on your behavior. On a regular basis, collect feedback from your managers, peers and employees. Seek change.

Keep the company values front and center in people’s mind.

General Electric’s Jack Welch on Acting Quickly

March 9, 2007 By Nagesh Belludi Leave a Comment

General Electric's Jack Welch on Acting Quickly

Jack Welch, General Electric's former CEO Jack Welch was the Chairman and CEO of General Electric (GE) from 1981 to 2001. During Welch’s twenty-year tenure, GE grew into one of the largest and most admired companies in the world. Jack Welch is widely recognized as one of the greatest business leaders of our time. In 1999, Fortune magazine named him the ‘Manager of the Century.’

In an interview with Spencer Stuart executive headhunters Thomas Neff and James Citrin for the book “Lessons from the Top”, Jack Welch regrets not taking action quickly during his tenure at General Electric.

I think the biggest mistake I made is a fundamental one. I went too slow in everything I did. … If I had done in two years what took five, we would have been ahead of the curve even more.

You rarely do things too fast. If you think about your life and the decisions you’ve made, you can’t come up with too many where you said, “I wish I took another year to do it.” But you can sure come up with a list where you say, “I wish I had done a bunch of things six months earlier.”

Call for Action

Procrastinators sabotage themselves. However, procrastination is a learned behavior and therefore can be unlearned.

In all spheres of life, competition has transitioned from “big-eat-small” to “fast-eat-slow.” Good ideas are relatively easy to come up with. However, quick and efficient execution is primary to the success of these ideas. When a hundred people probably have the same idea, execution in a fast timeframe is just about the only thing that matters.

Are you holding back on your ideas? Do the tasks look daunting? Do you lack confidence? Are you uncertain of the direction or afraid of failure? How can you overcome these hesitations? Develop a set of ideas to reach your goals, prioritize them, and commence working on your ideas right away. Why delay?

How to Make Tough Choices // Book Summary of Suzy Welch’s 10-10-10 Rule

November 13, 2015 By Nagesh Belludi 1 Comment

In “10-10-10”, Suzy Welch offers a simple, straightforward thought process for decision-making.

The fundamental premise of Welch’s “10-10-10 Rule” is that our decisions define us. Each of our choices has consequences, both now and in the future.

Welch advocates making decisions thoughtfully by considering the potential positive and negative consequences in the immediate present, the near term, and the distant future: or in 10 minutes, 10 months, and 10 years.

… there is nothing literal about each ten in 10-10-10. The first 10 basically stands for “right now” as in, one minute, one hour, or one week. The second 10 represents that point in the foreseeable future when the initial reaction to your decision has passed but its consequences continue to play out in ways you can reasonably predict. And the third 10 stands for a time in a future that is so far off that its particulars are entirely vague. So, really, 10-10-10 could just as well be referring to nine days, fifteen months, and twenty years, or two hours, six months, and eight years. The name of the process is just a totem meant to directionally suggest time frames along the lines of: in the heat of the moment, somewhat later, and when all is said and done.

Welch reiterates that decision-making should involve a clear understanding of all the attributes and the long-term implications of your dilemma, crisis, problem, or question.

10-10-10 does have a way of galvanizing people into forward-thinking action and out of a fixation on the present. … The third 10 in 10-10-10 has a powerful way of mitigating that tendency. It helps us decide whether (or not) it’s worth it to endure short-term flame-outs in the service of our larger, more deeply held goals in life.

The bulk of the book offers trite, protracted, and tiresome examples of people using 10-10-10 to make decisions related to friendships, dating, marriage, children, work, and career and life planning.

Welch explains that the perspective that accompanies considering our decisions’ immediate and long-term consequences can be very helpful.

“By having us methodically sort through our options in various time frames, the process … forces us to dissect and analyze what we’re deciding and why, and it pushes us to empathize with who we might become.”
“The process invariably led me to faster, cleaner, and sounder decisions.”
“The process also gave me a way to explain myself to all the relevant “constituents”—my kids or parents or boss with clarity and confidence.”

Recommendation: Skim. If you must, read the first two chapters for a long-form description of what I’ve summarized. You’ll find little of value in the rest of the chapters. Alternatively, read The Oprah Magazine article in which Welch first introduced her 10-10-10 idea.

Postscript: In 2002, Suzy Welch was launched into spotlight after getting fired as an editor of the Harvard Business Review following a scandalous affair with former General Electric CEO Jack Welch, who was still married to his second wife. Subsequently, Jack’s enraged wife revealed embarrassing details of his post-retirement compensation from General Electric, claimed a significant share of his wealth, and divorced him. Suzy and Jack got married in 2004 and have since authored two best-selling books, “Winning” and “The Real-Life MBA”.

Books in Brief: ‘Flying Blind’ and the Crisis at Boeing

September 24, 2022 By Nagesh Belludi Leave a Comment

Bloomberg investigative journalist Peter Robison’s thoroughly researched Flying Blind: The 737 MAX Tragedy and the Fall of Boeing (2022) offers noteworthy lessons about corporate responsibility and leadership problem-solving.

In a nutshell, starting in the late 1990s, Boeing shifted from a company run by engineers who emphasized product integrity to one run by MBA-types who prized shareholder value over long-term product planning. Inspired by General Electric’s Jack Welch, the company embraced cost-cutting, outsourcing, financial engineering, union-busting, and co-opting regulators. These miscalculated strategies culminated in the 737 MAX disasters and disgraceful corporate responses.

Recommendation: Read Peter Robison’s Flying Blind, but be wary of the author’s broad-brush political biases, which, I found, sidetracked from the storyline. The internal organizational tensions that led to corporate deception and the fateful consequences of federal regulators’ consigning design approvals to Boeing are particularly interesting.

Key Takeaway: Negligent engineering to minimize costs and adhere to a delivery schedule is a symptom of ethical blight.

Making Tough Decisions with Scant Data

January 18, 2022 By Nagesh Belludi Leave a Comment

CDC Grappling with Imperfect Science - Making Tough Decisions with Scant Data Yesterday’s New York Times article highlights the complex tradeoff leaders must often make between indecision and acting on insufficient information:

The Omicron variant is pushing the CDC into issuing recommendations based on what once would have been considered insufficient evidence, amid growing public concern about how these guidelines affect the economy and education. CDC Director Dr. Rochelle Walensky has been commended for short-circuiting a laborious process and taking a pragmatic approach to manage a national emergency, saying she was right to move ahead even when the data was unclear and agency researchers remained unsure. The challenge now for Dr. Walensky is figuring out how to convey this message to the public: “The science is incomplete, and this is our best advice for now.”

The smartest people I know are the ones who understand that they don’t know—can’t know—everything. Yet, they’re ready to act on imperfect information, especially when being slow will be costly.

Idea for Impact: Being able to analyze information is insufficient if you can’t reach decisions.

Knowing you’ll never know everything shouldn’t prevent you from acting. The ability to reason and reconsider your position on something is an integral part of rational thought.

Book Summary of Verne Harnish’s ‘The Greatest Business Decisions of All Time’

December 6, 2021 By Nagesh Belludi Leave a Comment

The Greatest Business Decisions of All Time (2012) is a flatfooted anthology of 18 engaging—and oversimplified—business stories that influenced the course of business. Edited by management consultant Verne Harnish, this tome contains long articles by nine Fortune magazine journalists.

Apple and the Return of Steve Jobs. The 1996 decision by Apple’s board of directors to bring back Jobs revived the company, transformed the consumer electronics industry, and made Apple one of the most valuable companies in the world.
Zappos and Free Shipping. Zappos’s decision to offer free shipping and 365-day free returns lured more mainstream buyers onto the internet. Other retailers had no choice but to provide free shipping (albeit with some restrictions) and absorb the costs.
Samsung and Global Immersion. In the early 1990s, Chairman Lee Kun-Hee instituted a policy to send his brightest young employees on international sabbaticals that exposed them to the local cultures and build business networks. This program later fuelled Samsung’s global ambitions.
Johnson & Johnson and the Tylenol Comeback. Consistent with the company’s “patients come before profit” credo, CEO James E. Burke set the benchmark for crisis management when he decided to pull Tylenol off the shelves nationwide and create a tamper-proof bottle at the cost of $100 million. Johnson & Johnson cemented its reputation for responsible management.
3M’s 15% Free Time Rule and Innovation. 3M Company CEO William McKnight’s extraordinary idea of giving employees free time for “experimental doodling” yielded such innovative products as Post-It notes. 3M quickly diversified its portfolio and entered many consumer- and industrial-businesses. 3M inspired Google’s 20% rule.
The “Intel Inside” Marketing Campaign. To forestall the commoditization of the computer chip, CEO Andy Grove shifted Intel’s image from that of a microprocessor company to that of a producer of a coveted, brand-name product that stood for performance. Intel became a household name that consumers sought when they purchased a computer.
General Electric’s Jack Welch and Crotonville. Welch transformed GE’s sprawling management-training institute in Crotonville, New York, into a focal point of learning for the company.
Bill Gates and His “Think Weeks.” The Microsoft founder’s twice-yearly retreat in rural isolation allowed him to read, reflect, and map out ideas—away from the distractions and the noise of business life.
Softsoap and Impeding Competition. A small Minnesota company called Minnetonka Corp. developed liquid hand soap in the early 1980s. When Softsoap started flying off the shelves, deep-pocked behemoths like Procter & Gamble began to prototype their own variants. Minnetonka’s CEO Robert Taylor developed a smart strategy to block his giant competitors and keep his company’s market share. He purchased the entire U.S. supply of plastic pumps used in the liquid soap bottles for one year—that’s 100 million units from the only supplier. By the time his competitors had access to the plastic pumps, Taylor’s Softsoap’s brand was well established.
Toyota and the Quality Revolution. Toyota’s institutional obsession with waste-reduction, zero defects, and process improvement has transformed manufacturing and inspired excellence in every service industry—including hospitals.
Nordstrom and Customer Service Excellence. Nordstrom built its brand on “above-and-beyond” customer service and problem-solving. The entirety of the Nordstrom Employee Handbook fits on a 5×8 card and contains precisely one rule, “Use the best judgment in all situations. There will be no additional rules.”
Tata Steel and Labor Relations. During a turbulent period of India’s leading steelmaker, Managing Director Jamshed J Irani confronted a bloated cost structure by reducing his 78,000-strong workforce to 40,000 by 2005. In keeping with the Tata Group’s rich philanthropic legacy, Irani offered decent pension plans and invested in labor welfare.
Boeing 707 and the Jet Age. Boeing’s decision to develop the Boeing 707 at the cost of $185 million (more than the company’s market capitalization) “remade a company, an industry, and the very culture of its time.” The 707 was the first transatlantic commercial jetliner in an era of prop planes. It kicked off the Jet Age, revolutionized air travel, and established Boeing as a dominant airliner manufacturer.
IBM and the Customer-Centric Makeover. In 1993, Lou Gerstner became CEO and embarked on an “Operation Bear Hug” to launch new communication pipelines between top executives and IBM’s customers. This helped transform IBM from an inwardly focused bureaucracy to a customer-centric market-driven innovator.
Sam Walton and Walmart’s Saturday Morning Meeting. Walton’s energetic 6:00 A.M. meeting was a pep rally, merchandising workshop, and financial update—all rolled into one. He brainstormed with his store managers on how to improve things week after week and helped metamorphose Walmart from a single, small-town variety store in 1962 into the world’s largest retailer.
Eli Whitney and the Dawn of American Technology. Whitney’s invention of the “saw gin” that worked well with short-staple cotton helped transform Southern agriculture (and sustain the institution of African slavery!) Whitney then popularized the use of interchangeable parts in making firearms.
Bill Hewlett and David Packard and the “HP Way.” The essence of Hewlett-Packard’s management philosophy was an openness and respect for the employees. With a framework of principles and the simplicity of their management methods, they established many progressive management practices that prevail even today.
Henry Ford and the Factory- and Wage-Revolution. When Ford introduced the moving assembly line, his fledging factory was confronting a dispirited workforce, declining workmanship and quality, absenteeism, and annual labor turnover of 370 percent. Then Ford decided to raise wages from $2.50 to $5 a day. The following week, Ford Motors had more than 26,000 job applicants. Ford increased production rates and slashed the per-unit cost of the Model T. Annual labor turnover fell to 16 percent, and Ford’s profits doubled within two years. Every time Ford increased the productivity of car production, he continued to raise wages. His well-paid workers had more to spend—and could afford the very cars they built.

Recommended: Quick read. The Greatest Business Decisions of All Time is a concise and entertaining read, especially if you like getting into heads, the thoughts, and the motivations of well-known business luminaries. The 18 case studies lack rigor and are beset with recency biases, narrative fallacies, and a misplaced sense of causes and effects. Some stories, e.g., the Softsoap one, aren’t well known.

Daniel Gross’s Forbes Greatest Business Stories of All Time (1997) is significantly more engrossing and instructional.

Even the Best Need a Coach

November 22, 2021 By Nagesh Belludi Leave a Comment

Even the Best Need a Coach (Tom Brady with coach Bill Belichick)

As the saying goes, it’s what you learn after you know it all.

Top athletes rely on coaches to push their performance to new heights. Even Tiger Woods had a swing coach at the top of his game.

Many corporate executives seek out several advisors who help frame ideas for them and play a point of critical thinking. Former General Electric CEO Jack Welch worked with Ram Charan, the eminence grise of business advisors, for many years.

“It’s not how good you are now; it’s how good you’re going to be that really matters”

In a TED2017 speech, the American surgeon Atul Gawande—author of such well-received books as The Checklist Manifesto (2011)—emphasized how coaching helps individuals and teams execute better on the fundamentals:

Having a good coach to provide a more accurate picture of our reality, to instill positive habits of thinking, and to break our actions down and then help us build them back up again.

There are numerous problems in “making it on your own.” You don’t recognize the issues that are standing in your way—or, if you do, you don’t necessarily know how to fix them. And the result is that somewhere along the way, you stop improving.

That’s what great coaches do—they are your external eyes and ears, providing a more accurate picture of your reality. They’re good at recognizing the fundamentals. They’re breaking your actions down and then helping you build them back up again.

Sometimes you can be too close to things to see the truth.

Blind spots are less obvious when things are going well. It is very easy for you to become inward-looking, particularly when you’ve been very successful. However, these blind spots can become destructive when performance moves in the other direction.

A third-party, fresh-eye assessment is an obvious reality check. Coaching is a whole line of way that can bring value to what you do and excel at it.

If you’re successful and want to get better, you’ll need to look at your situation as an outsider might. Coaching can help you get perspective and see things in a more detached manner.

It’s Lonely at the Top

Executives need a valuable ally and a resource for professional growth. They hire coaches to help explore their strengths and vulnerabilities.

Coaches are also valuable allies in decision-making. Many executives find it helpful to talk important decisions over with a trusted coach—just the process of talking can help sort out and clarify thoughts and feelings. Not to mention how another person’s views may illumine aspects of a problem that you may have missed.

Besides, many a coach’s specific arena is one of interpersonal relationships, office politics, and corporate culture. To be effective in our work, you must be effective in building relationships with your bosses, subordinates, peers, and other organizational stakeholders such as customers and suppliers. Management and leadership are all about influence.

Idea for Impact: Coaching is how people get better at what they do

You too should consider a coach to look at things with a fresh eye, improve your performance, and help with interpersonal relationships in the workplace.

Don’t Be Deceived by Others’ Success

November 15, 2021 By Nagesh Belludi Leave a Comment

Imitating successful competitors is a leading pathway to business innovation. Benchmarking can offer meaningful insights into comparative performance and help discover learnings for improvement. However, adopting others’ best practices can be surprisingly misleading and ineffective.

Four perception biases that come with benchmarking other companies can fail to make yours any better.

Many companies luck into success.

Don't Be Deceived by Others' Success As I’ve noted before, you can’t reproduce others’ luck. Successful companies tend to significantly overvalue the effect of their leaders’ deliberate decisions on their performance and understate the role of chance—being at the right time, at the right place, with the right people. Alas, what worked in their circumstances may not work in yours.

The set-up-to-fail syndrome.

Benchmarking can be remarkably misleading when you make oversimplified comparisons to superstars who may not represent your situation. You could sink your business if you blindly copy celebrity leaders’playbooks in the wrong context, product, strategy, or market.

Companies that benchmark Apple and Steve Jobs and sidestep market research often disappoint themselves when their product launches fail. The leaders of these companies neither have Jobs’s brilliant intuition nor his extraordinarily talented creative team to build what customers want but didn’t know they wanted yet.

In the same way, companies that imitate the 20-70-10 “rank and yank” processes from Jack Welch’s playbook often fail to realize that several factors contributed to their success at General Electric. Welch had a robust organizational culture that insisted on regular and candid employee feedback and robust personnel processes for recognizing and developing the best talent within the company.

Corporate culture is a tricky business.

Your company’s culture—the prevailing way your people feel, think, behave, and relate to one another—cannot be changed easily. One industrial company aborted trying to imitate Google’s culture. This company couldn’t get its managers and employees to be more autonomous and innovative because the company’s and the industry’s ingrained culture did not lend itself to experimentation, risk-taking, and the celebration of fast failure.

Benchmarks look backward, not forwards.

In a competitive, ever so fast-changing world, what has succeeded in the past ten years may not necessarily do so in the next 10. The management guru Tom Peters once warned, “Benchmarking is stupid! Because we pick the current industry leader, and then we launch a five-year program, the goal of which is to be as good as whoever was best five years ago, five years from now.”

A strong focus on “quick wins” can turn out long-term losers.

Benchmarking can make short-term gains but have adverse long-term effects that may not manifest until many years later. By imitating an industry leader, a capital goods company decided to boost efficiency by outsourcing design to its suppliers. Years later, it discovered the debilitating effects of the loss of vital technical knowledge.

Idea for Impact: Best practices only add value when applied in the proper context

Applying best practices in the wrong context is a sure-fire way to hold your company back.

Pay attention to all ideas, mull them over, test what makes sense, adopt what works, and discard what doesn’t.

Sure, help yourself to great ideas wherever you can get them, but be mindful of the context. Try to understand how the top performers’ circumstances and culture may be causing their success. Think through the long-term consequences of any decision you take or any practice you adopt.