“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.” A recent article in Fortune blasted out the news that Jack Welch's rules for running a successful business have gone out, and the poor guy has only been out of the corner office for five (5) years. How time flies. Yet in the offices of corporate America, the momentum of the old rules is strong. Many business leaders are following playbooks that apparently have been distorted by progress and time.
If you didn't see the piece, the list was kind of interesting:
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.
As much as I, along with the rest of the universe, admire the results of what GE accomplished during Jack's tenure, it does not necessarily follow that his leadership "rules" are the be all and end all. Because of Jack's personality and style he is often looked at as a benchmark when it comes to leadership. This is understandable, but as we all know there are lots of other companies that have done extremely well with leadership styles that were very different from Jack's. There are also plenty of examples of ones that have failed with leaders whose styles and rules were like Jack's. I guess that is why they call it "situational leadership."
Jack Welch advocated lean and mean, and lowest cost–and corporate America got out its ax. Welch liked to rank players and weed out the non-performers–and HR departments turned henchmen. Everybody joined the bandwagon including academics, consulting firms, and leaders looking for answers to sustain growth and impress Wall Street. According to Harvard Business School's Rakesh Khurana, this is the legacy of the Old Rules. Managing to create shareholder value became managed earnings, and managing quarter to quarter to please the Street. "That meant a disinvestment in the future," says Khurana, author of "Searching for a Corporate Savior."
The new challenge is about adaptability, agility, inventiveness and, of course, great people. We witnessed how Apple’s innovation with the iPod made the company take off, and how Dell transformed an industry by upending Compaq, IBM, and Hewlett-Packard. Google is the ultimate answer and advertising machine, and nobody imagined that Internet business model till Larry Page and Sergey Brin made it happen, and created a company with a market cap of $114 billion in a short 5 years.
So, I don't know if it's the fact that the "rules" of leadership have really changed and the old ones don't work anymore–or if it is simply that we have "new rules" driven by paradigm shifts such as globalization, the Internet, recognition of human capital, and technology breakthroughs. Whatever it was, things changed, and there are seven old rules with apparent limitations–and seven replacements that point toward a new model for success.
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