Trasformational leadership

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1Transformational leadership



In the 80’s a new approach towards leadership appeared. As the market realities were changing rapidly, the competition was becoming fiercer and the shareholders were pressing in order to increase the value of the company a new concept of a transformational leader was becoming more and more popular.

The theory of leadership based on the notion of transformational leader was not looking for answers concerning what leaders are and what their style is. On the other hand it focused more on the decisions and actions the leaders take in order to be efficient and efficacious. Managers and leaders have different tasks and functions in the company. The manager responsibilities are to establish an order in the company and manage its complexity. The leaders are supposed to create a climate of entrepreneurship and involvement and shape the company according to the changes of the environment. To achieve these goals the leaders have to able to create a vision in the company and make people follow as well as possess the skills essential in the process of introduction of new procedures, rules and other changes crucial for the company if it is to follow the mission. The best example of such a leader possessing all the above mentioned predispositions and skills seems to be Jack Welch.




Jack Welch may be the most talked about and widely emulated manager in business history. Hes used his own uncanny instincts and unique leadership strategies to run GE, the most complex organization in the world, increasing its market value by more than $400 billion over two decades. Much has been said and written about how Welch has transformed what was an old-line American industrial giant into a keenly competitive global growth engine, how he has astutely moved the once-Establishment maker of things into services. Welch has reshaped the company through more than 600 acquisitions and a forceful push abroad into newly emerging markets.

Jack Welch succeeded as CEO due to several factors including his tremendous leadership skills. He was aware about the ways how of communicating key ideas to the rest of the staff persistently repeating it over and over, ultimately driving the messages home. His concept of change was also aggressive by clearly outlining what needs to be changed. When Welch intervenes, he is rarely indecisive. He was saying ‘yes’ or ‘no’, trying to avoid the word ‘maybe’.

As Welch became the CEO of the company in 181 the position and future of the company seemed to be secure. Nevertheless he was not satisfied with the performance despite the profit of the company. He tried to anticipate the future changes on the market and in his opinion without radical changes the company’s future was unsure and risky. He decided that the company has to reconsider the structure of the range of offered products and decrease the labour costs by layoffs. That step was made taking into consideration the increasing competitiveness of the Japanese producers as far as the quality and labour costs were concerned. Anticipating that a fierce competition on the market is inevitable he wanted to make the organisation more flexible and resistant. As he said the best moment to make decisions is before the crisis appears.

Jack Welch proved to be a great enemy of bureaucracy and procedures. He flattered the hierarchy in the company in order to improve the internal communication and speed up the decision making process. The exchange of information and lack of barriers was said to be crucial to make people work effectively. He strongly believed that the organisation should be simple, the decision made quickly without useless debates, meetings and discussions. As a result in the 0’s the phases of projection and introduction of new products to the market were much faster comparing to the competition.

Next step of the CEO was to change the managers that remained in GE into leaders. He wanted to have leaders that would make the employees follow the mission and the employees willing to do something by themselves. The employees were provided with trust and support so that they were willing to make some decision independently and take some risk. They simply started to have faith in themselves. By giving them this independence they were aware that they are personally responsible for the success or failure of the company. As Welch was saying less management is better management.

The other crucial advantage of Jack Welch is the ability to make use of the most effective strategies existing on the market. He knew that it takes time to develop an original strategy that may prove to be efficient in the future. That is why to make the process of modernisation faster and less risky he strongly supported the idea of introducing solutions and methods existing in other companies. According to him in that situation it was not wise to develop even best ideas but instead to look for them and introduce them as soon as possible. The whole strategy of GE was based on the process of learning. Welch tried to encourage all the employees, managers and ordinary workers, to look for solutions that may prove beneficial for the company. The idea of constant learning and improvement was one of the key issues that allowed GE to reach its current market position.

GE projects are usually successful because the managers were forced to face a difficult choice. As he introduced the program of 6 sigmas, created in Motorola, aiming at improvement of effectiveness and quality the managers had a chance to decide whether they want to become a part of it or not. If you were reluctant you had to look for another job. A year after all the remaining employees had to undergo the training. To emphasize the priority of this program Welch made it clear that almost 50 of the managers’ salary will depend on number of mistakes and quality of production.

Another idea implemented by Welch was the objective stretching. He assumed that budgeting is limiting the effectiveness of the company as there exists a natural tendency in each department to minimize the objectives it faces and maximize the resources spend on their realisation. It results in the situation when the company is stagnant. Objective stretching was said to be the best alternative. It consisted of two phases. In the first one the company wa assuming the partial objectives which were rational and possible to reach. In the second phase the objectives were stretched as high as possible. Although the objectives were almost impossible to realise Welch claimed that the results were much higher than if provide the staff with the achievable goals. Objective stretching is not that popular as very often it is hard to guess what the actual objective is. But that is what it is all about. As the objective is higher the motivation increases. No one will be motivated by the objectives that require only a little more effort.

Unquestionably Jack Welch turned out to be a leader possessing all the skills and predispositions to manage a company and make it successful. He is an excellent example of a transitional leader as he was able to establish a mission and make people follow in the same time being innovative and shaping the company according to the environment needs and anticipated changes.



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