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GE’s Welch on Leadership

Posted By Barry Ritholtz On January 23, 2004 @ 6:04 pm In Media,Politics | Comments Disabled

Its hard to discuss the stock market without, at some point, talking about General Electric, the biggest company in the United States. And its impossible to talk about GE, without disucssing the man at the helm for so many years, Jack Welch

Jack has an intriguing article on “leadership” in today’s WSJ: Four E’s (a Jolly Good Fellow) [1]

Every time I speak to a group, I get asked about leadership. Mainly, people want to know how I feel about that age-old question: Are leaders born or made? And I always answer the same way: Who knows? What I do know is what leaders look and act like. Not because I’m a great thinker on the subject, but because I hired (and occasionally fired) leaders for about 30 years. After a while I got the hang of the characteristics that made some people better than others at setting the right goals, reaching them the right way, and doing both in the right amount of time, which is what leadership is when you get right down to it . . .

Basically, my process assesses four essential traits of leadership (each one starting with an E, a nice coincidence). One, successful leaders have tons of positive energy. They can go go go; they love action and relish change. Two, they have the ability to energize others — they love people and can inspire them to move mountains when they have to. Three, they have edge, the courage to make tough yes-or-no decisions — no maybes. And finally, they can execute. They get the job done.

Jack adds that a fifth element, “Passion — a heartfelt, deep and authentic excitement about life and work” — is also necessary.

But we really can’t discuss these 4 (or 5) characteristics unless you get past two threshold questions.

“First: Does the leadership candidate have integrity? That means, does he or she tell the truth, take responsibility for past actions, admit mistakes and fix them? . . . Second: Before applying the Four E’s, you have to ask, is the candidate intelligent? Does the candidate has to have the breadth of knowledge, from history to science, which allows him to lead other smart people in a world that is getting more complex by the minute.”

Jack slices the issue even finer:

“A leader’s intelligence has to have a strong emotional component. He has to have high levels of self-awareness, maturity and self-control. She must be able to withstand the heat, handle setbacks and, when those lucky moments arise, enjoy success with equal parts of joy and humility. No doubt emotional intelligence is more rare than book smarts, but my experience says it is actually more important in the making of a leader. You just can’t ignore it.”

Jack then applies this to several of the Democratic candidates. While I find some of his analysis inconsistent, its still a very interesting approach to political handicapping and candidate selection.

It would be fascinating to see the results of applying Jack’s own standards to his preferred candidate, President Bush. Always amusing to see theory applied to real life . . .

Four E’s (a Jolly Good Fellow) [1]
By Jack Welch, January 23, 2004
(Mr. Welch is a former chairman and CEO of General Electric Co.)


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[1] Four E’s (a Jolly Good Fellow): http://online.wsj.com/article/0,,SB107481763013709619,00.html

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