Winning

Welch ran General Electric for twenty years and turned it into the most valuable company in the world; after retiring he traveled the planet answering questions from executives and founders, and Winning is the compilation of his answers. It is not a book of theory but of blunt opinions from someone who made tens of thousands of decisions about people, budget and strategy.

His lessons on fundamentals are four:

• Mission and values. The mission answers how we are going to win in this business, and the values describe the behaviors that make it possible; both must be concrete, and whoever violates the values leaves even if they deliver results.
• Candor. The lack of candor, the habit of softening, staying quiet and saying in the hallway what wasn't said in the room, is what costs organizations the most, because it blocks ideas and slows speed.
• Differentiation. Every year the top 20 percent of people receive disproportionate rewards and responsibilities, the middle 70 percent is developed and cared for, and the bottom 10 percent must leave, with dignity but without exception.
• Voice and dignity. Anyone must be able to say what they think and be heard.

The author's line: "Lack of candor is the biggest dirty little secret in business." For hiring, Welch proposes a filter and a list. The filter is three acid tests: integrity, intelligence and maturity; without them, don't even interview. The list is the four E's and a P:

• Energy.
• The ability to energize others.
• Edge, the judgment to make hard decisions.
• Execute.
• Passion.

Welch insists that references be checked personally by the hiring manager, not by recruiting, and with incisive questions. Even so, he admits he was frequently wrong in his people decisions, and that he improved over the years without ever getting it right every time. The conclusion is to make peace with the fact that there will be hiring mistakes: the point isn't to avoid them entirely, but to detect them early and correct them, because the mistake is yours and so is fixing it.

On firing he says what no one wants to hear: no one should be surprised to be fired; if they are, their boss failed for months to tell them the truth.

And for crises he gives five rules: the problem is worse than it looks, there are no secrets, your handling will be told in the worst possible way, there will be changes in processes and in people, and the organization will survive.

His definition of strategy is one line: find the big idea, put the right people in place and relentlessly seek best practices. He distrusts negotiated budgets, which he calls the most ineffective exercise in management because they reward whoever negotiates the lowest target, and proposes replacing them with operating plans that look at what the competition did and what is possible (outside-in, top-down). When it's convenient, promote change before it's forced.

The concept to master is the performance curve, the 20-70-10 differentiation. You can reject the percentages, but the underlying question can't be avoided: do you know who your 20 is and who your 10 is, and do they know?

How to apply it? Write the names of your leadership team on a sheet and place them in the three bands honestly; then ask yourself whether each person in the 20 knows it and has received disproportionate rewards and responsibilities this year, and whether anyone in the 10 would be surprised to learn it. Wherever there's surprise, there's a conversation pending this week.

Additionally, the final chapters on how to find the right job, how to deal with a bad boss and work-life balance are useful advice for any founder.