WISDOMSOURCE NEWS

Vol. 2, No. 7
Monday, January 17, 2005

K3M CEO Brief on Jack Welch's: Straight from the Gut

In this powerful edition of WisdomSource News, we discuss the book Straight from the Gut by Jack Welch, the former CEO of General Electric, one of the world's largest companies. Focus is given on presenting you with the concepts that GE uses to embrace change so that you can transform your organization to profit from the propitiousness of changing market and operating conditions.

General Electric is the U.S. company with the highest market capitalization of $388 billion; and it employs over 305,000 people worldwide. It can be considered a model for the principles of K3M.

The concepts of Six Sigma Process Improvement, Differentiation, Boundaryless, and Knowledge Coaching in E-Business as brought about by Jack Welch's leadership are good examples of the effective organizational management detailed by K3M: Knowledge Management Maturity Model^TM at the highest levels.

The WisdomSource Knowledge Management Maturity Model (K3M)^TM

GE is a model organization for the principles of K3M: The Knowledge Management Maturity Model in the views of the marketplace, products & services, human resources, and the organization that successful entrepreneurs and business leaders who are at the top of their game operate by in their continuous reinvention of themselves, their organizations, and that which their organizations represent.

Living with Change

A wise man once said: the only constant is change. Change will never stop. As such we must learn to live with change whether we like it or not.

What it takes to become and remain a Fortune 100 company is the ability to consistently anticipate changes in market and operating conditions before their time comes so that you can transform your organization and gain business advantage in the ever-changing global arena.

What enables this ability are the peace of mind that stems from having your organization and its component systems running smoothly and the good feeling that your employees bring to work everyday. Information must be available where needed; and your employees' minds need to be freed from the confusion that comes from lack of organization. Each individual needs the peace of mind to intuit what he or she needs to do in order to achieve their fullest potential without getting caught in the minutiae of non-value-added work. Only then is your organization truly free to think ahead and to focus on value-added, revenue-generating activities. The end-result is a financially successful enterprise and a greater sense of personal fulfillment for everyone involved.

Embracing Change

Early in his career, Jack Welch declared war on the bureaucracy of GE and its stodgy hierarchical structures that were slow to adapt to change. Under his leadership, GE was able to transform itself from an organization known for its avoidance of change to the house that Jack built, an organization that rides on the leading edge of change.

Developing Social Capital Through Eco-Friendly Initiatives

To give an example of the success of GE in its embrace of change, at the time of the printing of this newsletter, GE has moved towards sustainable operations in order to ensure the future of the Company. Through the addition of eco-friendly businesses such as healthcare, water purification and alternative energy to its portfolio, the Company has made significant gains in public relations and in social capital.

A move in the direction of sustainable business is commendable and worthy of recognition given the fact that GE has not traditionally been considered a poster child for the environment. Costly PCB contamination related lawsuits and significant losses in public trust have occurred as the result of over a century of heavily polluting industrial operations.

Under the leadership of CEO Jeffrey Immelt (since 2001), the newly minted “green” giant is expected to grow total earnings by 15% next year, easily topping the projected 6% earnings growth for the S&P 500 index.

Using Six Sigma to Achieve K3M Level 7

Central to Jack Welch’s success during his tenure at GE is the Six Sigma process improvement methodology and the achievement that it wrought in the goal of improving business operations.

Six Sigma is based upon statistical analysis and the Bell curve. At the level of Six Sigma, a manufacturing or service process produces only 3.4 defects per million operations, which is equivalent to 99.99966 percent of perfection.

Through the adoption of Six Sigma methodology and GE’s famed Six Sigma Black Belt program, GE put into place an operating methodology and corporate culture that rewarded excellence and fostered improvement of business processes across the board. GE's full embrace of Six Sigma methodology serves as a model for K3M Level 7: Continuous Process Improvement.

Differentiation and the Merger of K3M Level 4 and Level 7

GE merges organizational learning (K3M Level 4) with continuous process improvement (K3M Level 7) through what the Company calls differentiation. Using its Session C yearly employee reviews, GE is effective in sorting out the top 20%, vital 70% and bottom 10% of all human resources, otherwise known as A, B, and C players.

Each year, the organization is stratified. Those who add value are recognized for their addition of value and receive increases in pay and responsibility; and those who fall short of expectations are notified that they need to improve or are let go. This ensures that the Company maintains the sharpness and capabilities of its people; and that its employees are engaging in innovation and in furthering the goals of the organization.

Additionally, GE sets the stage for its top performers to innovate the businesses of GE by providing clear career progressions, giving them the training that they need to achieve their personal career goals within the overall enterprise of GE, and weeding out employees who don’t add value so that performers can succeed.

Boundaryless

Another concept fundamental to GE's complete embrace of change is that of the boundaryless organization. GE merges with other companies in order to change; and it will diversify its holdings and let go of operating units that don't add to the bottom line. Additionally, the Company considers its customers, vendors, and suppliers as if they are part of its own organization.

In boundaryless operations, portfolio holdings are structured so that each component business gains operating advantage from consolidations in infrastructure and operations. Businesses that do not gain advantage are sold without attachment to an organizational ego or sense of identity that does not make good business sense.

GE's reinvention through mergers, acquisitions and divestitures is a way to continuously improve processes based upon what makes the most business sense in terms of profitability, because processes are managed from end-to-end as the organization adjusts itself to its processes.

Within this view, adjustment of the organization is the means by which the Company continuously adds value to its customers and the marketplace.

Knowledge Coaching in E-Business: Self-Actualization Through Knowledge Sharing

Because no one person is an expert in everything, a person who is advanced in one area may be a beginner in another.

When GE's E-Business came to light, it became evident that the organization's older, more senior executives lacked the experience to take advantage of the possibilities that the Internet and Web-based technology had to offer.

GE paired young Internet-savvy business people to mentor these older experienced executives. This enabled these younger people to experience self-esteem through knowledge sharing and to live in the world of the senior executives. Similarly, the older, more-experienced executives were empowered with the ability to use the Internet to gain business advantage; and they were able to feel good about passing on their life's work and business wisdom to the future leaders of the organization.

Choose WisdomSource and Get to the Next Level

WisdomSource v3.0 empowers you to understand your organization and to be able to gradually change over time so as to always be in harmony with the demands of the time. Our software provides a gradual path to organizational self-actualization that enables your resources to share their valuable lessons-learned and to benefit from the wisdom of your best people so that you can take things to the next level and ensure your future.

WisdomSource enables your organization to harness change and to maintain a balance with change by capturing the changes that are taking place right now in your business and applying them to your products, services, and operations across your enterprise.

Contact WisdomSource to Succeed in Transforming Your Organization so that You Can Engage in Real Innovation

WisdomSource v3.0 is the turnkey solution that eliminates the organizational risks that stem from undergoing transformation. Contact us today for a consultation with an experienced change management specialist who will help you to see what needs to be done. If you would like to discuss the possibilities that a WisdomSource Knowledge Management Solution affords your organization, please Contact WisdomSource. We look forward to hearing from you.