Mindset: The New Psychology of Success

When Jack Welch took over GE in 1980, the company was valued at fourteen billion dollars. Twenty years later, it was valued by Wall Street at $490 billion. It was the most valuable company in the world. Fortune magazine called Welch “the most widely admired, studied, and imitated CEO of his time.… His total economic impact is impossible to calculate but must be a staggering multiple of his GE performance.”

But to me even more impressive was an op-ed piece in The New York Times by Steve Bennett, the CEO of Intuit. “I learned about nurturing employees from my time at General Electric from Jack Welch.… He’d go directly to the front-line employee to figure out what was going on. Sometime in the early 1990s, I saw him in a factory where they made refrigerators in Louisville.… He went right to the workers in the assembly line to hear what they had to say. I do frequent CEO chats with front-line employees. I learned that from Jack.”

This vignette says a lot. Jack was obviously a busy guy. An important guy. But he didn’t run things like Iacocca—from the luxurious corporate headquarters where his most frequent contacts were the white-gloved waiters. Welch never stopped visiting the factories and hearing from the workers. These were people he respected, learned from, and, in turn, nurtured.

Then there is the emphasis on teamwork, not the royal I. Right away—right from the “Dedication” and the “Author’s Note” of Welch’s autobiography—you know something is different. It’s not the “I’m a hero” of Lee Iacocca or the “I’m a superstar” of Alfred Dunlap—although he could easily lay claim to both.

Instead, it’s “I hate having to use the first person. Nearly everything I’ve done in my life has been accomplished with other people.… Please remember that every time you see the word I in these pages, it refers to all those colleagues and friends and some I might have missed.”

Or “[These people] filled my journey with great fun and learning. They often made me look better than I am.”

Already we see the me me me of the validation-hungry CEO becoming the we and us

of the growth-minded leader.

Interestingly, before Welch could root the fixed mindset out of the company, he had to root it out of himself. And believe me, Welch had a long way to go. He was not always the leader he learned to be. In 1971, Welch was being considered for a promotion when the head of GE human resources wrote a cautioning memo. He noted that despite Welch’s many strengths, the appointment “carries with it more than the usual degree of risk.” He went on to say that Welch was arrogant, couldn’t take criticism, and depended too much on his talent instead of hard work and his knowledgeable staff. Not good signs.

Fortunately, every time his success went to his head, he got a wakeup call. One day, young “Dr.” Welch, decked out in his fancy suit, got into his new convertible. He proceeded to put the top down and was promptly squirted with dark, grungy oil that ruined both his suit and the paint job on his beloved car. “There I was, thinking I was larger than life, and smack came the reminder that brought me back to reality. It was a great lesson.”

There is a whole chapter titled “Too Full of Myself” about the time he was on an acquisition roll and felt he could do no wrong. Then he bought Kidder, Peabody, a Wall Street investment banking firm with an Enron-type culture. It was a disaster that lost hundreds of millions of dollars for GE. “The Kidder experience never left me.” It taught him that “there’s only a razor’s edge between self-confidence and hubris. This time hubris won and taught me a lesson I would never forget.”

What he learned was this: True self-confidence is “the courage to be open—to welcome change and new ideas regardless of their source.” Real self-confidence is not reflected in a title, an expensive suit, a fancy car, or a series of acquisitions. It is reflected in your mindset: your readiness to grow.

Well, humility is a start, but what about the management skills?

From his experiences, Welch learned more and more about the kind of manager he wanted to be: a growth-minded manager—a guide, not a judge. When Welch was a young engineer at GE, he caused a chemical explosion that blew the roof off the building he worked in. Emotionally shaken by what happened, he nervously drove the hundred miles to company headquarters to face the music and explain himself to the boss. But when he got there, the treatment he received was understanding and supportive. He never forgot it. “Charlie’s reaction made a huge impression on me.… If we’re managing good people who are clearly eating themselves up over an error, our job is to help them through it.”