Mindset: The New Psychology of Success

He learned how to select people: for their mindset, not their pedigrees. Originally, academic pedigrees impressed him. He hired engineers from MIT, Princeton, and Caltech. But after a while, he realized that wasn’t what counted. “Eventually I learned that I was really looking for people who were filled with passion and a desire to get things done. A resume didn’t tell me much about that inner hunger.”

Then came a chance to become the CEO. Each of the three candidates had to convince the reigning CEO he was best for the job. Welch made the pitch on the basis of his capacity to grow. He didn’t claim that he was a genius or that he was the greatest leader who ever lived. He promised to develop. He got the job and made good on his promise.

Immediately, he opened up dialogue and the channels for honest feedback. He quickly set to work asking executives what they liked and disliked about the company and what they thought needed changing. Boy, were they surprised. In fact, they’d been so used to kissing up to the bosses that they couldn’t even get their minds around these questions.

Then he spread the word: This company is about growth, not self-importance.

He shut down elitism—quite the opposite of our fixed-mindset leaders. One evening, Welch addressed an elite executive club at GE that was the place for movers and shakers to see and be seen. To their shock, he did not tell them how wonderfu they were. He told them, “I can’t find any value in what you’re doing.” Instead, he asked them to think of a role that made more sense for them and for the company. A month later, the president of the club came to Welch with a new idea: to turn the club into a force of community volunteers. Twenty years later that program, open to all employees, had forty-two thousand members. They were running mentoring programs in inner-city schools and building parks, playgrounds, and libraries for communities in need. They were now making a contribution to others’ growth, not to their own egos.

He got rid of brutal bosses. Iacocca tolerated and even admired brutal bosses who could make the workers produce. It served his bottom line. Welch admitted that he, too, had often looked the other way. But in the organization he now envisioned, he could not do that. In front of five hundred managers, “I explained why four corporate officers were asked to leave during the prior year—even though they delivered good financial performance.… [They] were asked to go because they didn’t practice our values.” The approved way to foster productivity was now through mentoring, not through terror.

And he rewarded teamwork rather than individual genius. For years, GE, like Enron, had rewarded the single originator of an idea, but now Welch wanted to reward the team that brought the ideas to fruition. “As a result, leaders were encouraged to share the credit for ideas with their teams rather than take full credit themselves. It made a huge difference in how we all related to one another.”

Jack Welch was not a perfect person, but he was devoted to growth. This devotion kept his ego in check, kept him connected to reality, and kept him in touch with his humanity. In the end, it made his journey prosperous and fulfilling for thousands of people.

Lou: Rooting Out the Fixed Mindset

By the late 1980s, IBM had become Enron, with one exception. The board of directors knew it was in trouble.

It had a culture of smugness and elitism. Within the company, it was the old We are royalty, but I’m more royal than you are

syndrome. There was no teamwork, only turf wars. There were deals but no follow-up. There was no concern for the customer. Yet this probably wouldn’t have bothered anyone if business weren’t suffering.

In 1993, they turned to Lou Gerstner and asked him to be the new CEO. He said no. They asked him again. “You owe it to America. We’re going to have President Clinton call and tell you to take the job. Please, please, please. We want exactly the kind of strategy and culture change you created at American Express and RJR.”

In the end he caved, although he can’t remember why. But IBM now had a leader who believed in personal growth and in creating a corporate culture that would foster it. How did he produce it at IBM?

First, as Welch had done, he opened the channels of communication up and down the company. Six days after he arrived, he sent a memo to every IBM worker, telling them: “Over the next few months, I plan to visit as many of our operations and offices as I can. And whenever possible, I plan to meet with many of you to talk about how together we can strengthen the company.”

He dedicated his book to them: “This book is dedicated to the thousands of IBMers who never gave up on their company, their colleagues, and themselves. They are the real heroes of the reinvention of IBM.”