Welch: Turkey's got so much potential, need to create 200, 300 companies like Turkcell

Welch: Turkey's got so much potential, need to create 200, 300 companies like Turkcell

Jack Welch, famous for building General Electric (GE) into the largest company in America, spoke at the Swissôtel on Saturday at the invitation of Turkcell, Turkey's number-one GSM mobile telephone service provider. Welch ran GE for 21 years before retiring in 2001. During his tenure as chief executive, the company increased its revenues four-fold and its market capitalization grew from $14 billion to $410 billion.

Turkcell CEO Süreyya Ciliv welcomed Welch as the guest speaker of the company's second İşTcell Leaders Conference, a series inaugurated last November with an appearance by Virgin Airways founder Richard Branson. Welch's wife, Suzy, acted as moderator for a question-and-answer session with her husband. Suzy Welch attended Harvard College, where she also earned her MBA. Ciliv recalled his own days at Harvard Business School in his introduction. One of the first case studies his professor handed out in 1981 concerned GE, portrayed as a large and diverse company of 300,000 workers, a company with potential, but one whose size and bureaucracy hindered fast growth.

In years to come the GE case study would be presented again in business schools across the world, but as a study in success, for Jack Welch became CEO in 1981 and immediately began selling non-performing units and firing or laying off unproductive workers. By the time Ciliv took a job at Microsoft, Jack Welch had become the business model for Microsoft and hundreds of other companies. In 1999 Fortune magazine chose Welch as the manager of the century.

What does Turkey need?

Asked for his impressions of Turkey, Welch said he found the Turks to be engaging, exciting, and aggressive. "They want to be technological leaders and want to educate the hell out of everybody," said Welch. "Turkey's got so much potential, and people need to create a hundred, 200, 300 companies like Turkcell." Turkey needs a business climate that makes young people believe that their dreams can come true, he said. Turkey needs a good tax policy, one that focuses not on maintaining wealth, but on creating wealth. America's luck is that it has a huge pool of venture capital, with more money than ideas, and you're a hero if you start a successful company, not a bum.

Welch rehashed much of his advice from the distillation he made of his management practices in his bestseller, "Winning." The difference on Saturday came in hearing the words with Welch's enthusiasm, alive and enlivening even if his voice is beginning to crack with age. Asked what leaders do, Welch said the first step is to set a mission -- not just a buzzword, but a goal that people know in their hearts. Secondly, a leader selects a set of behaviors, or values -- not vague concepts like quality, but key ideas like speed. Take ideas from everywhere, from another company or from the mail clerk; for the best ideas win, not the level of the organization from which the idea comes.

Then you get every employee on board: Which brought Welch to one of his hallmark practices, honest appraisals of employee performance, candid feedback.

What leaders do

"Reward with praise and money, for companies that win are what society needs," said Welch. "Is the place vibrating, or like a salt mine? You cannot lead without being straightforward, can't hide behind your title. Take care of your very best, improve the middle and get the bottom out. It sounds cruel, but the cruelest management is to keep people who do not belong."

To illustrate, he brought up the current round of layoffs in the banking industry in New York. "Some guy says, 'But I've been here 32 years, why me?' Well, you have to go because you're not good enough. It's like running a sports team, constantly developing new talent, trading players, getting rid of people who don't perform." Suzy Welch asked what people should do if their culture has a taboo on honest appraisals and Welch said that his was only one method, not the only way, but that it had been proven in hundreds of companies. The same technique of reward applies to programs as well as people. "Sprinkling your resources here and there is cowardly," he said. "You need to have the courage to say yes to this and no to that, to invest all the way in the ideas you think will win."

What are leaders like?

True leaders are authentic, comfortable in their own shoes, can deal with anything. "When I saw a leader who got excited about their people, who liked to give raises, that was great, and those people got the best results," said Welch. "It's not just energy, but being able to energize; and to have an edge, be able to say yes or no; and passion, to really care about people."

Real leaders are not so much tough, as tough-minded, he said. The biggest mistake managers can make is to insulate themselves, not use all the input around them. "A leader needs a desperate connection with different levels of the organization, not to be isolated from reality in a big, fat office," said Welch. He recounted his own practice of going to GE's management school and visiting for a whole day, "just hanging out," going to the bar after class and getting a real feel for what's going on rather than the dry summary from some report.

Welch also blasted budget meetings as one of the more wasteful corporate rituals, with one guy coming in asking for four, his boss prepared to give two, they spend eight tedious hours in a windowless room looking at PowerPoint presentations and come up with… you guessed it, a budget of three. He claimed to have changed the dynamic of that process at GE so that budget meetings explored opportunities rather than limits.

Local questions

The session closed with videotaped questions from various Turkish business leaders, beginning with one from Borusan Holding CEO Agah Uğur as to Welch's happiest result in his years at GE.

"It was no single event, but the idea that thousands of people had their lives changed, knowing that people benefited from their stock options, bought second homes, educated their kids," said Welch. "We had 46,000 people volunteering in their communities because they had the time and the money."

Akbank Chairwoman Suzan Sabancı Dinçer asked about the capital markets' focus on quarterly, short-term results and whether that prevented managers from focusing on the long-term. She also asked whether executive pay had become too high, whether it should be regulated somehow.

As to quarterly results, Welch said that's what management is all about: being able to balance long and short-term performance and goals. "Anybody can say I'll make it short-term, then cut corners, and anyone can say I'll do such and such in five years," he said. "No one has ever been accused of being too long-term-oriented. I was in charge of GE for 84 quarters and found satisfying the capital markets to be good discipline."

Welch has always favored free market forces to set executive pay, but he did explain how the public can get the wrong idea from a few isolated cases. He planned his succession at GE, firing the three candidates for the job. The man who won the "prize" got a 20 percent pay raise, while the other two collected millions in promises from their new employers, who were bringing trucks full of gold to attract the talent. Welch posed the possibility of getting close to a team's management, asking who would you rather sit with, the coach or the accountant. Of course you want to be with the coach, to learn about the players. As with a coach, the key to leadership is self-confidence, he said. But the key to business success lies in instilling a culture of sharing intellect, sharing ideas, getting everyone to think about how to do a better job. Which reminded Welch of a slogan they used at GE, a slogan he believes goes to the heart of winning: Find a better way to do it every day.