Jack Welch

Jack Welch's two GE rules: be #1 or #2, and cut the bottom 10%

At GE, Jack Welch required every division to be number one or two in its market, or it had a year to be fixed, sold, or closed. He also fired the bottom 10% of performers every year. Shaan notes it sounds tame until you actually try doing it annually.

“And he had 2 simple rules. when he was running GE. One was every division, you need to be number 1 or number 2 in your market. Otherwise, you have 1 year to fix it, sell it, or close it. That's it. We will trim the business divisions unless you can be number 1 or number 2, which is an incredible forcing function because it's a sort of Darwinian pressure to survive. And the other Darwinian pressure he applied was every year Jack Welch would fire the bottom 10% performers in the company. Every year.”

Steal thisSet a hard bar for every business line (lead the market or fix, sell, or close it within a year) and review your lowest performers annually.