This part of the series: “How Small and Mid Sized Firms Grow” deals with the concept of “going with your gut” and what this really means when we are talking about how large well managed companies make decisions.
The best example of someone associated with making decisions from their gut was Jack Welch who when he ran GE for over some 2 decades and was generally considered to be the best leader of his day. He famously stated in his best seller Straight from the Gut that he used a blend of instinctual approaches with solid analytical work in arriving at his decisions.
Welch was intolerant of bureaucracies; he cut waste and efficiency and insisted on getting the unvarnished facts to make decisions. As an engineer by training, he measured and compared every metric he though would be helpful to getting things right. He invested heavily in information systems, such as: their Six Sigma System, 4E programs, QMI marketing systems and an array of matrices and grids for cutting through the clutter to make quick decisions. He promoted winners and terminated the lowest performers in the company. He was brutally opportunistic which others considered ruthless. He was known as Neutron Jack, wiping out tiers of management while leaving buildings standing for better use. His mantra was to have a “boundryless” market where assets were redeployed to wherever they could do the most long term good.
Yet, one should not be confused with what he called a “gut feeling” based on years of experience for him to come up with the knowledge of what needed to be done and a the common and misconstrued concept of a gut feeling. That is Jack did not wasting time doing more and more analysis then what was needed to be quite certain of what needed to be done. This is what is often called paralysis through analysis. When you have gathered enough evidence to know the answer, simply make a decision. Jack shorthand name for his decision making process as “straight from the gut”, but this was misinterpreted as using hunches instead of his informed decision making process and even perhaps because it name might have helped sell books.
This is very different from someone who might go to the track and bet on a horse named Brazil because he as going to Rio the following week and had a gut feeling that would be a good wager. More recently, Jack’s gut did get him into hot water recently when his political biases were used in his gut assessment, saying the reduction in the BLS unemployment rate just before the Presidential election couldn’t possibly be right. As future monthly data was released the rate remained steady it became apparent the data was not manipulated for the election.
In the last blog, we discussed minimizing risk, the use of cost benefit analysis and creating a vision for the future. In our next blog, will discuss how to model your company and to do “what if analysis”. To see all articles in this series please go to LinkedIn Mike Neidle or Optimal Management’s website.
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