Jack Welch on transparency, meritocracy, and the death of hierarchy

On Tuesday I’m heading up to New York to share an open source perspective with GE marketing executives at the legendary GE leadership center in Crotonville. I wrote a post a few months ago praising GE Chairman Jeffrey Immelt’s compelling new vision for corporate America, and I have an enormous amount of respect for GE as an innovation engine. I’m excited about the opportunity to exchange ideas with the smart folks there.

In 2009, Forbes ranked GE as the world’s largest company, so I’ve figured before I went up to Crotonville it’d be a good idea to do some homework and see what elements of what we call the open source way are already in practice within one of the most successful companies in history. I’ve found some interesting stuff in my research.

One piece in particular grabbed me. Sitting on the beach today over the holiday weekend, I finished the 2001 biography of Jack Welch (the legendary predecessor to Immelt as Chairman of GE) entitled Jack: Straight from the Gut. I thought I’d share a Jack Welch prediction (written almost ten years ago) that fits right in with our open source view of what the 21st century organization looks like.

Hierarchy is dead. The organization of the future will be virtually layerless and increasingly boundaryless, a series of information networks in which more electrons and fewer people will manage processes. Information will become transparent. No leader will be able to hoard the facts that once made the corner office so powerful.

My experience working in the open source world during the time since Welch originally wrote this backs him up. The most successful open source projects are organized as meritocracies where the best ideas win rather than hierarchies where the people with the biggest titles win. Decisions are made in the open rather than behind closed doors and data and information is shared rather than hoarded. Because everyone has access to data and information, the best ideas can come from anywhere, not just the top. Transparency is the key to a successful meritocracy.

Welch even talks about the meritocracy at GE:

I believe the GE I’m leaving is a true meritocracy, a place filled with involved and excited people, with good values and high integrity. It’s a company that lives for great ideas, a place where the people do get up every morning searching for a better way.

GE creates an enormous number of products and services across many diverse businesses (some of which could qualify as Fortune 500 companies on their own). But what struck me most about Welch’s book is that about 90% of it is about people and culture, not products. This tells me that one of the most successful corporate leaders in American history spent quite a bit of his time thinking about the dark matter of his organization.

That’s cool.