Sunday, October 25, 2009

Mackay on Welch on Interdependence

Harvey Mackay had a column last week on knowing what can go wrong in order to do things right. He starts out with a story about former GE CEO Jack Welch.

When Jack Welch was chairman of General Electric, he would regularly ask the top managers in the company's 14 major businesses a series of questions about the global competition. These questions apply to nearly every business, and I think they are worth sharing.

* What are your global market dynamics today, and where will they be over the next several years?
* What actions have your competitors taken in the last three years to upset those global dynamics?
* What have you done in the last three years to affect those dynamics?
* What are the most dangerous things your competitor could do in the next three years to upset those dynamics?
* What are the most effective things you could do to bring your desired impact on those dynamics?

I like this strategy; it acknowledges the power of other forces and people to upset our apple carts. We like to think we control our own destinies, but that is true only to a certain point.

Mackay then goes on to talk about strategy in business. What struck me was that Welch obviously knew what kind of market structure GE was competing in. It's an oligopoly. All of the questions revolve around the interdependence of GE's divisions and their competition.

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