The current
issue of Fortune magazine features
a cover with a “no entry sign” over a picture of Jack Welch—former CEO of GE,
author of Winning,
and an early champion of the Six
Sigma process. In big print are the words “Sorry
Jack!” followed in
smaller print by “Welch’s Rules for Winning
Don’t Work Anymore (But We’ve Got 7 New Ones That Do).”

This excellent
article, called “Tearing up the Jack Welch playbook” by Betsy
Morris (Senior Writer, Fortune), discusses traditional (Welch-esque) “rules of
management” that have been typically employed by more established
corporations—like GE—and compares them with new and emerging management trends
that have propelled some of the newer, growing companies—such as Google—and contributed
to their success.

Here’s a table
comparing the old vs. new rules, followed by a brief abstract from the intro of
the article:

In executive suites across the country, a dramatic rethinking is
underway about fundamental assumptions that defined Welch and his era. Is an
emphasis on market share really the prime directive? Is a company's near-term
stock price – and the quarterly earnings per share that drive it – really the
best measure of a CEO's success? In what ways is managing a company to please
Wall Street bad for competitiveness in the long run?

Sorry, Jack, but we don't buy it. The practices that brought Welch…and
others such success were developed to battle problems specific to a time and
place in history. And they worked. No one questions today that bloated
bureaucracy can kill a business. No one forgets the shareholder – far from it.
Yet those threats have receded. And they have been replaced by new ones. The risk we now face is applying old solutions to new problems.

I really enjoyed
this article overall and the ideas and concepts that it covers reminded me of several
different things…

Firstly and
mostly, many of the new rules reminded me of the stuff that I’d heard in talks by
Jason Fried (Founder, 37signals). For
example, listen to Smaller,
Lighter, Faster (MP3 audio file) from SxSW 2006, Small is Beautiful
(WMV video file) from the 2006
Collaborative Technologies Conference, and Lessons Learned while
Building Basecamp from ETech 2005. Also, check out
their eBook Getting Real
(I admit—I’ve only read the free chapters so far) and the 37signals blog, Signal vs. Noise, for more ideas on
such emerging management trends.

It also
reminded me of several articles/essays that I’ve read recently, such as Paul Graham’s How to Start a Startup
and The Hardest
Lessons for Startups to Learn, Rod Boothby’s quintessential
white paper on Turning
Knowledge Workers into Innovation Creators and Andrew McCafee’s post
on The
Trends Underlying Enterprise 2.0, as well as the recent Business Week
article entitled Web
2.0 Has Corporate America Spinning (which I blogged about here).

Of course,
it also felt like the article was reiterating some of the points discussed in my previous posts,
such as Marissa Mayer’s 9
Notions of Innovation—which I discussed in my post called A License
to Pursue Dreams—as well as Web 2.0 and
the CEO and my QOTW by Michelle
Conlin.

Overall, I
thought it was a great article, especially for anyone considering a startup or in
an early stage business at the moment. And as for bigger, more established
companies, this is a good wake up call—as slow as it may take the boat to turn,
I think it’s at least time to take another look at the compass and start turning
the wheel in the right direction.

By the way,
if you think Jack Welch let this article go by quietly, you’d be absolutely
wrong. Here
is Welch’s retort to the article. Also check out some of the great comments
and discussion in the Fortune Talkback
section.