Originally published by Ravi Venkatesan on LinkedIn: When the leader can’t let go
The recent startling events at the Tata group have shone the spotlight on an important and uncomfortable aspect of business leadership in India. Too many promoters, founders and chief executives find it difficult to let go of the reins sometimes even after handing over the business to their chosen successor. This is true not just of family-promoted businesses but even in many so-called professionally-run businesses with diversified shareholding.
As the pace of change quickens in every industry, and as the threat of new competition and disruption grows, this reticence to let go will become increasingly problematic. Creative destruction is an essential and healthy phenomenon in business as in life; the old order must constantly change, yielding place to new ideas and new ways of doing business or else run the risk of irrelevance and decline.
One company that exemplifies how this should happen is the venerable General Electric Co. (GE). Jack Welch, who became CEO in 1981, wasted little time in re-architecting the company and undoing much of the legacy that he inherited although GE was hardly underperforming at the time.
“Neutron Jack” slashed employment, dismantled the bureaucracy, closed factories and exited businesses where GE could not compete. In his 20-year reign, Welch transformed GE from an industrial company to a financial services powerhouse.
His handpicked successor, Jeff Immelt, has not been a passive inheritor of the house that Welch built. He has sold off GE’s plastics and appliances businesses, NBC and most of GE Capital and returned the company to its industrial roots.
Now GE is embracing the “Internet of Things” to rapidly transform itself into a new-age industrial company fit for the 21st century. Each leader had the freedom to reshape GE without the long shadow of their predecessor over them. It is this ability to constantly adapt itself to the times that has allowed GE to flourish for over 100 years.
It is important to understand why letting go is so hard for so many leaders. Successful enterprises tend to be built by vigorous leaders with strong opinions and forceful personalities. If you make great sacrifices, pour all of your energy and the very best years of your life into creating an enterprise or an institution, it is impossible to not be profoundly attached to your creation. The combination of a forceful opinionated personality and great love for the institution, makes it difficult to watch as a successor dismantles part of your legacy. As every disgruntled and anxious employee seeks solace and support in you, it takes a great deal of restraint to not leap back into the fray.