Jack Welch on learning from failure.

For many years, I have used a story to illustrate how good managers approach learning from failure. Now Jack Welch, the star of the story, has told it himself.

Jack Welch by Rain Rannu on Flickr

In my apocryphal version of the story, Jack was called into his boss after a dreadful million-dollar business mistake. The conversation went something like this:

Boss - "Why do you think you are here, Jack?"
JW - "I expect I am here so you can fire me"
Boss - "I just spent a million dollars on your education - why would I fire you now?"

Here is the official version from the great man himself, published recently in LinkedIn Pulse

One of us (Jack) actually learned the lesson we’re discussing in this column [about breaking bad news to your boss] very early in his career when, as a plastics engineer at GE, he blew up a factory in Pittsfield, MA. 

Very fortunately, no one was injured, but the roof was obliterated and every window on the top floor of the facility was shattered. Immediately, word came from headquarters: “Come in for a meeting.” Or, as the heart-pounding, inner translation understood it to mean: “Come in to get canned.” Instead, something amazing happened. 

Group Executive Charlie Reed, a brilliant scientist with a professorial bent, had personnel development as his agenda. With gentle determination, he applied the questioning Socratic method to carefully explore all the reasons for the explosion, the ways it might have been prevented, and just as important, what would have to change in the laboratory for such a thing to never happen again. His approach to the disaster in his office – imagine, a blown up factory! – made a lasting and powerful impression. 

Look, you cannot be in business and avoid messy or downright unsuccessful situations forever. To paraphrase, “junk” happens. Just remember, when it does, you’ll be all the better if you own up to it fast, and come to your boss prepared to stick around for a good, long conversation about the road up, out, and forward.

We see two great cultural behaviours in this story, both of them providing cornerstones for organisational learning and knowledge management.

First is an openness to admit and explore mistakes, even million-dollar mistakes involving destroyed factories.

The second is to use every such mistake as an opportunity not for punishment, but for learning and improvement. What Jack describes as the Socratic Method is often formalised as the After Action review - an approach to discussing

• What actually happened?
• Why did it happen?
• What have we learned?
• How do we ensure it never happens again, anywhere in the organisation?

When Jack Welch later rose to be a CEO himself, he did an excellent job of summarising the business vision for Knowledge Management, when he made this statement in the GE 1996 annual report.

“Our behaviour is driven by a fundamental core belief; the desire and the ability of an organisation to continuously learn from any source, and to rapidly convert this learning into action, is it’s ultimate competitive advantage”

I wonder whether that early experience in Pittsfield set the seed for this powerful vision of the ultimate advantage of the learning organisation.