During Jack Welch’s 20-year reign as chairman and CEO of General Electric (GE), the company’s stock price grew by 4,000% and revenues increased by $105bn.

He was named “manager of the century” by Fortune and retired with a severance payment of $417m in 2001.

But Welch also had a reputation for being direct and ruthless. His first five years as CEO of GE saw him fire over 100,000 people: a flair for downsizing that would earn him the name Neutron Jack. In 2005, Welch explained his management style in the bestselling book Winning.

Welch believed that candor should be encouraged and rewarded. We tend to hold back a little to spare others’ feelings, but people must be able to speak freely in a business environment. Otherwise, it’s a waste of intellectual resources.

At GE, employees would be gathered in large groups to brainstorm solutions without supervision. Bosses promised to respond to 75% of their anonymous recommendations or ideas immediately afterward and 25% within a month. Productivity skyrocketed as a result.

Successful businesses have a simple strategy. That strategy is built on “lightbulb” moments of inspiration. You need high-quality staff to uncover those moments and execute them tirelessly.

The “20-70-10” rule dictates that every workforce has the same composition: 20% are top performers, 70% are average, 10% are sub-par. The goal is to reward the top 20%, motivate the 70% to join the top 20%, and get rid of the bottom 10%.

Firing 10% of staff every year can instill fear, so it’s important that all performance evaluations must be done fairly. This requires developing a rigorously objective review system.

When hiring people, look for three qualities: 1) integrity i.e. honest, with a good reputation 2) Intelligence 3) Maturity (resilience and humility). Positivity is a valuable bonus, as it will have a knock-on effect on other employees.

A company must have a clear mission. The values of any organization exist to emphasize that mission. There must be no wishy-washy stuff here; only an actionable code that helps you achieve goals. Reward those who embody your values; punish those who don’t.

To add to the simplicity, there should be as little hierarchy and bureaucracy as possible. Everyone should know their responsibilities and who to report to. More layers = more issues.