Ack J Welch - Alchetron

Introduction 5enterprises anywhere. Only a handful of U.S. corporations of GE’s age remain at the forefront of their industries and are formidable competitors in the global arena.Welch was a busy man at GE. Along with poweringup training and evaluation and driving home qualityand efficiency, he was involved in more than a thousandacquisitions. This averages out to more than two permonth. When he retired, GE employed nearly 300,000people in about 15 major businesses ranging from jetengines to credit cards.Who is this most feared and admired leader? If, asWelch claims, the label “toughest boss in America” isunfair, the “toughest competitor in America” is not. TheEconomist described him as a “restless Irish-American.”4Certainly, Welch never seems to rest. An outgoing, exuberant news and information junkie, Welch speaks witha slight stammer, bites his nails, and looks every minutehis age. Though he is almost bald, his 5-foot-8-inchframe is trim and wiry. His penetrating, pale blue eyessparkle with curiosity, interest, and intellect.In 1982, the Wall Street Journal reported, “Mr. Welchcan spend a day visiting a factory, jump on a plane,catch a few hours sleep, and start all over again; inbetween, he might stop in Sun Valley, Idaho, and, as heputs it, ‘ski like crazy for five days.’ ”5He still has fire in the belly at age 72. Welch spikeswords across sentences like a volleyball player smashingcintro.indd 59/25/07 11:36:20 AM

6 JACK WELCH SPEAKSa ball over the net. He slams his points home like a bridgeplayer holding high cards in the trump suit. He speaks inshort, incomplete sentences marked by the accent of aBoston cop. He was famous for interrupting subordinateswhen they hesitated momentarily. He is sometimes“excitable to excess,” former GE vice chairman EdwardHood once observed.6Even ill health hasn’t slowed him down. In May 1995,he underwent quintuple-bypass heart surgery. He returnedto work on Labor Day, 1995. After his retirement, Welchhad three back surgeries; but he remarried for the thirdtime and remains a globe-trotting writer, speaker, andconsultant. One small concession: He’s given up hisbeloved golf.The Washington Post once called Welch an “unlikelyprophet”; yet despite the stuffy image the company hadwhen Welch took over, GE has long been dedicated tomanagement innovation. Notions such as strategic planning, decentralization, and market research all arosefrom the fertile brains of GE managers. It is no surprise,then, that sound management flows from GE culture, acompany that promised to “bring good things to life.”Yet few people expected the originality and daring thatWelch brought to the job.Indeed, Welch did not follow a traditional career path atthe company. He started out in a plastics Skunk Words(research and development services) and deftly sidesteppedcintro.indd 69/25/07 11:36:21 AM

Introduction 7the corporate mainstream for about half of his work life.Welch entered the race for GE’s top slot perceived as anoutsider, too young and too troublesome. Welch got the jobin his own scratchy way, and he did the job in his ownscratchy way.This was my second book about a business leader,primarily stated in his own words. The first was the bestseller Warren Buffett Speaks (Wiley, 1997). Though Buffett and Welch are vastly different men with differentstyles, skills, goals, and accomplishments, they sharemany similarities: Both are the absolute best at whatthey do. Both have been intensely smitten with theirown work and focused on it. Both men are out-front,unabashedly American middle class. Both attendedpublic school and graduated from state universities.Buffett was raised as a Protestant and Welch as a Catholic; and though neither attend their childhood churchesmuch, both stick to hard-line principles when doingtheir jobs. In the same way that Buffett led the Midwesttriumph over Wall Street, Welch led the factory-townNew England victory over international business. Bothshow us that the American dream survives. Both demonstrate that everyday people have plenty of dignity,capability, and intelligence to accomplish whateverthey aspire to do.cintro.indd 79/25/07 11:36:21 AM

8 JACK WELCH SPEAKSOne last similarity: The two men share their ideas liberally. Buffett’s Berkshire Hathaway annual report hasbecome a best seller among professional and invidualinvestors. The Washington Post reported that Welch’s“annual letter to shareholders has become closelywatched by other corporate leaders and business professors for news on the latest thinking on management,and his techniques are being adopted throughout corporate America.”7Welch often explains that the business world is riddled with paradoxes and that successful business leadersin the future will accept paradox as normal. Well, JackWelch is a paradox himself; and said Dr. Steve Kerr, GE’sformer chief learning officer, that is the most interestingthing about him. His complexity makes him unique,sometimes exasperating, but always intriguing.Welch clearly has blemishes and blind spots. He had atendency to fight too long for lost causes, such as hisrefusal to accept public and government demands thatGE clean up pollutants it put in New York’s Hudson River.While he talked about giving opportunity and encouragement to women and minorities, his managementteam remained overwhelmingly male and white. JeffreyImmelt, who followed Welch as GE chairman, said hehas been haunted by a group photograph of GE uppermanagement and the obvious imbalance. He’s vowed toimprove the picture.cintro.indd 89/25/07 11:36:21 AM

Introduction 9Welch could be blunt and harsh. He had the habit inhis speeches and writings of issuing warnings to individuals or business enterprises that may have been in danger of extinction. GE employees became as adept asState Department diplomats at interpreting his word. Forexample, in an interview published in GE’s house organ,Monogram, the interviewer asked whether Welch hadany new ideas on how to communicate. He replied:“You’re right about how highly I value communications. . . . But the more I understand the subject, I thinkperhaps we’ve all focused a bit too much on techniques,like choosing to use this publication or making anothervideotape. Certainly, the medium’s important; andwhile just about all our businesses have done an outstanding job in providing good, candid informationon competitors, on customers, on markets, we’ve got togo beyond that.” 8Not long after that, the publication was gone—discontinued.Some observers claim that Welch’s great contributionto GE was the matching of technology and markets. Others say it was his role as a change agent. Certainly, hetruly Americanized GE—bringing a more democraticprocess, the voice of the ordinary worker, farther into thecorporate arena—while at the same time pushing GEinto global leadership.cintro.indd 99/25/07 11:36:22 AM

10 JACK WELCH SPEAKSExperts point out—and Welch himself claims—thatnot all of his ideas are original. They spring from manysources. His skill was the ability to recognize good ideas,distill them, and implement them in a company with asmany workers as Akron, Ohio, has residents, with revenues larger than the gross domestic products of morethan half the nations of the world.A few words of guidance to the reader: Because thisbook is composed mainly of Welch’s comments, it paintsa picture of the GE for which Welch hoped and aimed, notnecessarily the GE that others saw or even the GE that heran. It was difficult to separate Jack Welch from the company he headed, but readers should remind themselvesto do so. I’ve tried to make the distinction clear.The focus of this book is on Welch, to capture thewhole person, to understand who he is and how andwhy he does what he does. If you listen to people talkabout almost any subject, they reveal a great deal aboutthemselves in the process. Listen to the words Welchuses most frequently: game, compete, speed, performance, and winning. I said in the original edition of thisbook that winning seemed to be almost a spiritual concept with Welch, right up there with enlightenment orgrace. It’s no wonder that he titled one of his postretirement books Winning (Harper Business, 2005). It’s alsoencouraging to notice how often Welch uses the wordsfreedom, truth, quality, and love.cintro.indd 109/25/07 11:36:22 AM

Introduction 11Remember, too, while reading this book that Welch’scomments were not made in the order in which theyappear here. They have been grouped together by topics or by ideas that allow Welch’s life and personality tounfold. (The footnotes give details on where and whenWelch made a particular comment.) A chronology isincluded in case the reader wants to check the progression of events.Business Week summarized Welch’ business careerthis way: “Like him or not, Jack Welch has succeeded insweeping a major American company clean of thebureaucratic excess of the past and transforming apaternalistic culture into one that puts winning in themarketplace above all other concerns. Like it or not, themanagement styles of more U.S. companies are goingto look a lot more like GE.”9And as noted earlier, when Welch left GE, he didn’texit the public arena. He got through the divorce andmarried Suzy Wetlaufer, and the couple proceeded tobuild themselves into a media empire.Teased TheBostonChannel.com, “There is simply noescape. Jack and Suzy Welch are a part of your dailylife. There is nothing you can do. Accept it. . . .“It’s hard to know exactly when this happened. ButJacknSuzy are now as much a double bill as Bill andHillary, Brad and Angelina, Tom and Katie. Only moreso . . . so much more so. At least if feels that way.”10cintro.indd 119/25/07 11:36:22 AM

12 JACK WELCH SPEAKSIt is true. The Welches are ubiquitous. This newchapter in Jack’s life evolved mysteriously, glamorously, like the phoenix flapping up from the ashes.Jack Welch fans say he’s become more relevant andmore interesting than ever. Read on; then draw yourown conclusions.Janet LoweSeptember 2007cintro.indd 129/25/07 11:36:22 AM

In One Decade:From Lettermanto Seinfeld“I love Seinfeld. I think it’s sensational television. Itsomehow hits every bone I’ve got. I wouldn’t chase anyother program.” 1Welch had plenty of reasons to adore the trendy NBCtelevision sitcom. Seinfeld was the most successful television series of all time. It was the first to commandmore than 1 million a minute for advertising—a distinction previously limited to the Super Bowl. Not onlywas Seinfeld wildly popular, but its vast viewership hasenabled NBC, a General Electric subsidiary, to slot showsaround it on the schedule to maximize their popularity.13c01.indd 139/25/07 11:36:42 AM

14 JACK WELCH SPEAKSIn 1997, NBC dominated prime time television, plusmorning, evening, and late-night news ratings.Ratings, naturally, led to higher advertising rates andhigher profits. In 1996, NBC made seven times moremoney than ABC, the only other network to be profitable. NBC profits, plus another 500 million kicked in bycable and television station operations, added up tonearly 1 billion in GE’s operating profits that year.Seinfeld contributed 200 million a year to thoseprofits.NBC, home to the Milton Berle Show, Bonanza,Cheers, and dozens of other classics, proved its ability topresent memorable television programming. Yet despitethe track record, Seinfeld’s popularity and NBC’s profitability were rousing personal victories for Jack Welch.The NBC saga was the Jack Welch story in a nutshell.When he announced in December 1985 that GEwould buy RCA (NBC’s parent company) for 6.3 billionin cash, Welch was euphoric. Not only was it the largestcorporate acquisition up to that time, but the dealbrought a lost child home. GE founded RCA in 1919,shortly after buying the rights to Guglielmo Marconi’sradio technology. In 1933, to the great disappointmentof company executives, the threat of antitrust litigationforced GE to sell the subsidiary.“Welch foresees no indigestion from swallowingRCA,” wrote Newsweek. “He will continue to run RCAc01.indd 149/25/07 11:36:43 AM

In One Decade: From Letterman to Seinfeld 15with the hands-off supervision that is the essence of hismanagement style. Speaking of NBC chairman GrantTinker and his team, [Welch] says, ‘They’re our type ofpeople. They know how to be number 1, and we knowhow to give people who know how to be number 1money.’ ” 2Not only was RCA a golden asset, Welch explained:“The network business acts as a counterbalance tomore cyclical manufacturing businesses.” 3But it wasn’t long before NBC and GE were locked inone of the most publicized culture clashes of all time.There was an instant and acid reaction to the acquisition from NBC late-night talk show hosts, especiallyDavid Letterman, who, among other things, called GE’smanagement “knuckleheads.”Right after the announcement came, Letterman hauleda camera crew to the old GE building in New York City.“You never know what you’re in for when you get abrand-new boss. So when General Electric bought thecompany, RCA and NBC, I thought I would drop bythe GE building here in midtown Manhattan, meet mynew employers, kind of, you know, get things off on theright foot.” The videotape showed Letterman amblingdown Lexington Avenue, a basket of fruit clutched inboth hands: “Sometime in August, I guess, the takeoverwill be complete; and we’re all getting a little curious asc01.indd 159/25/07 11:36:43 AM

16 JACK WELCH SPEAKSto what kind of effect it’s going to have on NBC as weknow it today—the program and, I guess, specifically,how is it going to influence me? And what I’m really trying to get at here is, am I going to have a job? So this isthe General Electric building, and I have a little gift, andwe thought: What the heck? Let’s just drop in and sayhello, just see how it’s going. They can’t object to that,can they?”At the door of GE headquarters, a voice blasted froma speaker: “This is not a building to film in. Clear thefront of the GE building please.” A woman stepped outof the revolving door with a security guard at her side.“I’m not sure you’re able to do this. We haven’t gottenany authorization.” “You mean we need authorizationto drop off a fruit basket? Oh, this is going to be fun towork with these people, isn’t it? To drop off a fruit basket you need paperwork,” Letterman chided.Letterman politely persisted his way into the building,where the security guard demanded that the camerasbe turned off. Letterman agreed, then reached out toshake the security guard’s hand. The guard reachedout, but thought again and pulled his hand away at thelast minute, jabbing his thumb in the air. “Shut offthe camera, please.” Finally, the guard put his handover the camera’s lens.The “security gentleman” became a star on Letterman’sshow. “Maybe you didn’t realize that we got to see ac01.indd 169/25/07 11:36:43 AM

In One Decade: From Letterman to Seinfeld 17glimpse of the official General Electric handshake,”Letterman hooted. Then he showed the hand-out/thumbup gesture over and over again as the audience rolled inlaughter.Welch said he wasn’t upset. The video was shown inthe GE boardroom and at GE’s training facility atCrotonville.“It was fun.” (Welch laughed.) “From then on, we’dtease the guard when we went in the building—givehim the GE handshake.” 4But Letterman wouldn’t let it go, cracking that the headof GE’s small appliance division would push for a miniseries on the development of the toaster oven. Whenasked by a student at Harvard Business School if heminded David Letterman frequently calling GE executives “pinheads,” Welch said he didn’t care, as long asLetterman’s ratings kept rising.5Soon, however, NBC did feel heat from GE. DespiteNBC’s prime-time domination, Welch thought they couldbe more profitable, especially the money-bleeding newsoperation. In 1987, NBC news was losing 150 millionannually, which Welch believed was unnecessary.Because of their important role as part of the fourthestate of democracy, news executives felt their firstresponsibility was to produce excellent programs. Thec01.indd 179/25/07 11:36:43 AM

18 JACK WELCH SPEAKSentertainment arm, always profitable, could pick upthe slack. Some members of the news operation wereinsulted that Welch didn’t put their business on a highermoral plane than other GE businesses.Welch, however, maintained that all of GE’s products,everything from lightbulbs to refrigerators, carried theresponsibility of public trust:“Every GE engine attached to a plane, people bet theirlives with. That’s a public trust and greater in manyways than a network.” 6Laying off hundreds of GE turbine employees, Welchsaid, was no worse than cutbacks in TV news. Newsmay be responsible for informing the public, but turbine workers were important, too. They, in fact, were ata disadvantage:“They have no press to write about them.” 7Welch was particularly irritated when NBC paid 300million for the rights to broadcast the 1988 SeoulOlympics but attracted only a 30 percent viewer share.Welch contended NBC’s Olympic presentation wasdull. Welch complained:“They are running a semi-news operation rather thana heroic sports event. It’s as if the [space] shuttle wentc01.indd 189/25/07 11:36:44 AM

In One Decade: From Letterman to Seinfeld 19up, and they were talking about Franco-Americanrelations.” 8Grant Tinker, who made NBC number one and who lefteven though Welch wanted him to stay, explained thechange that had occurred: “My idea of running NBCwas to get it up to top speed, make a lot of money; andso we spilled a little, who cares? To the extent it becomesjust a maximize-the-bottom-line kind of company, someof the air will go out of NBC.”9Differences between GE and NBC flared on otherfronts. When NBC’s headquarters at 30 Rockefeller Plaza inNew York City were remodeled, employees wantedto replace the large RCA on the building with thenetwork initials. Welch reinforced the relationshipbetween the network and the company by insistingthat the GE “meatball,” the intertwined G and E,replace the historic RCA logo. GE dumped its Miami affiliate, WSVN-TV, andreplaced it with WTVJ-TV, previously a CBS affiliate.It was the first time a network had acquired astation aligned with a rival network. GE paid aneye-popping 270 million to do so.At NBC’s 1987 management conference in FortLauderdale, Welch painted his vision of GE and NBC’sc01.indd 199/25/07 11:36:44 AM

20 JACK WELCH SPEAKSplace within it. He asked a question and then answeredit himself:“Was NBC better off under RCA or GE?”“I’d say for the good people, it’s a dynamite deal. Forthe turkeys, it’s only marginal.” 10Welch then chilled the audience by suggesting that theturkeys didn’t have much of a future at GE and shouldn’thang around.“We’re going to dema

Honey, I Shrunk GE 145 THE SOFTWARE REVOLUTION 147 The Soft Values 147 Workout 151 Simplicity 156 Speed 159 Self-Confi dence 163 Labor Unions 166 A Boundaryless GE 169 Searching the Planet for the Best Practices 174 Teamwork 177 Stretch 178 Six Sigma Quality 182 It All Comes Out in the Wash 189 TAKING STOCK 193 Fail Your Way to Success 193