In 2001, when Jack Welch stepped down as CEO of General Electric Co., he closed the book on a 20-year run that established him as the most-admired business leader of the 20th century. But the man who increased GE’s market value by nearly $400 billion during his tenure is quick to credit others with his success.
"The idea that one person could run a company with 360,000 people like GE with all those businesses is silly to even think about," he says. "But getting great people there to do it, you get the reflected glory of all their work. So you’re nothing but a product of how many good people you get."
Welch got plenty of good people. In fact, four of the Dow 30 companies are run by CEOs who once were Jack’s guys: Home Depot’s Bob Nardelli, 3M’s Jim McNerney, Honeywell’s David Cote and, of course, GE’s Jeff Immelt. In addition, dozens of other major U.S. corporations are run by ex-GE executives steeped in the master’s ways.
Since retiring, Welch has consulted with Fortune 500 companies and written the autobiographical "Jack: Straight from the Gut." Now, following years on the road conducting question-and-answer sessions with businesspeople around the world, he has penned "Winning" with his wife, Suzy Welch, a former Harvard Business Review editor.
Smart Business caught up with Welch during his book tour to talk about the new work and the management principles that brought him so much success at GE.
Why did you use "Winning" as the title for your new book?
It sort of gets you down to this philosophy I have that the glass is half full. It gets you focused on all the things that you can do about not being a victim. I don’t like victimhood.
So what I’ve tried to do in chapter after chapter is to show ways that people can get out of wringing their hands as victims. Whether it’s how to get a new job, how to do a budget, how to do strategy, how to work for a bad boss – any of these things — my wife and I try to put into perspective how you can take charge of yourself.
You open "Winning" with a section called "Underneath It All," in which you talk about your business philosophy. What is that philosophy?
My philosophy is that candor does wonderful things for people. It speeds the process. Everyone knows where they stand. One of the problems I see in business is people don’t know where they stand. Differentiation is letting the best know where they are. And letting the weakest understand what their shortcomings are and what they have to do about it, not surprising them someday by laying them off.
So differentiation is how you build great teams. You are constantly raising the bar. And I think business is a lot like sports: The team that fields the best players wins.
Voice and dignity are, in fact, part of demanding or requesting or pulling the best ideas from everybody. Everybody wants to have a voice. We went through a workout process at GE that spent years and tens of thousands of town meetings asking for ideas from any level. And we tried to get to the point where ideas came not based on the stripes on your shoulder but from the quality of your idea.
The same thing is true about dignity: Respecting people by telling them where they stand. Never let them be in the dark. Always explain what they can do to do better, and if they can’t do it, send them on their way.
But don’t come in some day and say, ‘We’re having a recession and we’ve got to lay off two people and Mary and Joe, you have to go.’ And Mary and Joe say, ‘Why us?’ And you answer, ‘Because you weren’t doing that well.’ ‘But we’ve been here 15 years and nobody’s ever said anything.’ That happens all the time.
I definitely think everybody has to know where they stand. One guy in Louisville said to me, ‘You’ve had my arms and legs for 25 years; you could have had my brain for nothing.’ That’s true. The people closest to the work know the work. You should ask them.
So all those things are part of a fundamental philosophy. When they know where they stand and they are willing to speak out openly because candor is a value that’s rewarded and you give them respect, you will get the most out of people.
How did you develop your philosophy of candor?
I’ve been that way all my life. My mother was that way. I’m an only child of an Irish mother. We didn’t have any money. My father was a conductor on the railroad. Union household.
But she always said you have to face reality. ‘This is the way it is, Jack. Don’t wish for something. This is the way it is. Now go do something about it.’
