"The biggest challenge is to be fair. No one trains you to be a judge."[86]
Honesty is essential, Welch says:
"Tell people the truth, because they know the truth anyway."[87]
Welch says that he expected GE employees to win, but to win honestly:
"Excellence and competitiveness are totally compatible with honesty and integrity. The A student, the four-minute miler, the high-jump record holder—all strong winners—can achieve those results without resorting to cheating. People who cheat are simply weak."[88]
"A professor gave a hypothetical case to his business school students. He said, 'If you were running a business for a larger company and were about to book a $50 million order, but to do so, you had to deposit $1 million in a Swiss bank account to an agent, would you do it?' Approximately 40 percent to 50 percent said they would. I was shocked! Shocked! I told the students someone was teaching them the wrong things. This was not one of those cases where you had to interpret the law; this was a simple bribery case."[89]
"In the end, your integrity is all you've got."[90]
Note
GE has had its share of scandals, though none were linked to Welch. For more on those incidences, see "Dirty Diamonds and Other GE Scandals" at the end of the next chapter (p. x)." After retiring from GE, however, Welch had an affair and a subsequent divorce that had tongues wagging everywhere. For more on that, see the last chapter, "The Reinvention of Jack Welch" (pp. 237–249).
"I am an optimist, someone who is often accused of seeing the glass as always half full. And I'm probably guilty as charged."[91]
"I don't think of myself as a risk taker. I think of myself as somebody who tries to do the careful analysis needed to make the right decisions—but clearly one who is willing and anxious to make such decisions."[92]
Welch learned to be tenacious while doing graduate research at the University of Illinois.
"You go down 27,000 blind alleys. It doesn't work. You start again. You feel there's no hope while you're asking those questions, pressing, probing, pushing. But you have to get it resolved; otherwise you'd spend your whole life looking for the ultimate answer."[93]
Welch can be impatient. Tom Peters recalls this incident: "A story is told of Welch. He had asked some purchasing people to work on some tasks. Weeks later, he met with them to review their progress. To his dismay, they had none to report, only weighty analyses and half-completed efforts at coordination with various departments. Welch was furious. He called the meeting to an abrupt halt then ordered it reconvened only four hours later. The agenda? To report on progress. He got it, too. More was done in those four hours than had been done in the several weeks preceding them."[94]
Organizational development expert Karl Weick points out a Welch paradox: "Welch makes real trouble for theorists of behavior commitment. To his top people, Welch says essentially, 'If I'm paying you $200K, I can damn well demand full commitment to change.' Research on behavioral commitment shows that people get committed to public, irrevocable, volitional acts. Maybe Welch is able to get commitment from people because he keeps reminding them, 'Look, you don't have to stay here and take this. You can go somewhere else.' If they stay, then they have acted out of their own volition."[95]
It may have been clear to others, but it wasn't clear to Welch why he was called a tough boss:
"The people with whom I have been associated have worked harder, enjoyed it more—although not always initially—and, in the end, gained increased self-respect from accomplishing more than they previously thought possible."[96]
"My reputation for harshness is overblown. From the beginning, it was stamped into my forehead. Though to a certain extent it was understandable. I made changes that upset people's lives. They'd like somebody to blame."[97]
"I have to be perceived as demanding. There are six companies going after every order out there. . . . There is an atmosphere of rigor at GE, but not of fear."[98]
To Jack Welch, competition is not simply an episode that must be endured to achieve success, it is an ongoing, everyday state of affairs. And for Welch, that's fine, because when competition is at its keenest, he's living life at its fullest.
In 1994, Welch told the Economic Club of Detroit that the prosperous times being enjoyed by the United States only meant the country had reached the eye of a competitive hurricane. The United States had been through one side of the storm and another fierce round of international competition was coming:
"The paradox is that these brutally competitive times will be the most exciting, rewarding, and fulfilling for those fortunate enough to be part of boundaryless companies."[99]
Later in the same speech to an audience dominated by auto makers, Welch sounded like a hockey coach telling players where to put the puck:
"We must concede no markets—and no customers—because our competitors do not. You [know] with car models and I know with turbines and jet engines and CT medical scanners that there is a value nub, an intersection, where low-cost and just-the-right-features intersect. That value nub, when hit, causes products to fly off the shelves and out of the showrooms. The consuming passion of each of our companies must be to become so fast and so lean and so close to that customer that the value nub is always in our sights."[100]
"We come to work every day on the razor's edge of a competitive battle."[101]
At stake was the well-being of an entire nation. In the early 1980s, national productivity was in an alarming decline:
"U.S. business today finds itself challenged by aggressive overseas competitors. National productivity has been declining; and in industry after industry, product leadership is moving to other nations. Companies that refuse to renew themselves, that fail to cast off the old and embrace new technologies, could well find themselves in serious decline in the 1990s. We are determined that this shall not happen to General Electric."[102]
One GE division learned this lesson the hard way:
"At GE Power Systems—after decades of load growth and prosperity—the attitude toward customers became: 'We make turbines. This is what we charge for them. Would you care for one?' It took a humbling order drought of several years to overcome that arrogance and make that business a customer-friendly one."[103]
Despite his obsession with competition, Welch did not merely scare workers into action with stories of the enemy. Organizational development expert Karl Weick observed another Welch paradox: "Welch apparently views the Japanese simultaneously as competitors, partners, friends, and enemies: This is a good example of not being forced into either/or thinking."[104]
Welch believes shareholder activism puts U.S. companies on their toes:
"[W]hile some in this country often complain about share-owner activism, impatience, and demands for performance, I believe that the indulgence and the patience of the European and Japanese share owners have had the effect of lessening the bite, the urgency, and the overall competitive edge of their companies"[105]
Welch sees an advantage in "constructive conflict." If an idea can't stand up to an aggressive attack, it is a weak idea.
NBC executive Brandon Tartikoff said competition is what made Jack Welch get up in the morning: "He' like me. He loves to win."[106]
Note
Tartikoff became the youngest entertainment president in network history when, at age 30, he took over NBC's ailing programming and made it the most successful in the business. Tartikoff died in 1997 at the age of 48 of Hodgkin's disease.
By most accounts, a meeting with Jack Welch was something like a Roadrunner cartoon. Jack dashed away chortling, "Wasn't that great?" His staff left the same meeting feeling like Wile E. Coyote—run over, blown up, dumped off a cliff. But it wasn't so bad once you learned the game.
One employee explained: "You can't even say hello to Jack without it being confrontational. If you don't want to step up to Jack toe to toe, belly to belly, and argue your point, he doesn't have any use for you."[107]
John Opie, vice chairman of GE, said staffers prepared for meetings with Welch the way they would get ready for the big game: "You go in pumped up. You go in ready for combat." If Welch didn't like your acquisition proposal, he might say, 'You're crazy, that's too much money, not even close. Go get it for half.' You'd better have a thick skin; or when you come out, you will be a hurting person."[108]
David Orselet, a retired GE executive warned: "The one thing you can never do with Jack is wing it. If he ever catches you winging it, you're in trouble. Real trouble. You have to go in with in-depth information. Stand up for what you believe, but acknowledge what you don't know when you don't know it."[109]
Frank P. Doyle, former senior vice president for corporate relations, once said: "It's a brawl; it's argumentative, confrontational. There's a much higher decibel level here. I told Jack what passes for conversation here would be seen as a mugging by RCA people."[110]
According to one former unnamed GE executive: "Jack will chase you around the room, throwing arguments and objections at you. Then you fight back until he lets you do what you want—and it's clear you'll do everything you can to make it work. It's a ritual. It's like signing up."[111]
But if Welch really didn't like your idea, you would know it. Leonard Vickers, GE's former marketing vice president, told about reviewing an ad agency presentation with Welch: "I was using my indirect English to tell the agency it wasn't on target. Jack just picked up the storyboard, threw it on the floor and said, 'See? We don't like it! It doesn't work!'"[112]
Dr. Steve Kerr, former director of GE's leadership education center at Crotonville, said that when he first came to GE, people told him that the trouble with Welch was that he had a "shit list" of people who failed to impress him. Another employee agreed, then added, "But you can get off of it."
Kerr said that Welch sometimes did change his mind about employees and would even promote them if they had overcome their damaged image.[113]
"He comes to judgment quickly," Kerr said. "If you are as opinionated as Jack, it's useful to be able to change your mind."[114]
Some observers claimed that over time, GE executives became increasingly deferential toward Welch, unwilling to stand up to him. A notable exception is Gary Wendt, former head of GE's profit dynamo GE Capital Services. If it hadn't been for his age, 55, and a highly publicized and contentious divorce, Wendt might have been considered a candidate to replace Welch when he retired.
"Wendt is the only top executive at a GE function who won't be kissing Jack's ass," an unnamed retired GE executive was quoted as saying.[115]
Author Richard Tanner Pascale observed: "For those who know Welch personally, his blunt confronting style and his steamroller drive to succeed are more than offset by his sincerity, courage, and dedication. But strong leaders cast long shadows. The majority of GE managers 'see' Welch second- or third-hand. From a distance he can seem overbearing and instrumental."[116]
You probably had to be there to know for sure if Jack Welch was joking. Welch is good friends with Henry Kissinger; but when Nancy Kissinger called to see whether Welch could help get an appliance repaired, he cracked: "What do you think I am, a repairman?" Welch took care of the problem and, in recent years, has made quality improvement his number-one priority.
When asked if he agreed that he and the late GM chairman Alfred Sloan were the two greatest corporate executives of the century, Welch said: "I didn't know Alfred Sloan."[117]
Welch admits that he is revered by some and reviled by others. Welch says that depending on whom you ask, he is "somewhere between a prince and a pig."[118]
Welch tells the story of an arrogant, pompous bullfrog who'd heard stories of other frogs being kissed by princesses and turned into handsome princes.
"He figured he would be an excellent candidate. He went to a fortune-teller and told her he was sure a beautiful woman somewhere was looking for him. The fortune-teller looked into her crystal ball and, sure enough, said, 'I see a beautiful young woman watching you . . . exploring your body for hours . . . driven to know everything about you.' 'I knew it,' said the frog. 'Where will I meet this woman?' The fortune-teller looked again into her crystal ball. 'In her biology lab,' she replied."[119]
A clue to the temperament of Jack Welch is the fact that he was an unabashed fan of brash radio talk-show host Don Imus.
"There's a lot of Don in every one of us. Most of us don't have the guts to be Don. Our suits constrain us."[120]