Jack Welch is one of America’s best known and most highly respected corporate CEO’s of all time. Vadim Kotelnikov’s website Leadership and New Management Secrets discusses how Jack Welch’s vision to restructure General Electric to a “unique learning culture and boundaryless [sic] organization” has help make GE one of the fastest capital growing companies. In the 1980’s he was said to be “the biggest S. O. B. ,” but today his management techniques are now credited with empowering the employee (“Jack Welch Gurus”).
Management guru Jack Welch, former CEO of General Electric, has been instrumental in forming today’s top business management leaders by imparting effective knowledge in leadership management; he is widely credited with transforming GE into a multibillion-dollar conglomerate. Jack Welch was born on November 19, 1935 in Salem, Massachusetts (“Thought Leader”). His father, John Francis Welch, Sr. was a conductor with the Boston & Maine Railroad. His mother, Grace Andrews Welch, was a housewife.
Welch has said that his mother was the most important influence on him, cheering him on in sports and academics, and always encouraging him to strive for more. Competitive and outspoken even as a child, he was known among his friends as an expert negotiator as well as a diehard opponent. He and his friends converted and excavated gravel pits into a park where they played fiercely competitive games; they called it “the Pit. ” Jack Welch excelled academically as well. In school, Welch played several sports, including hockey, golf, and baseball. He was a Junior Rotarian, senior class treasurer, and a member of the Student Council.
He was voted “most talkative and noisiest boy” by his classmates, and in a high school literary magazine he named his repressive desire as “to make a million. ” Welch did not win the Navy ROTC scholarship for which he was nominated, and he had to put aside his dreams for going to Dartmouth for the less prestigious, but less expensive University of Massachusetts. While at the University of Massachusetts, Welch majored in Engineering, achieving high grades in spite of his active social life in an athletic fraternity. After finishing college he went to Graduate School at the University of Illinois, finishing a Master’s Degree and a PhD. Chemical Engineering (“Thought Leader”).
In 1959, he married Carolyn Osburn, and in 1960 he took his first job working for General Electric back in his home state. He was part of the Chemical Development Organization, a wing of GE meant to develop new businesses in chemicals. Welch was known as a maverick from the beginning. Working away from headquarters, and in a section of the company outside the traditional electric businesses, he was unhappy because of the low raise he was given, and he felt that GE had a strict bureaucracy.
He would have left the company had it not been for Reuben Gutoff (“Thought Leader”). In 1968, Welch was appointed General Manager of the worldwide Plastics Division and became a vice-president in 1972. His move up the corporate ladder was steady. He became a senior vice-president in 1977, and a vice-chairman and executive officer in 1979. In 1981, he was appointed Chairman and Chief Executive Officer (CEO) (“Thought Leader”). General Electric is a highly diverse corporation, manufacturing a wide variety of goods from light bulbs and appliances to aircraft engines and nuclear weapons.
GE enjoyed national recognition as a model of American industry, as well as rising profits and sales from $13 billion in 1981 to over $300 billion in 2001 when Welch retired (“Jack Welch Gurus”). Welch listened to the market analysts who predicted that corporations would have to restructure their top-heavy bureaucracies and huge staffs of business school planners. Over the next five years, Welch put his plan into action, selling 232 businesses, closing 73 plants and facilities, and firing more than 100,000 employees. His strategy was “Fix it, sell it, or close it. He got rid of any part of the company that wasn’t number one or two in its field (“Jack Welch Gurus”).
Jack Welch’s informal approach allowed him to get to know his employees, interact with them, and get involved in all aspects of the business and his employees coined him “Neutron Jack” (“Thought Leader”). The title equated him with the Pentagon’s planned neutron bomb, an atomic bomb that theoretically kills people while leaving buildings and structures intact. Welch also implemented a revolutionary “workout” program. In the late 1980s, GE instituted “workout,” a strategy session approach that quickly became famous in the corporate world.
Welch also made bold acquisitions and the company acquired more than $25 billion dollars worth of new companies during the 1980s and early 1990s, including Hungary’s Tungsram Lighting Company, Borg-Warner Chemicals and RCA, a corporation that included the television network, NBC. The success of Welch’s radical restructuring was quickly apparent. While GE’s net earnings when Welch took over were good, just under $2 billion dollars annually, they leaped to over $5 billion dollars by 1993 and in 1996, GE had a market value of $200 billion dollars.
Welch “ran GE like a corner shop – keeping an eye on profits, cash-flow, and people” (“Jack Welch Gurus”). In November 2000, GE announced that forty-four year old Jeffrey R. Immelt would succeed Welch until his retirement. Meanwhile, Welch was hard at work on a new book. In describing the project, Welch told Financial News in May 2001 “I hope it is a story that ill inspire some young people to take on a job in business as a noble profession” (Welch, 1998). Welch has undeniably earned a reputation as a “can do” buff, and rightfully so. This is particularly evident within the strategies Welch has employed.
With so many chief executives dodging investigations, taxes, or shareholders’ wrath these days, the term “execution” conjures ominous images, but it’s just what corporate America needs most right now, according to Larry Bossidy, Chairman of Honeywell International, Incorporated, and management guru, Ram Charan. In “Execution: The Discipline of Getting Things Done,” they attempt to explain why visionaries often fail, and what steps leaders must take to translate their strategies into results. Bossidy logged 34 years at GE before leaving in 1991 to head AlliedSignal Inc. and Charan is one of the few consultants allowed into GE’s inner circle. Welch is also cited as the quintessential execution artist, praised for everything from his “boundaryless [sic] corporation” to his informal lets-get-it-done style (Brady, 2002). Jack: Straight from the Gut is the book which Jack Welch himself put together in 2001, and while the book does make it clear that many failed companies were staffed with bright, well-paid people, who are misdirected, demoralized, or working at cross purposes – all of these aspects of the corporate leader come across clearly in his book.
At the same time, they require robust, realistic strategies and “action” plans if they are to succeed. “Execution: The Discipline of Getting Things Done,” offers thoughtful questions to consider when building a strategy blueprint. Jack Welch has been written about in many publications, from business to psychology, the man projects a myriad of attributes which all come together in the development of his corporate style. Although I choose not to dwell on the negative, Jack Welch has been experiencing more than his share.
Welch’s troubles began when his estranged wife, Jane, filed divorce papers claiming GE paid for Welch’s lavish New York apartment for cleaning, laundry, flowers, and even picked up his restaurant bills and country club memberships (Rather 1998). At that point in time, (1998) wherein Jack Welch was planning his retirement, the country was preoccupied with the Y2-K bug. It was cited that his impending retirement could be the biggest jolt in the entire business world. In his reign of nearly two decades, Welch had remade GE into one of the world’s most profitable companies.
GE was named Fortune Magazine’s “America’s Most Admired Company” in 1998. The Welch era has been studied before, most notably in Slater’s earlier books: “The New GE: How Jack Welch Revived an American Institution,” “Get Better or Get Beaten: 31 Leadership Secrets from GE’s Jack Welch” and Noel M. Tichy and Stratford Sherman’s “Control Your Destiny or Someone Else Well. ” “Jack Welch and the GE Way” is built around two interviews with Welch, plus interviews with other executives including Robert Wright, head of NBC, and Steve Kerr, who leads GE’s Leadership Development Center in Hudson, New York.
The descriptions of the “confrontational” action at Crotonville, as well as of the town meeting styled “workouts, ” are some of the best parts of the report at issue, because they show Welch at his most involved, interacting with the troops and finding out what is really going on at GE. It also demonstrates how Jack Welch and GE have been able to take trendy concepts like: The Learning Organization, Quality, Stretch Goals, Empowerment and Change Management, and make them an effective part of the GE culture (Rosenstein, 1998).
Jack Welch has mellowed over the years, straying from the “Neutron Jack” image, as the media portrayed him in the early 1980s. Welch’s aggressive strategy, as well as his seeming autocratic style, is a reminder of the fast going trend of the 1980s. For years, the basic questions about how best to organize people and tasks remained the same: “To recentralize or decentralize? Do we organize by product or function? Where Do We Stick the International Operation? ” The answers were seldom satisfactory.
Typically, companies were organized by products, by customer, or by territory, and then switched when those structures stopped working. While senior managers felt the impact of such restructuring, it rarely affected the rank and file who continued to operate in the same functional, vertical organization where all that changed was the boss’ name. Today’s management challenge is to design more flexible organizations that affect all members. With traditional structures failing, managers must evaluate innovative types of organization to see if these structures can deliver.
Vadim Kotelnikov’s website Leadership and New Management Secrets discusses one promising innovative model, the boundaryless [sic] organization, which has been described by its chief architect, GE’s CEO, Jack Welch, as “an open organization free of bureaucracy and anything else that prevents the free flow of ideas, people, decisions, etc. Informality, fun and speed are the qualities found in a boundaryless [sic] organization. The term “boundaryless” [sic] may bring to mind a chaotic organizational reality in which “anything goes.
This is not the case. As Jack Welch suggests, “boundaryless” [sic] does not imply that all internal and external boundaries vanish altogether. Although boundaries may continue to exist in some form, they become more open and permeable. There exist several distinct structural styles, which can contribute to boundaryless [sic]. The Value Chain shows how the way an organization goes about structuring itself should logically follow from the appropriate configuration of its Value Chain.
Jack Welch personified this “building block. ” The Value Chain is comprised of primary activities and support activities. Primary activities contribute to the physical creation of the product, its sale and distribution to the buyer, and after-sale service. Support activities uphold the primary activities as well as each other. Value Chain analysis provides a useful framework for dividing a firm’s activities into a set of distinctive activities which adds value (Dess, 1995).
This style is reflective of one of the boundaryless [sic] or many approaches assumed by Jack Welch. A company will adopt a new organizational form while it must be ready to undertake changes in all aspects of their systems in order to turn the promises of “boundaryless” [sic] into a sustainable business result. Another author, Noel Tichy, (The Leadership Engine: How Winning Companies Build Leaders at Every Level) says “real leaders teach others to be leaders,” and that requires ideas, values and qualities he calls “edge.
Noel Tichy knows leadership, for twenty-five years, this University of Michigan Business School professor has studied America’s top business leaders up close, worked with people such as General Electric Company Chairman and CEO, Jack Welch, and taught leadership as Director of the University’s Global Leadership Program. Tichy co-authored “Control Your Destiny or Someone Else Will,” the landmark book about Welch, and he also ran GE’s renowned leadership program. Similar to Welch’s own strategy, the leadership engine assumes a very aggressive posture.
Jack Welch organized his strategy reviews, budgeting reviews, and people reviews, to be real time coaching sessions. If you are Jack Welch and have 250,000 people, you don’t only do it face-to-face. You have to invent ways to energize people, like getting everyone involved in his “workout” effort, or by training the top 5,000 people at GE to be facilitators in the Company’s Change Acceleration program (Alter, 1997). Tichy himself has branded this aggressive type of leadership that is so reflective of that of Jack Welch.
His book, as cited, reads almost like a textbook for the managerial style of Jack Welch. This includes both aggressiveness as well as the involving of everyone in the management process. “The most celebrated and successful CEO of the 20th century is Jack Welch he ran GE from 1980 to 2001. During his tenure, GE’s market value increased by about $400 billion, a record no other CEO has ever approached” (Welch). In a PBS interview Welch was quoted as saying “I’ve never made a decision in my life that wasn’t in the best interest of the GE employees and the shareholders.
Today General Electric is in more than 100 countries and has 340,000 employees (“Jack Welch Gurus”). Jack Welch is now sixty-eight years old and spends his time giving speeches, consulting, and is currently working on a business book (Tribune). Welch wrote New York Times bestseller “Straight from the Gut,” which was published in September 2001. He has a new book coming out in 2005 entitled “Winning” which is going to be a how-to business book, which was writing by Welch and Suzy Wetlaufer, former Harvard Business Review editor and Welch’s fiancee.