Though he's the legendary chairman of a $500 billion dollar company, General Electric chairman and CEO Jack Welch shakes his head at the notion that he holds a tough, stressful jobmost of the time. Speaking in his characteristically blunt style at HBS recently, Welch said, "The toughest job in anyone's life is to take somebody out of a job. Let's put that on the table.
"But other than that, these [high-profile jobs] are pretty great jobs. You hang around with good people, you play a lot of golf, you have a pretty good life. ... That's what success is all about. It's getting people you like, who want to take the hill with you, who want to win, who have the passion.
"This is not rocket science."
One of the most successful corporate executives ever, Welch spoke off the cuff to 880 graduating HBS MBA students on June 6 as part of the school's Class Day celebrations. Welch chose not to follow the standard route of delivering a speech from a podium, and elected instead for an informal interview format on stage with graduating MBA student Nigel Killick.
|You can give lifetime employability by training people, by making them adaptable, making them mobile to go other places to do other things. But you can't guarantee lifetime employment.|
Killick quizzed Welch on everything from his recipe for success throughout his 41-year career at GE to his decision in October 2000 to make a bid for Honeywell and thereby delay his retirement from April 2001 to early 2002.
"I was 'Neutron Jack' once," Welch told the group, soberly, referring to the period from 1981 to 1985 when, as newly elected chairman and CEO, he cut 100,000 out of 400,000 jobs at GE. Employees used the "neutron" moniker because it sounded like the nuclear bomb that kills human beings yet leaves buildings intact.
The decision to cut jobs was a difficult one that was made in hard times, he said. "The world changed, and we had to deal with a changing world. Don't forget, in 1980 Japan was going to take over the world in manufacturing; there was going to be no other manufacturing other than Japanese. Oil was going to go to $100 a barrel, if you could get it. Inflation was 20 percent. ... Jimmy Carter said the country was in malaise.
"Now all those things have changed. But we were in an environment that looked like that. And our company in those days had over 400,000 people. It was doing one-seventh of what it does today with 300,000 people."
The company tried to soften the blow as best it could at the time, he said, and he reminded students that GE was part of the command-and-control corporate culture that propelled the United States industry forward after World War II. In that context, lifetime employment was a common assumption by everyone at every company.
"If there's one thing you'll learnand dot.coms have learned it in the last yearis no one can guarantee lifetime employment," Welch told the students. "No one. The only thing that guarantees lifetime employment is satisfied customers.
"You can give lifetime employability by training people, by making them adaptable, making them mobile to go other places to do other things. But you can't guarantee lifetime employment. And we were one of the first ones to break that pattern. And we had to do it. And as a result of it, lots of people had pain, which we tried to soften; but a lot of people won, because the company has flourished," Welch said.
Hunkering down for Honeywell
The choice to go for Honeywell last autumn was a natural one, according to Welch. Though he was set to give up the reins to successor Jeffrey R. Immelt (HBS MBA '82) in December 2000 under what had been widely considered a perfect succession plan, the Honeywell deal meant that he would not retire for at least another year.
"Here was the problem," Welch explained. "The succession was going to take place in December. It was an October weekend. A competitor [United Technologies Corporation] made a move on Honeywell. I had the choice on a Friday night of going to bed, or working the weekend. I was going to retire in five months, at the end of April. I worked the weekend. And we bid $50 billion for Honeywell Monday morning."
The decision delayed his departure from GE, he said, "but my successor is off and running the show, and I'm just trying to clean up the laundry and leave town."
Asked by interviewer Killick if his "real goal in life" is to buy the Boston Red Sox baseball team as has been rumored, Welch deftly skirted the issue. However, he said with a smile, after The Boston Globe speculated recently that he might be the next Sox owner, "It's the only day that my four kids all called on the same day to say they were proud of me."
His memoirs, Jack: Straight From the Gut, written with John A. Byrne of Business Week, will be published in September by the book division of AOL Time Warner. The company paid a record advance of $7.1 million for the book, and Welch will give his proceeds to charity, according to a recent report in The New York Times. "Writing a book is the hardest thing I've ever done, by orders of magnitude," he admitted at HBS.
Advice to grads: "Don't be a jerk"
His advice for the graduating students was sharp. Success in business is based on "a bunch of lucky calls," Welch said. "Clapping, cheering, meeting, talking and laughingthat's what you're going to have to do in business. You're going to clap for every achievement, no matter how small, with everybody around you. That's your job. It's a helluva lot more important than some finite strategy."
He doesn't like to deliver speeches on commencement days or class days, he said, because he doesn't think the occasions should be about "imparting great wisdom."
"What I would tell every student in this place is that you've been here for a couple of years, and you know when you've been a jackass and when you've been smart, and when you've been right and when you've liked what you did," Welch said.
"Remember when you're a jackass. Remember the things you did that you wished you didn't do. Look yourself in the mirror in the morning and leave all those things behind you. Leave all the stuff that you know didn't work. And take all the great stuff you learned here and take all the good partsbecause rarely do you get a clean slate. ...
"Your basic role in life is take all the good stuff, don't be a jerk, and get on with it.
"I always say that the distance between the horse's brain and the backside of the horse is a pretty short distance, and it's very important that you know when you were at the back of the horseand don't take it with you as you go forward," Welch added.
"Not very profound. It's pretty simple."
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The Four E's of Jack Welch
Evaluating people shouldn't be hard. According to General Electric chairman and CEO Jack Welch, it's as easy as Four E's.
In his HBS Class Day conversation with graduating MBA student Nigel Killick, Welch spelled out the four criteria he uses to assess people who work at GE.
1. Do they have the energy to play in a global environment?
2. Do they energize others? It doesn't do you much good to be a whirling dervish if you don't end up exciting other people.
3. Do they have edge? Do they have the ability to say 'yes' or 'no,' and not 'maybe'? Do they make the calls?
4. The fourth E is execute. Do they deliver?
Said Welch, "Integrity is assumed. These four E'swhen you look at people and want to evaluate them, and when you look at yourself and evaluate yourself this waygive you a pretty good read on where you stand."