Viewpoint -- GE's Welch Leaves Legacy Of Aggressive Innovation

Dec. 21, 2004

Will General Electric Co.'s ex-CEO now coach other CEOs?

At a board of directors meeting on Friday, Sept. 7, Chairman and CEO John F. (Jack) Welch Jr. retired from General Electric Co. Business school professors and their students will debate for many more years the reasons why Welch was unable to cap his 20 years as GE's CEO with the strategically bold acquisition of Honeywell International Inc. And in the process, they -- and manufacturing company CEOs and COOs around the world -- will learn some lessons about strategy, tactics, and arrogance. In the meantime, Welch has left a legacy of aggressive innovation. For example, early in his tenure Welch declared that GE businesses were to be No. 1 or No. 2 in their global markets or fixed, sold, or closed. That dictum in part earned him a nickname, "Neutron Jack," that he hated. In the process of restructuring GE, it implied, Welch was making people disappear while buildings continued to stand. In fact, both people and buildings disappeared. Early on, Welch's tough discipline also led to grumblings among some veteran managers that GE wasn't a fun place to work anymore. GE's pridefully independent lighting division, for example, was reined in and told to improve its performance. Indeed, under Welch, GE's financial performance was extraordinary. GE remains one of the few conglomerate companies that actually works. Welch married manufacturing, services, and technology into a confederation of businesses that grew from $28 billion in revenue in 1981 to $130 billion in the year 2000, a 364% increase. A couple of years ago Welch described GE as a company "that is overwhelmingly a source of customer-focused, high-value, information-technology-based productivity solutions -- as well as a provider of high quality products." But growth didn't just happen. Credit Welch with making the principle of boundaryless behavior an operating practice. He encouraged, cajoled, and sometimes commanded employees to break down functional barriers that cramped people, inhibited creativity, wasted time, and slowed things down. Credit Welch with a problem-solving initiative called Work-Out that focused on finding and sharing new and better ways of running a plant, providing a service, or developing technology. Credit Welch with the notion of stretch goals, of a business venturing far beyond its immediate reach and being every bit as good as imagination said it could be. Credit Welch with recognizing the value of Six Sigma quality methodology and giving it momentum within GE, in part by tying every manager's bonus to quality results. Credit Welch with reserving to himself the role of CMDO -- Chief Management Development Officer -- and giving Jeffrey R. Immelt, his successor as chairman and CEO, and other GE business presidents and CEOs more management room to run their operations. GE continues to have the greatest management depth of any U.S.-based company, with more than a dozen senior executives able to be CEOs of major firms anywhere in the world. Credit Welch with passion. His intensity could be intimidating, even to the point of rudeness. But no one ever doubted where Welch stood on an issue that he cared about. Credit Welch with regularly venturing to GE's executive training center in Crotonville, N.Y., where he taught, challenged, and bantered with passion. Credit Welch with writing an informative and challenging letter to -- as he addressed it -- share owners, employees, and customers as part of GE's annual report to shareholders. These letters remain a valuable source of executive actions and operating philosophies, suitable for adoption, adaptation, and inspiration. To be sure, Welch had some strategic stumbles along the way. For example, despite great expectations, Kidder Peabody, the investment firm, proved not to be a good fit for GE. And one wonders if all of Welch's emphasis on having business-focused "A" players as its leaders cost GE a necessary measure of humanness. Nevertheless, Jack Welch will continue to influence managers and executives -- and not only in the U.S. For example, an eagerly awaited Welch management book debuted the week of Sept. 10. And there's the promise of Welch the consultant, with still-on-the-job CEOs calling him and asking for advice. But would Welch ever be content to be only a coach of CEOs? It's difficult to imagine Jack Welch being anything less than an intense, passionate player-coach. John S. McClenahen is an IW senior editor. He is based in Washington.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.