When Welch took the helm of GE in 1981, he built the company’s own version of the pit — a large lecture hall with a pitched floor — at GE’s corporate learning campus in Crotonville, New York, and made it the beating heart of the place. He would hold court there every other week and use it to foster a generation of managers who, in turn, helped him grow GE into the most valuable company in the world. Some of them then went on to run other iconic corporations. “As the most widely admired, studied, and imitated CEO of his time, Welch has enriched not only GE’s shareholders but also the shareholders of companies around the globe,” Geoffrey Colvin wrote in Fortune in 1999. “His total economic impact is impossible to calculate but must be a staggering multiple of his GE performance.”
The Pit is still there, but Welch is no longer with us. The man who led General Electric for 20 years, and became known as one of America’s most successful chief executives, has died. He was 84.
The New York Times reported the cause of death as renal failure, quoting Welch’s wife, Suzy.
Famed for his candid and direct manner, Welch became the chief executive of GE in 1981, when the company’s stock price struggled and its market capitalization hovered around $14 billion. When he retired two decades later, it stood at more than $410 billion. GE’s revenue grew from nearly $28 billion to $170 billion over the same period.
GE CEO Larry Culp led the tributes to Welch on Monday. “Jack was larger than life and the heart of GE for half a century,” Culp said. “He reshaped the face of our company and the business world.” Culp also shared his last memory of Welch: “He asked me, ‘So how exactly are you running the company?’ Jack was still in it: committed to GE’s success.”
Welch came from modest beginnings. He was born to a railroad conductor father and a homemaker mother in 1935, when America was reeling from the Great Depression. But Welch worked and played hard. He had summer jobs as a golf caddie, newspaper boy and shoe salesman, and excelled at hockey, baseball and football. He received his bachelor of science degree in chemical engineering from the University of Massachusetts in 1957, his master of science in chemical engineering from the University of Illinois in 1958, and a doctorate in the same discipline, and from the same institution, in 1960 — at the ripe age of 24.
Welch joined GE as a chemical engineer for its plastics division in Pittsfield, Massachusetts, in 1960. He quickly rose through the ranks. He was elected the company's youngest vice president in 1972 and named vice chairman in 1979. In 1981, Welch became just the eighth chairman and CEO in GE’s 118-year history, succeeding Reginald H. Jones.
It was a baptism by fire. Welch said in a 1986 speech that he had the choice to “fix, close or sell” various underperforming businesses. “It began some of the genesis of ‘Neutron Jack,’” he said. In a world where economic growth was stuttering, he was investing in businesses that looked like winners. Between 1983 and 1985, Welch entered GE into 118 acquisitions, joint ventures, and new companies, and disposed of 71 others.
Welch envisioned GE as an efficient machine that could take change in its stride and win big. The solution was enabling GE employees to work quickly, simply and confidently. He also believed that the best way to change a company’s culture was to start at the top. This culminated in the launch of Work-Out in the 1980s, which became known as a bureaucracy-busting productivity initiative. It empowered all managers to exercise their strategic judgment and make big calls on new projects.
“As we succeed in ridding our company of the tentacles of ritual bureaucracy, we are now better able to attack the final, and perhaps the most difficult challenge of all,” Welch wrote in 1986. “And that is the empowering of our 300,000 employees to release their creativity and ambition, the direct coupling of their jobs with some positive effect on the quality of a product or service.
“We want each man and woman in this company to see a connection between what he or she does all day and winning in the marketplace. Their roles and responsibilities must be clear to everyone. Small companies thrive and grow on the sense of contribution and reward. We want it as well, and everything we do to evolve our management system will be consistent with getting it.”
Along the way, Welch got rid of the blue books — the thick volumes of guidance for every GE manager, written by influential American business brains and captains of industry. “His message to GE's managers, preached since day one with remarkable consistency, is, ‘You own these businesses. Take charge of them. Get headquarters out of your hair,’” wrote Colvin in 1999, when Fortune named Welch its manager of the century. “Fight the bureaucracy. Hate it. Kick it. Break it.”
In his own words, Welch was always more considered. (In fact, he always disliked the “Neutron Jack” nickname: “Hate it,” he said in 2005). “Adapting our organizations to deal with change … creating an environment of candor, an environment free of bureaucratic logjams, so that it is easy for anyone in the organization with a good idea to communicate it to anyone else,” Welch told Duke University students in a keynote address in April 1983.
That desire to unclutter and simplify extended to General Electric’s name: It was Welch who renamed the company GE in 1986.
In 1995, Welch beefed up Work-Out with Six Sigma, the set of techniques and tools for process improvement. But Welch’s way was more than just theory. He also set tough targets, including an insistence that all GE businesses be first or second in their markets, whether that was jet engines, plastics, locomotives, financial services or broadcasting. (Welch identified 14 such businesses across GE in 1988).
“The American engineering profession needs to reassert its leadership: to raise its eyes and voices, roll up its sleeves and do again for the nation what it did a century ago... make it a winner in the global marketplace,” he said during his tenure. Welch, who famously began his day at the gym at 5 a.m., worked out until 7:30 a.m., and then put in a 12-hour day, revisited the theme of victory when he retired: His 2009 book was called “Winning.”
Culp paid tribute to Welch’s legendary competitiveness on Monday, saying, “We will continue to honor his legacy by doing exactly what Jack would want us to do: win.”
Welch also showed that he was no one-trick pony. When his strategy of being first or second in each market became, in his words, “tired,” he mandated that every business opened up to new markets where they held less than a 10% share.
Age did not weary Welch. On retirement he joked that he would get to the gym “at 10 a.m. instead of 5 a.m.” He worked as a corporate consultant for some years after leaving GE and became a familiar TV pundit and management guru. He also launched the Jack Welch Management Institute at Strayer University, an online MBA and certificate program aimed at giving students globally and at every career level the tools to transform their lives and the organizations of the future.
“He is survived not only by his wife, Suzy, children and grandchildren, but also by the hundreds of thousands of current and former GE employees around the world,” Culp said on Monday. “He will be missed.”