All of us in the business world have a few “business heroes,” those successful leaders that we look up to and admire. We probably don’t know these people personally but generally by reputation, public profile and maybe a book or two.
My husband spent much of his career running large global engineering and technology groups, and in the 1980s and ‘90s one of his business heroes was the Irish-American son of a railroad conductor from Peabody, Massachusetts.
This short, stocky, gravel-voiced kid went on to study chemical engineering at Amherst and the University of Illinois, and then joined General Electric as a plastics engineer in 1960. His name was John Francis Welch Jr., better known as Jack Welch.
Going on to lead one of the greatest and most valuable companies of the 20th century, Welch passed away earlier this month at the age of 84.
General Electric was founded in 1889 with support from JP Morgan and the Vanderbilt family. It was primarily seen as a way to finance and consolidate projects by Thomas Edison, who owned a number of companies involved with the new technology called “electricity.”
In 1896, GE became one of the first 12 companies listed on the newly formed Dow Jones Industrial Average, and over the next 100 years the company became a major player in television (both manufacturing and broadcasting), home appliances, aviation, computing, power generation, medical equipment and more.
After running GE’s plastics division for a few years, Welch was made chairman and chief executive of General Electric in 1981.
While the company was in reasonably good health when he took over, he earned his nickname that he never liked: “Neutron Jack,” after the bomb that wiped out people but left buildings standing.
Welch’s management style was fact and logic based, and ruthless. He routinely gave bonuses to the top 10% of his people and fired the lowest performing 10% each year, no matter how well the company was doing. He called this his “rank and yank” philosophy.
He was target and metric obsessed, and though he liked to say he was approachable, many people he worked with described him as smart and focused, but also volatile and confrontational.
Strategically, Welch diversified into financial services by adding GE & Capital to the mix of home appliances, medical devices, power generators and jet engines. He introduced lean manufacturing practices and brought a dual focus on both short term performance and long-term vision. If a business wasn’t a leader in its market, he said it “needed to be fixed, closed or sold.” He wrote the book “Winning” with his third wife Suzy, in 2005 to encapsulate his philosophy. Welch’s rigid and workaholic nature might have contributed to the fact that he was married three times and divorced twice. However, when he passed away, Suzy paid tribute to him as a “life force made of love” and he was reported to have been surrounded by his family and beloved dogs at the end. He had four children – Katherine, John, Anne and Mark – with his first wife, Carolyn, and they divorced amicably enough in April 1987 after 28 years of marriage.
Welch had his share of controversies, especially at the time of his much-publicized divorce from his second wife, Jane Beasley, who was a former mergers-and-acquisitions lawyer. She married Welch in April 1989, and they, it had some serious challenges to deal with, including an electrical appliance business that made TVs in New York state with manufacturing costs higher than their Asian competitor’s retail selling price to consumers.
He moved quickly to close the division down and divorced in 2003.
While Welch had crafted a prenuptial agreement, Beasley insisted on a 10-year time limit to its applicability, and thus she was able to leave the marriage reportedly with around $180 million of his reported $900 million fortune.
It appears that Beasley was “a woman scorned” as she discovered intimate emails between Welch and Suzy Wetlaufer, the Harvard Business Review editor, who had met him while developing an article about his life and career.
He married her in 2004 and they were together until the end of his life, writing books together.
When Welch retired in 2001, GE was the most valuable company in the world. The London Times says during his 20-year tenure he increased the value of GE 4,000% to over $400 billion. Fortune magazine described Welch as the “Manager of the Century,” and Boston Magazine once estimated his personal wealth at over $700 million.
I say goodbye this week with a quote from Neutron Jack himself: “Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.”
Great words for a business person to live by, whether you admire Welch’s ruthlessness or not.
God bless America, and RIP Jack Welch.