I belong to a very select club. OK, it’s less select now than when I first joined up. But, still.
PhD ChemE. Not only is chemical engineering the least populous of the traditional engineering disciplines, less than 5% of those who obtain a degree in chemical engineering actually obtain a PhD.
So, when I was growing up, it was amazing to see major firms (that were not part of the CPI- the chemical process industries) headed by PhD Chem E’s.
Why was this true? Because we Chem E’s had tremendous backgrounds in chemistry, math, engineering, finance, and management. (I – and my fellow ChemE’s from the 60s and 70s- actually took more courses in finance and’ accounting than MBA’s did.)
There was Bob Goizueta at Coca Cola. Andy Grove at Intel. George Rosenkranz at Syntex. And, Jack Welch at GE.
Jack was the talk of the world long before we emulated the young turks of Silicon Valley. He spent about 40 years at GE, starting at the age of 24. The first 20 got him to the top, impressing Reginald Jones, the CEO at the time. The next 20 got GE to the top of the crop- under Jack, GE was the most valuable company in America. $ 410 billion (back in 2000) in fields spanning financial services, tech, healthcare, media, energy, among others. Jack retired right before my 50th birthday (and 9-11).
Jack, as is true of most ChemE’s, was the round peg in a square hole. (Most engineering programs hone their graduates to be the best square peg to fit the square hole.) His own words were… “Many of my peers regarded me as the round peg in a square hole, too different for GE.” He was brutally honest and outspoken. He was impatient and seemed abrasive to many. (Those are his words paraphrased.)
We barely remember that GE was the product of Thomas Edison and J. Pierpoint Morgan. Because GE will be forever recalled (at least for another two or three score years) as the house that Jack built.
Jack earned the moniker “Manager of the Century” from Fortune magazine in 1999. GE was the “most respected company” for the last few years of his tenure. But, he also earned the moniker “Neutron Jack” (as in neutron bomb- where the buildings remain but the people are wiped out) with his philosophy of “fix it, close it, or sell it”, by axing 10% of the workforce each year (the lowest performing segment, of course).
Of course, Jack also demanded that managers ensure that every employee know- well in advance- should performance be wanting. On the other end of the spectrum, Jack hired the best folks he could find- and then assigned them “stretch assignments”- things that could be beyond their abilities, forcing them to “overperform”, learning they were capable all along.
(Like another titan of industry, Bill Gates [of Microsoft], it was tough to work alongside Jack. Demanding, utterly challenging individuals might help us rise to our best, but… [No comments from the peanut gallery!])
Keep in mind that under Dr. Jack Welch, GE provided a total shareholder return rarely (if ever) seen. Rising 21% a year, the return approached 5000% during his tenure. (The S&P performance almost hit 1400% during the same time period.) GE’s revenue soared from $ 27 billion to $130 billion over his tenure. More importantly, profits rose form $ 1.5 billion to $ 15 billion. (You do recognize that revenue quadrupled as profits rose ten-fold!)
GE turned from being an old-line manufacturer into service provider and high tech giant under Jack. Without neglecting its commercial banking and NBC (the TV network that is now under the Comcast umbrella, having been spun off from GE).
(I am not glossing over the fact that some of his businesses failed the integrity test or that his finance unit became the poster child for risky portfolios, necessitating a bailout during the Great Recession. Or that he became a spokesperson for the WrongWing and an Obama hater.)
Jack also ran the best business management and leadership development system- putting the vaunted Proctor and Gamble system to shame. (This became known as the “Welch Way”.) Jack knew it wasn’t the CEO’s job to know everything about each business- but to pick the best folks to run those business segments. And, then the CEO allocated how much money and resources each of the businesses deserved. Because Jack’s policy is that we are either first or second- or ‘outta here”. In business, with folks, with his life.
It’s why so many of his proteges ending up heading Fortune 500 companies. (Boeing, Home Depot, among others.) I believe his one failure was Jeff Immelt- his hand-picked successor for GE. OK. His first two marriages have to be included. Suzy proved that the third time could be a charm.(He not only taught business leadership at MIT’s Sloan School, but he and Suzy- together- started an online MBA program [The Jack Welch Management Institute] that was simply elegant. It is now part of Strayer University.)
Jack died of renal failure on the first of March. He was 84 years young.
