By John A. Byrne
As CEO of General Electric for the past twenty years, he has built its market cap<注1> by more than billion and established himself as the most admired business leader in the world. His championing initiatives like Six Sigma quality, globalization, and e-business have helped define the modern corporation.<注2> At the same time, he's a gutsy boss who has forged a unique philosophy and an operating system that relies on a "boundaryless" sharing of ideas, an intense focus on people, and an informal, give-and-take style that makes bureaucracy the enemy.<注3>
Starting at GE in 1960 as an engineer earning ,500, Jack learned the need for "getting out of the pile"<注4> when his first raise was the same as everyone else's. He stayed out of the corporate bureaucracy while running a billion collection of GE businesses—in a sweater and blue jeans—out of a Hilton, Massachusetts.
After avoiding GE's headquarters in Connecticut for years, Jack was eventually summoned by then Chairman Reg Jones. Through his dark-horse struggle, he made it to the CEO's chair and started the GE transformation.
Welch was ever called "Neutron Jack". During those years, GE's employment rolls fell by more than 100,000 as part of a strategy to "fix, sell, or close" each department<注5>—and he used the purchase of RCA<注6> to provide a foundation for the company's future earnings. There were mistakes, too—and Jack confronts them openly. He describes one of the biggest blunders: the purchase of Kidder Peabody, which ran counter to GE's culture.<注7>In fact when you see Jack in person, he is not so much as the celebrated chairman and chief executive of GE, the company he has made the most valuable in the world, but rather as Professor Welch, coach and teacher to 71 high-potential managers attending a three-week development course.<注8> ''You can't grow long-term if you can't eat short-term,'' he states flatly. ''Anybody can manage short. Anybody can manage long. Balancing those two things is what management is.''
If leadership is an art, then surely Welch has proved himself a master painter. Few have personified corporate leadership more dramatically. Fewer still have made so splendid achievements based on that leadership. For 17 years, while big companies and their chieftains tumbled like dominoes in an unforgiving global economy, Welch has led GE to one revenue and earnings record after another.<注9>
''The two greatest corporate leaders of this century are Alfred Sloan of General Motors (GM) and Jack Welch of GE,'' says Noel Tichy, a longtime GE observer and University of Michigan management professor. ''And Welch would be the greater of the two because he set a new, contemporary paradigm<注10> for the corporation that is the model for the 21st century.''
It is a model that has delivered extraordinary growth, increasing the market value of GE from just billion in 1981 to about billion today. No one, not Microsoft's (MSFT) William H. Gates III or Intel's (INTC) Andrew S. Grove, not even the late Coca-Cola (KO) chieftain Roberto C. Goizueta or the late Wal-Mart (WMT)<注11> founder Sam Walton has created more shareholder value than Jack Welch. So giddy<注12> are some Wall Street analysts at GE's prospects that they believe that owing to Welch, GE's stock could trade at to a share, up from now, and the company could be worth billion to billion.
Welch likes to call General Electric the ''grocery store.'' The metaphor, however quirky for such a colossus, allows Welch to mentally roll up his sleeves, slip into an apron, and get behind the counter.<注13> There, he can get to know every employee and serve every customer. ''What's important at the grocery store is just as important in engines or medical systems,'' says Welch. ''If the customer isn't satisfied, if the stuff is getting stale, if the shelf isn't right, or if the offerings aren't right, it's the same thing. You manage it like a small organization. You can manage better gradually.?''We're pebbles in an ocean, but he knows about us,'' says Brian Nailor, a marketing manager. ''He's able to get people to give more of themselves because of who he is. He lives the American dream. He wasn't born with a silver spoon in his mouth. He didn't just show up.''
As for what Welch will do next after his retirement, he doesn't hesitate to answer the question. While he will consider teaching an occasional business course, he has no intention of amassing corporate directorships. Instead, he intends to play golf with his second wife, Jane. Clearly, he will miss the job, the action, and the fun. ''A lot,'' he says, '' but succession is part of the rebirth of an organization. I'm not going to be around.<注14> I am not going to be near the board. It's a free swing for a new team.'' But can anyone ever run this company with the power and influence of a Jack Welch? Who knows.