January 26, 2008 – Business Management Article
“Jacked Up: The Inside Story of How Jack Welch Talked GE into Becoming the World’s Greatest Company” is a 315-page book written by author Bill Lane. Bill Lane is none other than Jack Welch’s former speechwriter. In his book Bill recounts how John Francis Welch Jr. (Jack Welch) built upon the straight talk culture and insisted on it. He mentions how Welch was sometimes brutally direct and drove out muddy thinking. Perhaps his nickname “Neutron Jack” comes from this passion or like some felt sometimes rude boss.
GE from an old-economy manufacturer into a modern conglomerate
GE’s turnaround from from an old-economy manufacturer (US$13 billion in 1981) into a modern conglomerate (US$480 billion in 2000) is because of this straight talk culture Jack Welch insisted upon. Jack was quick to praise people whose ideas he liked and ready to pounce on those who did not meet his standards. During Welch’s tenure between 1981-2001, GE’s stock price increased 50 times and Jack Welch’s leadership is well illustrated in the fact that GE’s stock has shown little growth after his retirement (Jack Welch retired after spending 41 years with GE in September 06, 2001) and not to forget the 9/11 attacks.
GE Managers – No five-year strategic plans
Under Welch’s leadership, five-year strategic plans were done away with as he believed no one could could plan four or five years into the future. Bill mentions in his book that any such person who planned for four or five years was considered a ‘bullshitter’. Welch wanted GE managers to give simple and clear explanations of the
business challenges they were facing and their plan to overcome them.
Restructuring GE
Jack Welch joined GE in 1960 as a Junior Engineer. Jack Welch quickly rose to become the head of the plastics division in 1968. He became the GE’s youngest CEO in 1981. Jack Welch initiated a restructuring plan in his initial years as the chief executive. This restructuring plan included massive job cuts, positioning the various businesses as number one or number two in the respective segments, and selling off unprofitable ones. The 29 layers of hierarchy were dismantled. GE then transformed into an informal company…