Chu, J. (2010). WHAT WOULD JACK* DO?. Fast Company, (151), 128-147.

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from EBSCOhost.

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References

Moore, P. L. (2000). JACK-THE WELCH ERA AT GENERAL ELECTRIC.

BusinessWeek, (3711), 99. Retrieved from EBSCOhost.

THE WELCH ERA AT GENERAL ELECTRIC

Contents

1. NEUTRON JACK
2. HIGH POINTS
3. LOW POINTS
4. THE WELCH TOUCH

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Section: Photo Essay

Jack

Now that he has finally told the world who his successor will be, John F. Welch embarks on the
final stretch of his remarkable 20-year reign as CEO of General Electric Co. When he leaves
GE's headquarters in Fairfield, Conn., for the final time a year from now, he will end one of the
longest and most triumphant runs of any CEO in Corporate America. He will also leave behind a
legacy of stunning change.

Most remarkable is the way Jack Welch transformed his own image. A brash upstart who was
inimical to the staid GE culture, he started his tenure at the top by ruthlessly cutting corporate fat
during the 1980s, earning unparalleled infamy among the rank and file. But that downsizing
positioned GE for the '90s boom. And now that he has added almost $500 billion in shareholder
value, the slasher image has long since been replaced by that of a management savant. Many
experts consider Welch one of the 20th century's greatest corporate leaders, ranking with
General Motors Corp.'s Alfred P. Sloan.

Indeed, the deftness with which he turned an industrial conglomerate into a high-growth
thoroughbred overshadowed many of the company's blemishes, from expensive missteps to
outright scandals. Now, Welch's legacy also will depend on how well he grooms his heir, Jeffrey
R. Immelt. If he gets it right, the Welch Era will live on long after the man himself departs.
NEUTRON JACK

Welch was a sharp contrast to his predecessor, the statesman-CEO Reginald H. Jones, who was
almost as admired in his day as Welch is now. Jones risked his reputation by pushing Welch
over several other candidates. Indeed, some GE board members considered Welch too impetuous
to take the helm. Welch started his reign with a bang, dismantling GE through a series of
dramatic restructurings and layoffs. From 1981 to 1985, he cut 100,000 jobs, an act so painful to
employees that they began referring to him as ``Neutron Jack,'' after the nuclear bomb that
vaporizes people but leaves buildings standing.

HIGH POINTS

Welch proved just as adept at buying and building businesses as he was at slashing jobs. He
purchased RCA in 1985, bringing the NBC television network into the GE fold and adding a
radically new service business to the industrial mix. He transformed GE Capital Corp. from a
sleepy finance company into a powerhouse that now supplies 41% of GE's earnings. And in a
dramatic stroke that proved he was a dealmaker to the end, Welch last October seized Honeywell
Inc. from rival United Technologies Corp. with a $45 billion bid. It was the largest deal of his
career--and to see it through, Welch postponed his retirement by eight months.

LOW POINTS

The Welch era was not without flaws. GE has suffered major setbacks and scandals, from
criminal indictments relating to military contracts to ongoing battles with environmental groups.
Until recently, New York's fabled River Cafe would not serve top GE execs because of PCB
contamination in the Hudson River that many blame on the company. Indeed, regulators will
soon rule on whether GE will have to pay to dredge the river. Even more damaging to GE: the
1994 bond-trading scandal at Kidder, Peabody & Co. that led to huge losses and the dismantling
of the investment bank Welch bought in 1986.

THE WELCH TOUCH

A hands-on manager who supplies the massive company's daily shot of adrenaline, Welch sets
high standards and can display a fiery temper when they're not met. But Welch's charisma is
most apparent when he's pursuing two of his passions: golf and teaching in ``the pit'' at GE's
leadership training center in Croton-on-Hudson, N.Y., where he engages GE managers in candid
exchanges.