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Welch
on Welch
By Michael Alan Hamlin
February 18, 2002
There's little worse than having
to start a column with a mea culpa. But here goes. Last week I said
the father of stockbroker and technology entrepreneur Ramon C. Garcia
Jr. is the former Philippine Stock Exchange president Ramon T. Garcia.
Ramon was pretty surprised - as I'm sure his real and pseudo fathers
were - that I had assigned him a new dad. Ramon the entrepreneur's
father is actually Ramon M. Garcia, known widely as Monchoy. He's
into chemicals, plastics, and economic zones. Anyway, sorry.
Now that that's done, let's move on to Jack Welch.
Welch, former chairman and CEO of General Electric, is even more
high profile now than when he was employed full time. His book,
Jack: Straight from the Gut (he was paid US$16.6 million for the
book, and he donated it all to charity), has been an international
bestseller since it appeared on bookshelves last year. Executives
everywhere are lapping up Welch, trying to figure out what it is
about the guy that took him to the top of GE, a US$25 billion company
that he grew into a US$130 billion company (annual revenue) with
assets of US$400 billion.
Aside from the book, Welch has begun appearing publicly
(US$250,000 for a 1.5-hour Q&A session plus expenses and private
jet) and granting a cornucopia of interviews. He doesn't seem to
be doing these things to sustain his legacy, and he certainly doesn't
need the money. Instead, Welch seems to be doing what he does best,
that thing that accounts principally for his success: having fun.
In an interview that appears in the February 2002 issue
of the Harvard Business Review Welch says about his leadership of
GE, "I had the luxury of doing what I love, which is hanging
around with people. I wasn't managing businesses; I was managing
people." Welch's frenetic public calendar is more of the same:
the guy just can't stop managing people, and getting into their
heads even if they don't work for him.
But Welch calls it getting into people's skin. "What
I wanted to do inside GE was to touch every person. I tried hard
to make that connection, so that they cared the way I cared. Everyone,
from the factories to headquarters in Fairfield, Connecticut. That's
why I always made it a point to have a relationship with our unions.
I wanted them to be on the same page, too."
But instead of contenting himself with connecting to
everyone at GE, Welch now seems to want to connect with everyone,
everywhere. Yet he professes surprise at the attention he receives,
and claims that, "I don't take myself that seriously."
Welch suggests that the preoccupation people have with him is probably
because, "I'm always willing to say what I think.
"I'm not afraid to put ideas out there. But you
have to understand that these ideas are starting points, not endings.
I love to throw ideas out like Six Sigma or the boundaryless corporation
and have people test them, modify them, expand them, mold them,
learn from them. I think about business a lot, and I tend to verbalize
my thoughts early to get those conversations started. Those discussions
led to a lot of success at GE, and perhaps I get the reflected glory
from that."
Thinking about business for Welch frequently means
immersing himself in a specific business, or a product line, to
make it better. He provides the example of cathode-ray tubes in
CT scanners to the HBS editors. Although the scanners were the best
in the world, Welch notes that "doctors were going nuts because
the tubes were going out while they were doing procedures. My gut
told me to take a deep dive on this tube problem."
Welch says that designing the scanners is a sexy job,
but that ordinary cathode-ray tubes are the heart of the machine.
No one was paying attention to the heart of the CT scanners because
in the corporate culture then, the same people who designed everyday
stuff like X-ray hangers and dollies did the tubes. There was no
glamour. As a result, even though customers were screaming, no one
cared about improving the cathode-ray tubes.
"That's when I suddenly became the tube business
manager," Welch says about the job that no one really wanted.
To make cathode-ray tube design glamorous, Welch said he "used
the power of my position. I changed the salary level, changed the
position, changed the people. Instead of paying the guy US$110,000
a year with six people reporting to him, I swooped in over the top
of the bureaucracy and said, "Let's pay the manager US$350,000
a year and make him an officer of the company." Suddenly, cathode-ray
tubes were glamorous, and customers stopped screaming.
Welch started out with GE as a US$10,000 engineer.
His first successes evolved from an intimate understanding of the
plastics division in which he worked. He never lost that intensity
for detail. Imagine, the chairman of a US$130 billion company worrying
about cathode-ray tubes. He also insisted that his managers know
their businesses just as intimately, and he threw good people into
critical businesses, even if they seemed mundane. "You should
always overstaff an opportunity. If it's a US$5 million business,
put a US$300 million person to work on it and they'll make it US$300
million. Put a US$5 million person on it, and it'll stay US$5 million."
(Michael Alan Hamlin is the managing director of consultancy
TeamAsia and the author of three books on Asian economies and companies.
His latest book is Marketing Asian Places, of which he is co-author.
His e-mail address is mahamlin@teamasia.com.ph.)
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