Book Summary Preview : jack STRAIGHT FROM THE GUT

The Early Years

Grace Welch was the most influential figure in her son’s life. She taught him the value of competition, by taking pleasure in winning and to take defeat in stride. Jack Welch’s leadership style was also patterned after her, tough and aggressive, warm and generous. Many of his basic management beliefs – like competing hard to win, motivating people by alternately hugging and kicking them, stretching goals and relentlessly following up on people to get things done – all these lessons came from his mom.

“Big Jack” was a diligent worker who would put in long hours and never missed a day of work. He would always look forward to climbing back on the train which he always thought of as his own. He loved greeting the public and meeting interesting people. Since the age of six, Jack Welch got his daily dose of current events and sports from the leftover newspapers of other passengers, which his dad brought home. Reading newspapers every night became a lifelong addiction.

He went to U-Mass not knowing what he wanted. He was the first in the family to go to college. He had no role models to follow, but he had an uncle who worked as an engineer at the power station so becoming an engineer looked good to him. He also decided with Umass because the caliber of competition there made it easier for him to shine rather than if he went to Dartmouth or Columbia.

Jack Welch started at GE on October 17th, 1960. He soon became frustrated with the bureaucracy, so much that it almost drove him out of the company a year later. In 1961, he got a $1,000 raise. It was fine until he found out later that he got exactly what the others received. Jack felt strongly that he deserved more than the “standard” increase. He started looking for another job, and he felt trapped in the pile at the bottom of a big organization.

A lot of people think that differential treatment erodes the very idea of teamwork. But according to Jack Welch, you build strong teams by treating individuals differently. Winning teams come from differentiation, rewarding the best and removing the weakest, always fighting to raise the bar.

In 1963, on his third year with the company, Jack blew up a factory. He was then 28 years old and he was the boss, so he took responsibility. It was also the first time he met Charlie Reed who took a Socratic approach in dealing with the accident.

When people make mistakes, the last thing they need is to get disciplined. Their self-confidence needs to be restored. “Piling on” during a weak moment pushes good leaders into panic mode. They start losing their confidence and they spiral downwards into a deep black hole of self-doubt.

In 1964, after getting an early promotion and a $3,000 bonus, Jack threw a party for the employees at his new house on Cambridge Avenue. That very next Monday, he bought his first convertible and was on top of the world. He also went to get a new suit and he enjoyed being called “Dr. Welch”, he was quite full of himself.

One spring day, he decided to put the top down for the first time but then the hydraulic hose sprung a leak and dark, grungy oil shot up on his suit and ruined the paint job on his new car. It was a smack in the face, bringing him back to reality.

In 1969, Dr. Jack Welch was promoted to general manager and he was ready to act as a businessman, not an engineer. A writer came to interview him for Monogram, a company magazine and referred to him as “Dr. Welch” he shot back with a quote – “I don’t make house calls, so call me Jack!”

Without regard of how previous leaders would feel, he boasted that his team would break all sales and profit records, and that the plastics business would grow more in his first year than in the previous ten years.

It was during this time that plastics was hot stuff, a lot of forecasters believed that plastics would become the fastest-growing industry over the next decade – even much faster than computers and electronics. When GE finally got Lean, he thought that GE could take on the world, and Jack was cocky enough to say so.

The marketing and promotional campaign for plastics was something new to everyone. It was being promoted like Tide detergent. They hired St. Louis Cardinal pitcher Bob Gibson to star in their commercial. They even had commentators plug their plastics in Detroit during prime time. Dennis McLain, at that time a thirty-game winner, hurled fastballs at Jack Welch in a parking lot holding a Lexan plastic sheet covered by the press.

All of this promotion got great attention because it was a different marketing strategy for an industrial plastic. By 1970, the boastful predictions were doubled but it came with a price, he was starting to ruffle some feathers at corporate headquarters.

As he kept on moving up he was being regarded as a rebel of sorts. Roy Johnson, the head of GE’s human resource department looked at Jack as someone who deserved the promotion, but his appointment carried more than the usual degree of risk.

In 1971, Jack Welch got a job as the head of the chemical and metallurgical division. This brought new challenges. His first job was to get a close look at his team – he is the first to admit that he was somewhat impulsive in removing people in those early days. It is the toughest and most difficult thing to do, it’s never easy and it doesn’t ever become easier.

On December 15, 1980 Jack Welch was finally named CEO. It was a long and tough road getting there. Former CEO Reg Jones had a different way of evaluating people. It all happened because Reg had enough courage to pick someone who was the antithesis of what was then deemed the “model” executive.

Building a Philosophy

In 1980, GE was, like much of American industry, a formal and massive bureaucracy, ruled by more than 25,000 managers who each averaged seven direct reports, in a hierarchy with as many as a dozen levels between the factory floor and the CEO’s office.

Having been in the field, Welch had a strong prejudice against most of the bureaucratic culture and its “superficial congeniality” – the atmosphere was characteristically pleasant on the surface, with distrust and savagery boiling beneath it.

Welch also hated the sense of elitism exhibited by GE managers, as exemplified by the Elfun Society, an internal management club that served as a networking group and a “rite of passage” into management. During one of their meetings, Welch told members of the Elfun Society that the club was an institution pursuing an old agenda, one without any value to the newer, faster, forward-looking GE he was trying to build.

When challenged to change, the members of Elfun rose to the occasion. Today, the once-exclusive management club is an army of GE community volunteers, with membership determined solely by the willingness of its 42,000 members to give back to society.

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