"Control your destiny or someone else will."
Former chairman and CEO, General Electric
Born: Nov. 19, 1935, Peabody, Mass.
Education: Bachelor's in chemical engineering, University of Massachusetts Amherst; master's and Ph.D., University of Illinois at Urbana-Champaign
An employee-manager rather than an owner-entrepreneur, John F. "Jack" Welch is a rarity on our anniversary list of the most transformative leaders, icons and rebels of the past quarter-century. Yet as chairman and CEO of General Electric, he defined American corporate management in the late 20th century through innovative leadership and his forceful, down-to-earth style. As Warren Buffett is to investing, so Welch is to the corner office.
Trained as a chemical engineer, Welch joined GE Plastics in Pittsfield, Mass., in 1960 after earning his Ph.D. Despite early misgivings about GE's bureaucracy that almost made him leave the company, Welch rapidly rose up the ranks. By 1972, he had become a vice president and within five years was a senior vice president. Two years later, he was one of three vice chairmen to audition to succeed the highly regarded Reginald Jones in the top job.
In 1981, Welch became GE's youngest-ever chairman and CEO, having been anointed by Jones. The outgoing chief was impressed with Welch's strategic vision, despite his youth and reputation within GE for being, according to Jones, "a wild man." During Welch's two-decade tenure, the company's market capitalization rose from $14 billion to more than $400 billion.
His first moves as CEO were to dismantle the organization Jones had built. Welch's relentless streamlining of GE was a blueprint for other CEOs during the 1980s, when they faced slow growth and Asian competition. He closed factories and slashed payrolls, cut basic research and development, and shuttered or sold subsidiaries that were not No. 1 or No. 2 in their industries.
Welch stripped out layers of management. Taking a page from the book of Wall Street's rank-and-yank investment banks, he fired the bottom 10 percent of GE managers each year and rewarded the top-performing 20 percent with bonuses and stock options. By 1985, he had cut GE's workforce by more than a quarter, to 299,000, which earned him the sobriquet "Neutron Jack."
His major strategic changes came with the acquisition of RCA in 1986 and its corporate headquarters at "30 Rock," in New York's Rockefeller Plaza. Welch kept the NBC broadcasting network but sold most of the rest of RCA. His next raft of purchases shifted the balance of GE's businesses to financial services from manufacturing. In 1995, Welch adopted Motorola's Six Sigma model for managing quality improvement. By the end of the decade, two-thirds of the largest companies in the U.S. had followed him in doing so.
GE's revenues rose from $26.8 billion in 1980 to $130 billion the year Welch retired. Earnings grew tenfold, to almost $14 billion. GE was famous for not disappointing Wall Street analysts' quarterly earnings forecasts; its share price rose from just over $1.25 in 1981 to a peak of $60 in 2000.
Like Jones before him, Welch set up an internal three-way succession race between James McNerney, Robert Nardelli and Jeffrey Immelt (the eventual winner). He retired to a second career as a best-selling author, a popular columnist and an in-demand speaker. He is also a senior advisor at the private equity firm Clayton Dubilier & Rice.
Jack Welch: Lifelong highlights
- Son of a Boston & Maine Railroad conductor of Irish descent
- Made $10,500 his first year as a GE chemical engineer and $16 million his last as CEO
- Outspoken critic of regulation of executive compensation
- Underwent acrimonious divorce from second wife, Jane, in 2001, during which his wealth, including his GE retirement benefits, came under intense scrutiny
- Published "Winning" in 2005, a best-seller about management co-written with his third wife, former "Harvard Business Review" Editor Suzy Welch
- Has taught a leadership class at MIT Sloan School of Management since 2006
- Avid fan of the Boston Red Sox baseball team; lifelong golfer
- Paid for college scholarships for caddies from Nantucket's Sankaty Head Golf Club
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