Business path: Jack Welch. 10 secrets of the world's greatest management king. Stuart Crainer

Back to Jack Welch
The first edition of Jack Welch's Business was published in 1999. At the time, Jack Welch seemed to be the unreachable corporate king. His biography was much more than just an administrator's biography. However, he felt calm before the approaching resignation.
Over the years, Welch's place in the Pantheon of business gods has been firmly established. Among the best business theorists (Thinkers 50 rating), businessmen and executives clearly stand out, with Welch and Bill Gates in the top ten. But it was Welch, who occupied the sixth position, who topped the list of the best directors. He is followed by many IT administrators, including former ones. Andy Grove of Intel (24th) is ahead of Michael Dell (25th) and Jeff Bezos of Amazon (30th). Another bright leader, Herb Keller (Southwest Airlines), was forty-ninth.
As Welch's career took off, he encountered serious difficulties in business life. Being only human, Welch did not remain unscathed and unsullied; even geniuses have flaws.
Jack Welch's last two years at the helm of General Electric saw two significant developments: the settlement of his successors and the purchase of aviation electronics giant Honeywell in an attempt to orchestrate one of the largest industrial mergers ever. It turned out that both events were intertwined in a complex way.
Jack Welch first considered buying Honeywell in October 2000. When he arrived on the New York Stock Exchange, he was told that United Technologies Corporation, owner of Pratt & Witni, was planning to buy Honeywell. It took him only 45 minutes to consult with the board and come up with a counteroffer. Welch believed that the deal between General Electric and Honeywell made a lot of sense. Combining General Electric's engine and aviation finance divisions with Honeywell's aviation electronics would bring significant benefits to General Electric. Welch was so convinced of the viability of the idea that he reached an agreement with Honeywell's directors within two days. He is said to have convened the Honeywell board the morning after visiting the exchange, while Honeywell's directors were considering United Technologies' proposal. Welch agreed that General Electric would pay $45 billion for Honeywell.

To complete the deal, Welch delayed his planned resignation from April 2001 until the end of 2001. If things went well, the merger could almost triple the size of General Electric and sensationally increase the company's influence in the global market. When the American authorities approved the merger, Welch seemed to find the right sensational deal to end his distinguished career. But Welch and the GE board underestimated the European Commission.
Since 1990, the European Commission, the executive body of the European Union, has exercised legal oversight of mergers where these companies pooled revenues of $4.2 billion or more, if $212 million of that revenue was from Europe. Since General Electric earned $25 million of its revenues in Europe, where more than 80,000 of its employees worked, General Electric / Honeywell clearly met the criteria set by the Commission.
Welch wasn't too worried about the involvement of the European Commission; he ended up saying, "This is the fairest deal you've ever seen." But Welch had every reason to be concerned about the activities of major corporations such as Rolls-Royce and Rockwell, who were viciously working on the European Commission to prevent a merger. On February 26, 2001, all interested parties were invited to a meeting in Brussels. General Electric presented its case, but was informed that Mario Monti, Commissioner of the European Union, moved the deal to "stage #2" - a full investigation.

There were many opponents of the deal. In addition to obvious competitors such as Rolls-Royce and Rockwell, 15 airlines opposed it, as did United Technologies, the original buyer. The Commission conducted its investigation and outlined the objections to the merger in 155 pages, this report was published on May 8, 2001.
On May 29, the parties met for a two-day hearing. On one side of the room sat the executives and lawyers of General Electric. Representatives of their opponents sat opposite. On a raised platform at the end of the room were the Commission's specialists. General Electric did everything in its power to counter the Commission's arguments. Moreover, Welch proposed as a palliative to sell businesses with $2.2 billion in revenue.
The denouement came on June 13, 2001. In the office, Monty Welch listened to a member of the Commission, who read out the indispensable terms of the deal: for the merger to take place, General Electric must sell 19.9% ​​of GECAS (GE Capital Aviation Services), and in such a way that General Electric could not control who will buy a controlling stake in GECAS. Monty asked Welch to communicate his decision on the same day. It was a thoughtless act. Welch had already offered everything that was commercially possible. He rejected the Commission's terms, and after a lukewarm discussion of the terms, the deal was declared void on 3 July.

It was a disappointing end to Welch's career. Welch later commented with characteristic candor: “General Electric was a great company before this deal. She remains a great company after her. It could be better if we succeeded. But is it worth regretting it? Not at all. I would do the same tomorrow."

After the failed deal, Jack Welch had no reason to delay his resignation. He announced that he was stepping down as CEO of General Electric on September 7, 2001. Jeffrey Immelt, who has held leadership positions at General Electric for almost 20 years, is next in line for this responsible position. It's a pretty tough challenge for him. He faces the daunting task of being the successor to one of GE's most celebrated CEOs of all time.

Welch's accomplishments speak for themselves. Pay attention to the numbers: from March 31, 1981 to November 1999, the share price of General Electric rose from just over $4 to $133 (including four stock splits), i.e. increased by 3200%; from 1980 onwards, the overall average return on General Electric stock was 27%; the company has generated consistently 100 growing quarterly profits from ongoing operations; bought in March 1981 shares of General Electric in the amount of $10,000 would be worth $640,000 by the end of 1999; since 1981, General Electric sales have risen from $27.2 billion to $173.22 billion; profits increased from $1.6 billion to $10.7 billion; in 1999 General Electric was the second most profitable company in the world. Either way, Welch is one of the greatest corporate leaders of the 20th century.

So what will happen to Welch now? His first business after handing over to Immelt was world tour to promote his autobiography "Jack from the Inside". A book that has no doubt been remade in light of the Honeywell deal. After the book tour, Welch intends to transfer his considerable management experience to other companies through a new consulting agency. “I hope to work with half a dozen chief executives in a quiet private room, doing what I like ... I hope I can raise the intellectual level of companies ... I hope I succeed. I still love this game." It is unlikely that Welch will have few clients.

How does all this play out in The Way of Business: Jack Welch? It is a review and analysis of Jack Welch's management style and leadership. What makes Welch a manager, and how does this fit with management theory and practice? The outlook on Welch's management style is unchanged. Welch has remained a prominent figure in the business. His career proves that working in one company is not always boring. She also confirms that the best management is not the prerogative of top managers in the high-tech fashion industry. Boring industrial conglomerates need exciting management. Welch's experience proves that management is more of an art than a science. Management must be emotional, and it must be done with passion, giving all the best. Corporate leaders are just people.

The Life and Times of Jack Welch

John Francis Welch Jr. was born November 19, 1935 in Peabody, Massachusetts. His father was a railroad conductor between Boston and Maine; mother is a housewife. Entering the University of Massachusetts to study chemistry, he became the first in his family to go to college. Welch explained his choice of subject as follows: “My uncle was an engineer at a power plant in Salem, so the engineering profession seemed to me very significant. I chose chemistry and fell in love with it. Further, chemistry and the profession of an engineer were studied in parallel.

It is noteworthy that the profession of an engineer is very attractive to entrepreneurs and businessmen. “I'm an engineer by training—and by nature,” admits Tom Peters (who trained as a civil engineer at Cornell and later built bridges in Vietnam). Michael Porter of Harvard Business School - Aeronautical Engineer; former McKinsey strategist Kenichi Ohmae is a nuclear physicist and Henry Mintzberg is also an engineer by training. Mintzberg even attacked Wall Street and financiers, stating, "These people are the furthest thing from anyone who creates, sells, uses and maintains a product, but because they have a financial education, they control companies." "Unlike the aforementioned financiers," he continued with a friendly sneer, "corporate titans like Welch and Andy Grove at Intel, both engineers by training, aren't afraid to get their hands dirty." Taking things apart and learning how they work is another of Welch's instincts.

Welch went on to study chemistry at the University of Illinois, where he received his degree. Welch recalls that when he graduated, he "wanted to be making $30,000 by the time he was 30."

In 1960, he joined GE in the plastics division in Pittsfield,