Welch, an only child, was born in 1935 and raised in Salem, Massachusetts. An avid sports enthusiast as a child, he credits the lessons he learned in a “scrappy place” called the “Pit” (the neighborhood gravel pit turned into a makeshift park) with forging his

leadership abilities. He later attended the University of Massachusetts at Amherst, and then went on to the University of Illinois, where he received a Master’s degree and a doctorate in chemical engineering. In October 1960, Welch joined GE in the plastics division in Pittsfield, Massachusetts. It was there that he formed his leadership ideal. Working in that exciting, fast-paced environment, Welch said, “Bureaucracy could not form, just as ice could not form in a swiftly moving stream.” (Despite this environment, Welch almost quit in 1961 when he received what he called a “lousy” $1000 raise that brought his income to only $11,500.) In the beginning, there were only two employees, which prompted Welch to liken his part of GE to a “corner grocery store.” In a neighborhood grocery store, you know the customers’ names, what they buy, who they are. Welch believes that confidence thrives in an informal arena. That metaphor would stay with him as he moved up the corporate ladder, becoming the company’s youngest general manager at age 33.Welch’s predecessor, Reg Jones, started searching for his successor in 1974, six full years before his retirement, and although the original list of 96 candidates did not include Welch, his name was added to the final list of contenders (see Succession Planning). In 1980, GE announced the name of it’s eighth CEO: 45-year-old John Francis Welch. On the day of the announcement, corporate America was in a tailspin. Interest rates were skyrocketing and the economy was sandwiched between two recessions. The stock market was in a shambles, emerging from its worst period since the 1930s. The Dow 30, which had first pierced 900 in the mid- 1960s, was at 937. And GE, one of America’s premier corporations, wasn’t doing much better. Despite the fact that Reg Jones was voted the best CEO by the Fortune 500 CEOs, GE’s stock, when adjusted for inflation, had lost half of its value over the previous 10 years.

 

What happened next has been well-documented: Welch tells a colleague of his bold plan to launch a “revolution” and spends his first years reinventing the company. In the early 1980s he performed a brand of corporate surgery that shocked even GE insiders, selling off more than 200 businesses and acquiring 70, including the $6 billion acquisition of RCA. Welch transformed GE from an aging industrial manufacturer into a diverse, global juggernaut. In doing so, he helped corporate America regain its once heralded position as the world’s most valuable competitor. Not since Alfred Sloan revamped GM’s bureaucracy half a century earlier has one corporate leader had such a great impact on a large corporation. While much has been written about the Welch initiatives that became his trademark (e.g., Work-Out, Boundarylessness), there has been less ink devoted to his basic tenets of business.Welch has consistently stated that “business is simple” and that “informal is a huge deal.” Simplicity and informality are as much a part of the Welch lexicon as “Work-Out” and “Boundarylessness.”When he speaks of his greatest accomplishments, he doesn’t talk about GE’s financial record, instead focusing on the “softer” aspects of leadership.

 

 

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