Jack Welch cuts to the chase on economy, regulation, career paths
Retired General Electric Co. Chairman Jack Welch is back with a speaking tour, a rant about regulation and straight talk about the state of the U.S. economy and his former employer.
Even down with a cold, the New England native and Red Sox fan makes clear he’s still a force to be reckoned with. In a 20-minute phone conversation, he challenged a new generation of leaders to clear away the mental cobwebs, discover your destiny and use clear direction to build an effective team.
The occasion for the chat is a new book. Co-authored by his wife, Suzy, and released in mid-April, it’s called “The Real-Life MBA: Your No-BS Guide to Winning the Game, Building a Team, and Growing Your Career,” (Harper Collins, $19.99). He’ll been joining Suzy for a talk about the book at UC Santa Barbara on May 17.
Welch thinks the U.S. economy is “in the middle innings” of an extended recovery with “more room to grow.”
The key is job growth and Welch thinks that could happen much faster if local, state and federal governments took a long hard look at regulatory burdens and removed some of the barriers to business formation and faster hiring. “Obamacare, environmental rules, labor rules are not contributing to creating jobs,” he said.
New financial regulation is one reason why he has publicly endorsed GE Chairman Jeff Immelt’s plan to return the company to its industrial roots, shedding GE Capital and related businesses in a series of transactions that could return as much as $90 billion to shareholders. GE’s finance operation at one time contributed heavily to profits but also put it in the cross-hairs of regulators during the financial crisis.
With the passage of Dodd-Frank and other post-recession reforms, “the regulatory environment changed the playing field,” Welch said. That means going back to businesses that were traditional GE strengths such as medical devices, aircraft engines, oil and gas, and locomotives.
GE’s ability to “change with the times” has been key to being the only company still in the Dow Jones Industrial Average after 100 years, he said. Even venerable AT&T has been kicked out of the average, now replaced with Apple Computer, but with market capitalization of $271 billion, a simpler capital structure and cash pouring in from the GE Capital sale, it is not in danger of being replaced anytime soon.
While it has become fashionable to talk about young professionals pursuing their personal passions, Welch thinks that the more effective term is “destiny.” By finding the field of endeavor where you can do “what you are good at and what you enjoy doing,” you can begin to develop a leadership style, he said.
Confusing your field or area of destiny with the ego gratification of making a lot of money can be tough. But Welch says that in his role as a senior adviser at private equity firm Clayton, Dubilier & Rice, he’s encountered plenty of wealthy financial types who make a lot of money but don’t find their jobs satisfying.
Once you find your area of destiny, he said, the trick is to reward your team members with money and honest feedback. “You have to explain clearly what’s in it for them,” he said. “There’s so much spin today. But if you can create trust, then you will get trust in return.”
Welch has no patience for long meetings where people play games and conversations get off point. A good manager, he said, runs short meetings and gives clear direction, constantly focusing the company toward goals.
These days he’s also spending a lot of time with the Jack Welch Institute of Management, an online education program based in Herndon, Washington that offers MBA and executive certificate programs. The program is affiliated with Strayer University.
When it comes to graduate business education, Welch, who graduated from the University of Massachusetts, is a bit of a disrupter. He thinks that taking two years out of your career to pursue an MBA full-time is too much of a sacrifice and too expensive.
The Welch Institute offers its online curriculum for $39,000 and focuses on fundamentals. In the end, says Welch, opportunity is there for people willing to seize it. For all our faults, the United States is still “the best place in the world to do business.”
– The Jack and Suzy Welch presentation will be at UCSB’s Campbell Hall at 2 p.m. on Sunday, May 17. Ticket price includes a free, pre-signed copy of “The Real-Life MBA.” Information at www.artsandlectures.ucsb.edu.