Jack Welch, a railroad conductor’s son who became chairman and CEO of General Electric and led it for two decades heralding its biggest growth, from $12 billion to $410 billion, has died at 84.
The cause was renal failure, his wife, Suzy Welch, said. She did not say where he died.
Combative and blunt, Welch became the chief executive of General Electric in 1981, a few months after
Ronald Reagan took office as president. It was a time of outsize gains for many of America’s big, multinational corporations and their leaders, who were helped by lower taxes and pro-business policies.
GE led the pack. The company’s revenue jumped nearly fivefold, to $130 billion, during Welch’s tenure, while the value of its shares on the stock market soared from $14 billion to more than $410 billion.
With a determination to win by busting up bureaucratic complacency, Welch earned two titles — “manager of the century” and “Neutron Jack” – the latter for slashing tens of thousands of jobs. Under his leadership, GE became the world’s most valuable company, after Microsoft. Its fortunes later turned south.
While at the helm, Welch bought and sold scores of businesses, expanding the industrial giant into financial services and consulting. GE Capital Bank was founded seven years into his tenure. His acquisitions included RCA – then-owner of NBC – and Kidder Peabody, the brokerage that became entangled in an insider trading scandal.
He also streamlined the conglomerate’s bloated bureaucracy by giving managers free rein to make changes they deemed beneficial to the bottom line.
Welch’s stardom extended beyond the business world. In a 2000 auction for the rights to his autobiography, Time Warner’s book unit won with a bid of $7.1 million, a record at the time. Jack: Straight from the Gut, written with John A. Byrne, was published the next year and eventually sold more than 10 million copies worldwide.
He invented the “vitality curve”, in which managers were ranked into three groups. The top 20 percent “A” group was “filled with passion, committed to making things happen”. The “vital” 70 percent “B” group was essential to the company and encouraged to join the A’s. Then there was the bottom 10 percent “C” group.
“The underperformers generally had to go,” Welch said in his 2001 book, Jack: Straight From the Gut.
According to the book, “the workforce went from 411,000 to 299,000 during his first five years as chief”. With such cuts, he acquired the derisive moniker named after the neutron bomb, which was designed to kill multitudes without destroying cities.
John Francis Welch Jr. was born Nov. 19, 1935, in Peabody, Massachusetts, to Irish American parents. His father was a conductor for the Boston & Maine Railroad and his mother was a homemaker. The younger Welch studied chemical engineering at the University of Massachusetts Amherst and received his PhD from the University of Illinois in 1960.
Welch joined GE in 1960 as a chemical engineer in its plastics division in Pittsfield, Massachusetts. He became a vice president in 1972 and vice chairman seven years later. In April 1981, at age 45, he succeeded Reginald H. Jones as chairman and chief executive officer.
Fortune magazine dubbed him “manager of the century” in 1999.
“Though he acted with what seemed at the time like blitzkrieg aggressiveness, he regretted in later years that he hadn’t moved even faster,” Fortune editorial director Geoffrey Colvin wrote in explaining the title.
“Having been handed one of the treasures of American enterprise, he said, he was ‘afraid of breaking it.’ Not only did Welch not break it, but he transformed it as well and multiplied its value beyond anyone’s expectations.”
Welch, who played a key role in the creation of CNBC in 1989, retired from GE in September 2001, days before the 9/11 attacks. Upon his retirement, The New York Times published an editorial that gushed over his professional record.
ISAAC ANYAOGU
