Jack Welch on Success, Regrets and Values

Welch spoke here at the annual spring conference held by InformationWeek, a sister publication to VARBusiness.

Welch is familiar with being at the center of controversy, thanks to his long tenure at General Electric as chairman and CEO, a position from which he recently retired, and the recent revelation of his romantic relationship with a Harvard Business Review editor, as well as his pending divorce.

And it seemed that at the lively, and often humorous, hour-and-a-half discussion and audience QandA that began after dinner InformationWeek editor-in-chief Bob Evans was going to stir that controversy. Evans asked Welch to confirm a rumor he had heard, insinuating Welch's affair with the editor.

"There's a personal topic that's been on everybody's mind," said Evans, as the audience of over 250 quickly grew silent. "Jack, there's a story going around that you beat Greg Norman in a golf match."

Welch responded: "That's pretty clever."

Once the laughter and clapping ended, conversation reverted back to business-related topics.

Welch spoke of the need for executives to recognize good workers who have positive values, while quickly dealing with poor managers, no matter how much they contribute to the so-called bottom line.

"It's a sin to lose a top performer," said Welch. "The managers who lose top performers should be removed themselves. The way you find out where the horses' asses are is you see they're losing the best people."

In addition, giving false kindness to those workers, especially over age 50, who are not contributors, is unfair, said Welch.

"I think it counts so much to let people know where they stand," he said. "You have no right to BS people. You have no right."

Another bad move for business technology executives, particularly for CIOs, is to propose what Welch referred to as "elephant projects."

If a project costs more than $20 million and takes longer than six months to implement, Welch said he automatically hates it.

"The elephant project is going to solve the whole world for the company--I think that's a sucker game," he said.

One company that should be a role models for others, said Welch, is FedEx.

The FedEx CEO/CIO combination of Fred Smith and Robert Carter, respectively, is why IT and business needs at the $21 billion shipping company are met with success, said Welch.

He said he believes a company's ultimate competitive advantages, such as FedEx's, is its ability to raise its intellectual level to become a learning organization, to find a better way every day to share that knowledge and quickly act upon it.

"So why do we hang around FedEx?" said Welch. "Not because we like packages, but because we want to learn everything they know about IT. Why do we hang around Wal-Mart? Because we want to know everything they know about touching customers [and moving product to customers rapidly."

Welch pointed to a front table, which seated eight people, as an example of the important of encouraging the sharing of knowledge among colleagues.

"If you could leave this room tonight at this table, and you knew the best thing that everyone at that table knew, you'd be a hell of a lot smarter than any one of you individually would be," said Welch.

The goal is to find out what others know that you don't know.

"What you get is an environment of finding a better way every day and celebrating those who find it, expand it and share it, and you have changed the atmosphere of a place," said Welch.

But that's easier said than done when corporate culture in many companies stick to the notion that competition is best for its employees to fight for that "piece of the pie," said Evans.

"Give people voice and dignity, and then compensate them," said Welch.

People who don't behave around the values that are decided for a company must be quickly removed from the company, said Welch.

"The one thing you know if you're a CIO here is that everyone in your organization knows who your jerks are,"he said. "When you don't put the absolute best people in the right spot, you are kidding yourself. You've got to back up every single act that you have with a value system and a reward system that fit."

After Sept. 11, a good manager should have responded in only one appropriate manner, said Welch.

"Far more in 9/11 than in a recession, it's to cushion uncertainly," said Welch. "It's to be with people and let them express how they feel, but it's no different in a recession when they're concerned about where they're going and what's going to happen."

At the moment, Welch declared the three toughest jobs in America are being CEO of Lucent, CEO of Xerox and CEO of Hewlett-Packard, all positions that are held by women.

"The worst thing that could happen for what is a very positive diversity movement is that these three get shoved simultaneously for trying to do jobs," said Welch. "These women have taken on challenges that are off the chart. And in many cases every male in America looked at the Lucent job."

Welch called for all IT executives to support Patricia Russo of Lucent, Anne Mulcahy of Xerox and Carly Fiorina of HP.

"We all of a sudden have a gender issue that we don't have to have, and the media will have a big party," said Welch.

An audience member asked Welch what he believed to be his greatest accomplishments and his regrets.

For his employees at GE, Welch said he felt proud to be able to enrich their lives with their jobs, while making them wealthier than they could imagine.

"For 20 years, they got a 23 percent return, and their jobs were better," said Welch. "They had fun. They didn't have some bureaucratic ass sitting on them in most cases. They had a job that they loved coming to and they learned every day."

Welch's regret relates to one piece of advice he gave to executives.

"I didn't move fast enough on [firing people who didn't have the values," said Welch. "And I've obviously been marginal on marriage."