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American Morning

Jack Welch Retires as Chairman of General Electric

Aired September 07, 2001 - 10:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JEANNE MESERVE, CNN ANCHOR: It's the end of an era at one of the world's biggest companies. Jack Welch has retired as chairman of General Electric. Welch is viewed as one of the most influential business leaders of the 20th century. He's credited with turning GE into one of the most valuable companies on the planet. Under his watch, the company saw nearly $400 billion in growth.

But there been some controversy during Welch's 20-year tenure with GE, and author Jeffrey Crames has chronicled Welch's career for more than a decade. He wrote the book, "Jack Welch: Lexicon of Leadership." The author joins us now to talk more about this business titan.

Thanks a lot for coming in.

The price of GE has gone up, what, something like 4,000 percent, under Jack Welch's tenure. Are there some other numbers that explain why he has become such a really mythological figure almost in the business world.

JEFFREY CRAMES, AUTHOR, "JACK WELCH: LEXICON OF LEADERSHIP": Yes, when he got to GE in 1981, to CEOs office, GE was worth some $13 billion. Last year, at one point, GE was worth $600 billion in market cap. So no CEO in history has ever created more shareholder wealth than Jack Welch.

MESERVE: But he's not particularly well loved by some former GE employees. A lot of layoffs, a lot of people under his watch.

CRAMES: In the lexicon, there's two Jacks. In the early years, he was fixing, closing and selling businesses, and he was firing people, and that earned him the moniker that he hates, of course, "Neutron Jack." Much later of course, he was called the manager of century and the champion of people and ideas.

So throughout the years, we've seen two Jack Welchs, but he would really see it as just somebody trying to reinvent company, and that's really what he did. He reinvented the company founded by Thomas Edison and turned this aging bureaucracy into this competitive services juggernaut, and along with it, redefined the world of leadership.

MESERVE: Well, he has changed GE certainly. What exactly has his impact been on other businesses? CRAMES: GE and Jack Welch is emulated by millions around the world. McGraw Hill, the company I work with, we published five books that probably sold a million copies around the world, and his impact has really been enormous. But one of the things that's really studied is between 1987 and 1999, Jack Welch launched five sweeping company- wide initiatives, things like workout, and sick stigma and e-business initiative, and these are the things that changed the DNA of GE and transformed the world of leadership, and these are the programs and initiatives that people are studying today.

MESERVE: Can you quickly explain what one or two of those things are?

CRAMES: Sure. Workout in 1989 came about as a result of the fact that he found out that managers weren't talking to the workers. You know, at GE for many, many years, the workers worked and the managers managed, and that's it. And so he instituted workout, this three-day program, that put people into a hotel, and for two days workers would tell folks what was wrong with the company, and the third day they would bring the boss back, and they would tell the boss what needed to be fixed. And had to say yes or not right on the spot, or I'll get back to you in a certain period of time.

In the lexicon of leadership, I call it the Declaration of Independence for the worker, because that particular program turned hierarchy on its head, and to this day, remains the largest cultural initiative ever launch in a U.S. corporation.

MESERVE: What happens to Jack Welsh now? Does he just fade away?

CRAMES: Absolutely not. First of all, Mr. Welch is publishing perhaps the most widely anticipated book of the year next Tuesday. He received as advance of over $7 million. Only the pope and the Clintons received more. So he is going to go on a very extended book tour, and "The Tonight Show" and "The Today Show" to really promote that work.

Also, what he wants to do now, is he wants to consult with a few companies, not the boards of directors, but other large corporations and their CEOs, to create great leaders, because really, that's one of his great leaders. He says that Says that GE's great core accomplishes is making leaders, and so he is going to consult with a few companies out there, and what's remarkable and has not really been widely reported at all, is the fact that when he signs on with the company, that will make great news. Think Clinton go to Harlem, and when that happens and gets reported in places like "The Wall Street Journal," it's likely that the stock price of the company he signs on with will actually possibly soar on that day.

So I think we have not heard the last of John Frances Welch.

MESERVE: But we have to stop talking about him now.

Thanks so much for joining us, Jeffrey Crames.

CRAMES: My pleasure, thanks for having me.

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