‘Regional growth will remain in double digits’

(PATRICK CASTILLO)   

 
Dubbed “manager of the century”, Jack Welch, the former CEO of General Electric (GE), is one of the most successful corporate executives in the history of American business. Under his leadership, GE stock went up 4,000 per cent, making it the most valuable corporation in the world at that time. Even though he retired seven years ago from the company, the accolades for Welch keep coming in.

These days he speaks before audiences all over the world, teaching his management style, and is still treated like a rock star. He is also obsessed with winning, which happens to be the title of his book, co-authored with his wife Suzy Welch. Even at the age of 72 he is full of energy and passion, trying to inspire people to win with his management philosophy. But his successful life has not been without its bad patches here and there – some personal and some at GE – Welch told Emirates Business.

What is your impression of the region’s economy? How do you think the economies of the GCC countries will fare in the next decade or so?

To predict for a decade is too difficult so it’s better to talk about the next three years. It’s incredible here, look at the energy levels. I would just use one word for this region: wow. I can say the growth will be in double digits in the next three years, we all know where oil prices are heading so there’s enough money pouring in.

The current oil boom in the region will benefit people more than what we’d seen in the 1970s. This time it’s more about the development of society. The governments are doing a lot to improve infrastructure, focusing on building schools and hospitals. It’s all focused on the development of the community, which is a damn good thing because this kind of growth is very balanced.

Where was Dubai on your agenda in the early 1990s?

I was too hooked on to India and China and I put my best people there. I should have focused on Dubai as well but I didn’t think that Dubai would become such a fast growing city.

What do you think are the biggest challenges confronting the region today? How can they be overcome?

The growth has been enormous here but getting the right talent in place to manage it is the biggest challenge that I see.

Increasingly, people are flocking to this region because of the opportunities available. First, the companies here should get the right people and retain them if they are good. It’s a universal phenomenon that when economies grow people switch jobs at a faster rate. In China, people change jobs within weeks because there are too many opportunities and employees want to change for the better. Movement of people is relatively less in the Middle East but as economies grow this problem comes hand-in-hand.

The astounding growth in this region is leading to a very serious lack of talent at all levels of organisations. Would you still advise a company – any company – to be candid in the appraisal of its employees when most of its peers are surely not?

Candour is constructive. You should put candour in the context of coaching. If you are doing a bad job and I’m not telling you to improve then it’s bad for the company and it’s bad for you.

Who likes a lousy business full of lousy people? Candour does not mean saying bad things about you or trying to put you down. That’s a misconception of candour. You can spin that to be right for you, meaning to say you are capable of doing much better. I have written Winning to make people realise the value of candour.

I firmly believe that candour is extremely important in the workplace. There’s little time and if you are candid with people and help them improve your company can become more competitive.

What is your opinion about the Gulf’s sovereign wealth funds (SWF)?

Sovereign wealth funds are a part of the global economy. It’s a good way of recycling money. I’m totally of the opinion that they are having a positive impact on globalisation. They are very similar to pension funds that we have in the United States.

But SWFs have come under a lot of criticism from foreign entities for a lack of transparency?

Then let them just leave it.

Are you wary of the media after what happened with the Financial Times? [Welch was quoted as being critical of his successor at GE, Jeffrey Immelt.]

No, I always try to be open with the media. But yes, I was quoted out of context and then had to rectify it. But this does happen.

You have faced a lot of criticism for firing a lot of people at GE and for taking a fat package of retirement perks. What is your response?

There were nearly 100,000 to 150,000 extra people at GE during the early 1980s and there were some loss-making businesses. Didn’t it make sense to shut down those operations? Even in my lectures and my book I talk about differentiation. You have to differentiate between good and bad – whether it’s people or businesses. One has to nurture the good and cull the bad. There are no two ways to win but I was labelled Neutron Jack. In my book I suggest getting rid of the least productive, the bottom 10 per cent of the work force and rewarding the best of your best guys. About my fat retirement package – the media just played it up. I was innocent.

What do you think has earned you the title of ‘manager of the century’? Is it vision, luck, charm, authority, speed, all of these, or something completely different?

Two things – luck and I retired at the turn of the century. If I had retired in 1921 or 2016, nobody would have bothered to write about me. It’s the timing that matters.

Who, or whose leadership style, has most impressed you and why?

I’m not a person to pick up the style of one person. I am very much a believer that nurturing comes from everywhere. You have got to watch a style here and a style there, a person here and a person there.

I’ve had a number of mentors in my life. For a company, I suggest looking at the practices of the best companies in the world and I can assure you will be better than them. Of the current generation, Steve Jobs of Apple computers and Samuel J Palmisano of IBM are great guys. Today, there are many more people to watch than we had 20 years ago.

Why did you choose Jeffrey Immelt as your successor at GE? What qualities did you see in him that made you believe he was equipped for the job?

I thought he was the best person to run the company.

GE missed its forecast for the commercial finance unit and blamed Bear Stearns for it. Would you have done anything different if you were still at the helm at GE?

I’m so far removed from it. I retired seven years ago and I’ve never been [back] to the office. I know nothing that’s happening inside, so I have no comment.

What makes you tick at the age of 72? Haven’t you been there and done it all? Where do you find the energy and stamina to continue at the pace that you do?

I believe in this method of management. If I can touch even 20 people in a packed room, the job’s done. These people employ thousand of employees in their organisations so I can touch so many lives. I believe in this management philosophy. It’s fun talking to people, I love taking questions, getting to know the ideas of others. It’s invigorating to me. I never know where the questions are coming from, what they’re going to say, how they’re going to say it. It’s exciting. I quite like it.

What are you going to do next?

Hang out with my wife and see more of the world. Recently we were sitting with a group of very smart Kuwaitis and it was such a learning experience. We are very lucky to know these people. I don’t know if I’ll come to UAE again next year but I would like to come to Dubai when I have more time. We have a young daughter back in the United States. She’s going to go to boarding school next year so our trips will be much more fun in the future when we have more time.

 

He remains a highly regarded figure in business circles due to his innovative management strategies. He has a net worth estimated at $720 million (Dh2.6 billion). Welch has a bachelor of science degree in chemical engineering from the University of Massachusetts Amherst and a MS and PhD from the University of Illinois. He joined General Electric in 1960 and worked as a junior engineer in Pittsfield, Massachusett, on a salary of $10,500.

He was named vice-president of GE in 1972 and moved up the ranks to become senior vice-president in 1977 and vice-chairman in 1979. Welch became GE’s youngest chairman and chief executive in 1981. Since then Welch’s strategy has been adopted by other CEOs across corporate America.