Former General Electric chairman and chief executive Jack Welch, whose death at age 84 was announced this morning, was the most celebrated executive of the latter half of the 20th Century—arguably the best corporate manager of the entire century, an accolade given to him by Fortune magazine.
In the years since his retirement from G.E., he became a highly sought-after mentor and business guru to generations of executives, taught at M.I.T’s Sloan School of Management, founded Strayer University’s Jack Welch Management Institute, wrote business columns for Fortune and Thomson-Reuters with his third wife, Suzy, a former editor-in-chief of the Harvard Business Review, and was a valued adviser to Chairman Barry Diller at IAC, the parent company of The Daily Beast.
“Jack was the Gold Standard of executives,” Diller said, “and yet that doesn’t come close to describing that bundle of energy and edge, decency, and incomparable brain that was Jack.”
Welch was a scrappy and charismatic leader who, during his two decades at the helm of G.E. from 1981 to 2001, remade an iconic if cautious manufacturer of household appliances, lightbulbs, and jet engines—founded in 1889 by Thomas A. Edison—into a massive yet surprisingly nimble global conglomerate that spanned every kind of business from high finance to television news and entertainment.
Welch famously operated according to strategies that other executives admired and tried to emulate: Only keep or acquire businesses that are No. 1 or No. 2 in their respective marketplaces. If businesses in a company’s portfolio are not performing up to expectations, either fix, sell, or close them. And continually shed the bottom-performing 10 percent of management and staff, and don’t hesitate to lay off inefficient or underperforming employees.
The latter strategy earned him the moniker “Neutron Jack”—a reference to the bomb ostensibly designed to kill people but save buildings. It was a nickname he hated. But Welch always defended a practice some thought cruel, arguing that it was kinder to encourage people who were unhappy or ill-suited in their jobs to find occupations that better fit their talents.
Welch loved the limelight and reveled in his status as a media mogul when in 1985 G.E. acquired NBC as part of the $6.3 billion purchase of the broadcast network’s parent company RCA. While some people couldn’t understand why G.E. would want to own NBC—an enterprise that had little in common with G.E.’s core businesses—Welch saw it as the jewel in the crown that enhanced the company’s brand and global profile.
He championed the growth of CNBC under the leadership of Roger Ailes, and in 1996, Welch joined with Microsoft’s Bill Gates to launch MSNBC, thus killing another Ailes-led cable outlet, America’s Talking. That decision prompted Ailes to quit and, six months later, create the Fox News Channel.
According to a highly-placed former NBC staffer who spoke to Welch about Ailes, G.E.’s chairman ultimately soured on the Fox News founder, who was famously paranoid and lived in constant fear of real and imagined enemies.
“When Roger started telling Jack that ‘the Jews are out to get me’”—a not-too-veiled reference to such NBC executives as Jeff Zucker, who ran the Today show, and David Zaslav, who helped grow CNBC and MSNBC—“Jack was not going to tolerate that. Jack couldn’t countenance that,” said the ex-NBC staffer.
Welch went out of his way to befriend NBC’s on-air talent in the network’s news and entertainment divisions, bonding with Matt Lauer, for instance, over their mutual obsession with the game of golf, and deploying his charm and bucketloads of money—$100 million plus G.E. stock—to persuade prime-time star Jerry Seinfeld to stay beyond his hit sitcom’s ninth season.
In his bestselling autobiography Jack: Straight from the Gut, Welch recalled that Seinfeld finally phoned him from Burbank to say, “Jack, this is a very hard decision for me, and I hate to disappoint you… It’s Christmas Eve and I’m in my cubicle. Everyone else has gone off to their families, and I’m here writing a show. I can’t do it another year, Jack. I can’t.”
Former Today co-host Katie Couric, who helped bring NBC’s morning to No. 1 in the ratings in the mid-’90s and beyond, told The Daily Beast: “He took tremendous pride when he owned NBC and I think he was really excited when the Today show started to do well. He was such a force.”
Couric, who left the Today show in 2006 to anchor the CBS Evening News, added that Welch “was incredibly gracious to me when I left NBC.”
Hardly the distant, unapproachable CEO, Welch was insatiably curious about people and ideas, and deeply familiar with G.E.’s businesses, and the people who worked in them, on a granular level.
“He was a ‘call me Jack’ guy,” recalled financial journalist Ron Insana, who became close to Welch in the ’90s when he was a CNBC anchor. Insana recalled that in 1991, when CNBC acquired the rival Financial News Network, resulting in hundreds of layoffs, a senior FNN producer phoned Welch’s office with a question about his COBRA health coverage.
Welch himself called back to discuss the issue, Insana said.
“He was a fabulous buccaneering kind of CEO,” said Tina Brown, The Daily Beast’s founder and first editor in chief, who got to know Welch during her years as editor of Vanity Fair, the New Yorker, and Talk. “He understood his business top to toe. He was not a guy who made stratospheric decisions without understanding what was happening underneath him. He really had his hands all the way deep and down into his company.”
Brown recalled that Welch, in his role as an adviser to IAC, was a fan of what turned out to be the ill-fated 2010 merger between The Daily Beast and Newsweek magazine, the money-losing weekly that bad been purchased from The Washington Post Co. by electronics mogul Sidney Harman.
“He advised us all through the Daily Beast-Newsweek acquisition,” Brown said. “Jack was very, very much in favor of it, and very much helping to broker it with Sidney Harman.”
Three painful years later, after IAC unloaded Newsweek, “Jack kind of laughed and said, ‘Sorry, I got that one wrong,’” Brown said, recalling a post-mortem conversation over dinner.
Welch wasn’t the only one who believed the merger would be a good idea, but it was—for him—a rare miscalculation.
A far more serious mistake—one that Welch later attributed to his own hubris and being “just full of myself”—was G.E.’s 1986 acquisition of the Wall Street investment bank Kidder, Peabody. Eight months after closing the deal, Welch learned that Kidder’s star investment banker, Marty Siegel, “had been trading insider stock tips to Ivan Boesky in exchange for suitcases full of cash,” as he recounted in his memoir.
Federal law enforcement authorities stormed Kidder’s offices and dragged people away in handcuffs. Seven years later—on April 14, 1994—Welch received even worse news.
“We’ve got a problem, Jack,” one of Welch’s lieutenants told him. “We have a $350 million hole in a trader’s account that we can’t identify, and he’s disappeared.”
Welch’s reaction: “I rushed to the bathroom, and my stomach emptied in awful spasms.”
Yet, by the time he turned over the reins to Jeffrey Immelt in September 2001, Welch had grown G.E. from a relatively focused enterprise with a $13 billion market valuation to a sprawling, dizzyingly complex $410 billion corporate behemoth—at the time, the largest company on earth, with nearly 400,000 employees.
As Bloomberg Businessweek columnist Joe Nocera noted in June 2019, G.E.’s revenue under Welch exploded from $25 billion to $130 billion and its profits increased tenfold to $15 billion. Wall Street adored him: With Welch at the helm, G.E.’s total shareholder return as measured from 1984 to 2001—expressed as an annualized percentage combining the rise in share price and dividends—was 2,504 percent, more than double the performance of the S&P 500.
Still, as Yale School of Management Professor Jeffrey A. Sonnenfeld points out, Welch’s undeniably amazing Wall Street record fell far short of Colgate-Palmolive’s 3,373 percent return over the same period under a publicity-ducking CEO named Reuben Mark.
“Jack was brilliant, with historic contributions to global commerce, and also imperfect, and like all of us, he had his flaws,” Sonnenfeld wrote today in Chief Executive business journal. “But the business world is changed and better because of him. He was, without doubt, an icon of industrial imagination.”
G.E.’s complexity and sheer size eventually presented severe challenges to Welch’s successor as Immelt tried to weather the tanking global economy, the catastrophic financial meltdown of 2008 and aftershocks that didn’t let up with tens of billions of dollars in losses by the company’s financial services subsidiary, G.E. Capital.
Welch was dismayed , friends said, when Immelt, who had been his choice as successor, sold his beloved NBC to Comcast in 2009. He was privately critical of Immelt’s stewardship, while Immelt returned the favor. “GE CEO Feud: Welch vs. Immelt,” was the headline over a January 2018 Fox Business story outlining each man’s complaints about the other after Immelt stepped down.
Welch joined G.E. in 1960 as a junior chemical engineer—his doctoral thesis from the University of Illinois was titled “Microscopic Study of Dropwise Condensation”—and, as he climbed through the ranks, applied a scientist’s unsparing allegiance to data leavened by a sharp eye for talent, an appetite for calculated risk, and a gift for human connection.
Welch was impatient with bureaucracy, and nearly quit G.E. out of frustration shortly after he joined the company, but was persuaded to stick with it by an executive who promised to help clear his path. As the 28-year-old manager of a plastics factory, however, Welch was almost fired in 1963 when the factory exploded during a volatile chemical process involving a large tank, bubbling oxygen and “an unexplainable spark.”
Luckily, Welch’s boss was understanding.
Blunt-spoken and ruthlessly competitive—with zero tolerance for what he derided as “the superficial congeniality” of corporate life, defined as “pleasant on the surface, with distrust and savagery roiling beneath it”—he was proud of his Salem, Massachusetts, roots as the only son of working-class Irish-Americans.
His father was a railroad conductor and his homemaker-mother was his best friend and closest confidant, who gave him the sort of tough love that he later administered to underlings.
In his memoir, published in 2001, Welch recalled that his mother Grace helped him overcome a childhood stutter.
“My mother served up the perfect excuse for my stuttering,” he wrote. “‘It’s because you’re so smart,’ she would tell me. ‘No one’s tongue could keep up with a brain like yours.’ For years, in fact, I never worried about my stammer.”
Welch was married three times. His first divorce from Carolyn Welch, his wife of 28 years and the mother of their four adult children, was amicable. His second divorce, from mergers and acquisition lawyer Jane Beasely, whom he married in 1989, was a tabloid-ready nightmare that, through various court filings, laid bare Welch’s extraordinarily rich G.E. retirement benefits. They included access to a corporate jet, the use of a luxurious Manhattan apartment, courtside seats at Knicks games and the U.S Open tennis tournament, seating at Wimbledon, box seats at Red Sox and Yankees games, country club fees, security services, restaurant bills and toiletries. Beasely eventually settled in 2003 for a reported $180 million, at the time the most expensive divorce in U.S. history—at least as publicly reported.
Welch had already begun a romance with Suzy Wetlaufer, a divorced mother of four young children who had interviewed him for Harvard Business Review in 2001. Both had to sacrifice in the name of love: Jack pared down his retirement benefits, and Suzy lost her job after Jane Beasely called the magazine to complain.
They were married in 2004.
“He was just so much in love with Suzy,” Tina Brown said. “He found his soulmate. It was a great love match and they became this incredibly happy duo together. They became this kind of writing couple and traveling couple and speaking couple. It was wonderful for Jack actually. I don’t think he’d ever had that before.”