Extra: Jack Welch Full Interview (Ep. 326)
Stephen Dubner’s conversation with the former longtime C.E.O. of General Electric, recorded for the Freakonomics Radio series “The Secret Life of a C.E.O.”
Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.
* * *
Stephen DUBNER: This is Stephen Dubner. Is that Jack Welch?
Jack WELCH: Hi, Stephen, how are you?
DUBNER: I’m great, thanks. Thank you so much for making the time.
WELCH: No, it’s great. I’m an admirer of your book.
DUBNER: I’m told you have roughly an hour. Is that true?
WELCH: I’ve got as long as you have, up to an hour.
DUBNER: Fantastic. Okay, let’s go then. If you would, just say your name and what you do.
WELCH: Hi, I’m Jack Welch. I’m the executive chairman of the Jack Welch Management Institute, an M.B.A. program online, fully online, fully accredited, to change people’s lives, for working adults.
DUBNER: Excellent. You’re most famous as an author — wrote a couple of books that were very widely read and well-received — and of course, as longtime C.E.O. of General Electric. But let me ask you this: your background, Jack, is in chemical engineering, including a Ph.D. — not management or finance or anything like that. Now obviously, chemical engineering was useful for a company like G.E., especially back when you joined it. But can you talk for a minute about engineering as a background generally for leading a company?
WELCH: Well, I think critical thinking is always important, and an engineering degree leads you to critical thinking. So my view of a Ph.D. is you are always going down blind alleys to get a solution to a thesis; and it was the most helpful thing that I ever had. You’re not doing rote homework assignments, where the teacher feeds you and you feed it back. You’re working on unknown paths to try and find a solution. And that thinking is very helpful in management.
DUBNER: As you became a manager, were you biased toward other engineers in promoting them?
WELCH: No, I don’t think so. I don’t think so. I always look at the brightest, most aggressive, self-confident people I could find. And the third one was important, because they speak back to you. When you have a crappy idea, they tell you that.
DUBNER: Now what do you do if someone’s got all the smarts and talent in the world, but doesn’t have either the aggression or the self-confidence? You know, there are a lot of timid people out there with great ideas. How do you not waste their talents?
WELCH: Well, you don’t think about them for promotions, you think about them in terms of what they bring to the party. They’re very valuable. They provoke thought, but they’re not a counterbalance to your personality, generally.
DUBNER: Now you were pretty much a G.E. lifer, although you thought about leaving at least once. Talk to me about your rise through the ranks and why you wound up staying.
WELCH: Well, initially, I worked at G.E. for a year and a half, and I got my first raise. I was making $10,400. I remember to the day. And I got a thousand dollar raise. And I was happy with my thousand dollar raise — I was in a bullpen of about six engineer — until I came back from my raise and found out that they all got a thousand dollars, and I thought I was a hell of a lot better than them. And so I quit and moved my wife to Chicago, and we were planning on starting another life at another company. And my boss’s boss came up and persuaded me to stay the night of the going away party. And I stayed. And the company called the other company and paid all their expenses of recruiting me, and I stayed there.
Look, differentiation is part of my whole belief in management. And treating everybody the same is ludicrous. And I don’t buy it. I don’t buy what people write about it. It’s not cruel and Darwinian and things like that, that people like to call it. A baseball team publishes every day the batting averages. And you don’t see the .180 hitter getting all the money, or all the raises. Now that’s the purest form. Athletics is the purest form of differentiation, because it’s public. Everybody understands it, the fans understand it, the people understand it. Big business is more subtle and it’s more qualitative. So the precision isn’t there to differentiate. So judgment’s important. But you don’t win with a gang of mediocre players in business or in baseball.
DUBNER: Let me ask you this: I know that when you were ultimately appointed C.E.O. by Reg Jones — you write about that, it’s a really interesting story. You were very different from him. He was kind of buttoned-down, formal, classically trained, in a way, and British. And you were more scrappy, Boston-area, said what you thought, didn’t necessarily care that much how people received it. It was a fascinating hand-off from him to you, and it’s amazing that he saw in you what others may not have seen. I’m curious: you were there a long time before that day. I wonder how much you were motivated to stay, and rise, by your desire to change the way the company was run, because you and he both acknowledged that at the time you took over, G.E. needed a lot of change.
WELCH: Yeah, I had an enormous thirst to get my hands on it. And so obviously I was on the sidelines thinking of what I would do if I got it. And when I got it, I did it.
DUBNER: You make it sound pretty easy.
WELCH: Well, frankly it’s a lot easier to come up on a company and see its foibles from the bottom through the middle, than be brought in as a hero at the top and know nothing of the infrastructure or the vibes of the place.
DUBNER: That’s interesting you say that. We recently spoke with Satya Nadella, the relatively new C.E.O. of Microsoft; and that was a case where almost everybody wanted an outsider, because they felt there had been stagnation internally. But you’re saying — at least from your perspective of being the insider who was made C.E.O., you had all that institutional knowledge and leverage — you think that was a big advantage for you, yeah?
WELCH: I think Nadella has some of the same characteristics that I had in that regard. Maybe he’s more subtle than I was, but he has a lot of the same characteristics of sitting their, frustrated by the bureaucracy at Microsoft, and wanting to get at it, participate in the cloud more aggressively. And he’s done a very impressive job. But he had the benefit of being there.
DUBNER: When you first became C.E.O. of G.E., 1981, what were the biggest adjustments? Feel free to take your time on this answer, because G.E. already was a very large company; and from what I’ve read from what you’ve written, there were a lot of issues on a lot of different dimensions that you felt needed addressing.
WELCH: Well the biggest thing that summarizes it all: Reg Jones in his departure — and he was a hell of a guy, and he had the courage to pick me, and he was a statesman in Washington, and he’d spent a lot of time in Washington trying to help the country with tax policy and other things — but in this valedictory, if you will, he said, “Remember, we’re the Queen Mary in a storm.” And I, in my opening remarks, said, “We are a speedboat in the harbor, trying to move like hell around this place.” And that in a nutshell covers it all. We moved too slowly. We carried businesses that we could afford to. Some businesses had lost money for 10 years, 15 years — but we could afford it. And so we carried. But we couldn’t afford it any longer. The Japanese were coming. They were eating our lunch. The Japanese in the 80’s were the Chinese of the 90’s. And I.B.M. didn’t move, a lot of companies didn’t move. The auto companies didn’t move. And you had to move quickly. And don’t forget, it’s not the problem of the people that were there, because they were living in a world of the 70’s, when the world of the 70’s was nothing but competing against Japan, which is on the ground flattened, Germany flattened. The war had taken everybody out of the game. So they were living in a totally closed society to an American world, and they were doing fine. But that all changed with globalization. It started in the in the mid-70’s with televisions. And it moved to autos, and all these other things. And then the Chinese came with all their innovations and copies, if you will.
DUBNER: Now, in retrospect we could say — I don’t know if this is accurate or not, but in retrospect, it’d be easy to say that you, Jack Welch, were one of the relatively few who recognized this, or who saw it as it was happening, and therefore sought to adapt pretty fast. Did you feel that way at the time? Did you feel like you were peering a little bit into the future, at least reading the present well and making moves that you had to make?
WELCH: Well, that is how I became Neutron Jack, because the press, by most, we were ahead of the times. It wasn’t a burning bridge. G.E. looked okay. The best way to think about that was: we were doing $26 billion in sales, with $1.4 billion of profit. Twenty years later, we were doing a $150 billion in sales. With that low, we had 420,000 employees. Okay? With that first one. That was the early 1980’s. And at the end of the century we weren’t doing $25 billion, we were doing $150 billion, plus or minus; and we we’re making $15 billion, and we had 300,000 employees, instead of 420 or 450. So either we were fat before, and we needed to move, or something’s different.
DUBNER: So, let’s talk about the moves you made that resulted in the nickname Neutron Jack, along with all your other nicknames. When it comes to your management — and here I mean not so much strategic thinking, but managing your personnel, managing your divisions — talk about some of the biggest changes you made, and which you felt were most and least successful.
WELCH: Well, the most — you got to understand that fundamentally I had a set of values and behaviors. First of all, I think a C.E.O. must set a mission, a direction, work with a strong team with the characteristics I talked about, put it together — and candor carries the day. In the end, a successful business develops an atmosphere of truth and trust. And unless you get truth out there, you can’t act fast, people don’t know where they stand. It’s a sin that people come to work not knowing where they stand. Everybody who works for you must know where they stand, what their boss thinks about them, what the company thinks about them. This idea of false kindness is pure nonsense, pure nonsense. We had appraisal books that said everybody was promotable. Everybody. No one said what they thought of people and their performance. I don’t know if you’ve seen the new book by Ray Dalio.
DUBNER: Sure have. Yeah.
WELCH: I think it’s a hell of a book. Now, he may be an extreme, but where we’re both asking for truth. You want to get the truth, and you got to bust your butt and come at it ninety ways to get truth in a bureaucracy. It doesn’t live there.
DUBNER: Yeah. So you were famous for speaking your mind, being yourself. Now the phrase is called “radical candor.” It wasn’t called that then; they just called you names like Neutron Jack.
DUBNER: But I’m curious, when you look around now, the world, generally, and the business world specifically, have changed a lot. I mean just take one relatively small thing like social media, that really changes the vulnerability, let’s say, of a firm to public response. So do you — what you’re saying now, I know you believe it. I know it worked for you — do you think if you were C.E.O. today, though, you could be yourself?
WELCH: Absolutely. I mean I would be! I wouldn’t operate any other way. I mean, I might be more careful politically, because I don’t want to wade into that game. It’s fun now, because I’m a free citizen. So I can take a wing at everything. But I’d probably stay out of politics like I did then, and keep my opinions to myself.
DUBNER: But you think you could have as much “radical candor” today as you did back then, and you wouldn’t end up all over Twitter and being protested and shouted down?
WELCH: No, because the missing link in this whole thing is people understand “radical candor” is not cruel. The kindest thing you can do to somebody: tell them where they stand early in their careers, so they know they can adjust. And they can change or they can move on. They can be somewhere where they fit. One of the luxuries I had, which has not been told — my predecessor left me a hell of a balance sheet. So I was able to put in all kinds of things for soft landings for people. We put in benefits that no one ever had in terms of reductions of workforce. And look, I feel when we have to lay somebody off, it’s the manager’s responsibility in many ways, not the person — they hired them. They’re responsible for developing them. I have a phrase: love them on the way out — I teach this to my school — love ’em on the way out the way you love them on the way in. And I’ll tell you another one: a severance dollar is the cheapest dollar you’ll ever spend. Those two things, if you practice that religiously, you’ll stay out of trouble, you’ll be perceived as fair. Maybe not loved, initially, but people will come to respect you. That’s why I have an army of friends. Many people who I let go are some of my closest friends.
DUBNER: It’s interesting, at the same time as you are obviously increasing revenues a lot, you’re also cutting payroll a lot, and therefore obviously cutting employees along with payroll; but, you’re boosting severance. I know at the same time you’re also boosting stock options for people who were staying there. You were broadening the category of people who were eligible for that. But let me ask you this: even though you came in with a strong cash reserve, was your board at all reluctant when you said you wanted to give such generous severance?
WELCH: No, my board was a thousand percent behind me, and another point: you don’t ever want to work in a place as a C.E.O. without a board that makes you feel — and I’m probably 5’5” and bald as an eagle. And I always thought I was 6’4” with hair. The job of my board was to make me 6’4” with hair.
DUBNER: I know you had hair once, you were a good looking guy younger. Was that a trauma for you, losing the hair? It sounds like you haven’t quite recovered from it.
WELCH: No. No one likes losing hair! And there was a study last week, I don’t know if you saw Larry David‘s comments the other day. There was a study, professors at Princeton [Ed. Note: the study was done by the University of Pennsylvania] came up with the fact that bald men are more attractive to women. And he said, “[Bleeped.]” And they asked Larry David what he thought of it. And that’s what he said. And I would say the same thing.
DUBNER: Let me ask you this: for years and years, people were talking about the U.S. presidency as a C.E.O. position, how it should be run as if it were a C.E.O. position. Now we’ve finally got an actual C.E.O. as president. Before we get into the specifics of Mr. Trump, because I know you’ve interacted with him a good bit: what do you think are the pros and cons of electing someone to the presidency who is literally a C.E.O. coming at it from outside politics?
WELCH: It’s a hard game. I mean it’s a real hard game. As C.E.O., you can do a lot more and you get a lot more done in a quicker time than a politician can. That’s just the way it is. I’m not saying that’s good or bad, but that’s the way it is.
DUBNER: Are there any characteristics, though, of corporate life that you can port over to political life that a politician might not naturally be able to do, or might not think of doing?
WELCH: Get great people, set the values that you want for your talent. Look, the whole thing, whether politically or anywhere else, is get a team of smart winning people, get on the same page, work together as a family. We used to call ourselves the greatest little grocery store in the world. The grocery store is the perfect model. You know how to treat your customer, because you know ’em. You know when the lady’s son is going to college for the first time. And you know how to deal with them. Your customer satisfaction is overwhelming. You treat your employees well. The game is all about — now think about this politically. If you get customer satisfaction right, and you get employee engagement right, from that will come cash flow. In a politician, if you get customer satisfaction right, if you get engagement out of the bureaucracy right, you’ll get elected again.
I mean it’s that simple, but you’ve got to measure it. You’ve got to deal with it where it isn’t working. You’ve got to know which parts of the bureaucracy are not working. But you measure those things, and I measure my school, my school’s growing 35 percent a year. And we’ve got a net promoter score, you know what net promoter score is? 82. It’s higher than Costco, it’s higher than Apple, it’s higher than Amazon. And we only measure customers. The customer is our student. It’s not the damned faculty. And most universities — and you know this better than I — most universities see the customer as the faculty. The student is a detail who pays bills.
DUBNER: But on the other hand, let’s go back to G.E. and you have to care to some degree about the employees, obviously, you don’t want them to be miserable.
WELCH: No, I just told you the number one thing is customer-employee engagement. Employee engagement. When I took over, about 42 percent of the — not about — 42 percent of the employees bought into the program. When I retired, 94 percent would bet their life on the company. That’s what you want. You want engagement, you want them involved, you want them feeling part of a mission with a purpose. That’s what this thing is all about.
DUBNER: I’m curious, I know you played sports as a kid, you were pretty good. Sports teams, it turns out, along with the military are some of the few units in our society that are really good at creating bonds across all boundaries: race, you name it.
WELCH: I agree, I agree, totally.
DUBNER: And I’m curious whether you used that kind of thinking. I’m curious whether — you know, look a lot of kids are into sports, but I’m curious whether any of your experiences as a kid in sport you imported into the way you thought about managing and building a team; because, you know, look, we know it’s a cliche now to say, “It’s a team, teamwork, et cetera.” But a sports team is a real thing and it operates differently than most hierarchies. I’m curious to know how much of that you brought in.
WELCH: Let’s start with differentiation. I learned differentiation when I was 11 years old in the playground. They throw the bat up. You put your hand one over the other; and the person that tops the bat has the first pick. And I was 11, and the other guys were 15 and 16. And I was playing on the playground in a modest area, to say the least. And what happens to the worst player? He’s picked last and he goes to right field. That’s differentiation. I mean that hasn’t changed my mind from that first day I went to the playground. And what happens when you win as a team? You want to be in the loser’s locker room, or the winners’ locker room? What’s more fun? Where do you celebrate? Businesses don’t celebrate enough. I fought that battle for 40 years, celebrate more! Now I have a school where they celebrate like hell!
DUBNER: How do you celebrate?
WELCH: How? Go out. Pizza. Have a case of beer. Now I did it, at G.E., when we won a big contract, we’d open the bar at five o’clock in the building.
DUBNER: Let me ask, you know, it strikes me now hearing you talk — and let’s not forget the name of your second book was Winning — it strikes me that you might feel that some pieces of society, particularly American society, have kind of gotten sheepish about winning, and that we pay too much attention to the disadvantaged, however you want to define that. You think that’s a mistake? Am I characterizing your view correctly?
WELCH: Yeah, you’re right. Everybody gets a prize. Everybody gets the trophy. I couldn’t be more against that than anybody alive.
DUBNER: But on the other hand, everybody can’t win. So what do you do to make the people who don’t win, at least not unfairly treated? How do you balance that out?
WELCH: No, you want to make everybody feel better than the day they walked in. So everybody’s got to feel a participant. And you find ways to include everybody in the party in some way. Some get rewarded more than others. But we had 65,000 people getting stock options at the end. We started with 150. We had more people playing in the pot. More people making a million bucks. That’s all good stuff. It may sound crude, talking about money, but I think it works pretty well.
DUBNER: And it’s pretty important.
WELCH: I think so.
WELCH: It’s better than a plaque.
* * *
DUBNER: So you’ve been serving on the President’s strategic and policy forum. What’s your assessment so far of President Trump’s leadership style?
WELCH: Well, you know, that ended. The policy committee ended. All of them ended, over Charlottesville, everyone got nervous and they ran.
DUBNER: Oh, I didn’t know that was one of the business councils.
WELCH: I didn’t feel that way. I thought you’re better off inside the tent, staying on the commission, seeing him, making your position known, than being outside. So I was one of the two or three that disagreed. There were 16 of us on the commission. I wasn’t an active C.E.O. I was the only retiree on there. So I didn’t bang the table; but I thought it was a bad decision just to express your frustration. But I understand, if you got a lot of employees and they’re rebelling over it, you might want to get out of town.
DUBNER: Well, tell me why you didn’t think it was a good idea to shut it down and, relatedly, what you think of his leadership abilities and style thus far.
WELCH: I mean I did this on television, and the Washington Post ran it so I can say it again. I give him a D- on management practices. And I give him an A+ on policies. Now the Washington Post only ran that I gave him a D-.
DUBNER: Do you think you could run him through your management institute and get that D- up to a B or something within a couple of years?
WELCH: I mean this is a guy that ran his own company, an independent guy with the family running it how they run it. So he does things like — I didn’t disagree with removing James Comey. I disagree with the way he did it. I disagree with the fact that he’s calling Tom Price out for flying private planes when other administrations and generals fly planes all the time. And Price got approval. But he abandons soldiers in his army very quickly. I know leaders of a corporation wouldn’t do that.
DUBNER: So you think it’s a function of him being in a family corporation where everybody around him is a little bit too obedient, perhaps?
WELCH: Yeah, that’s causing him problems.
DUBNER: So if you could tell him directly — in words that you think he could hear, because that’s important, because we know that he’s not the most receptive person to criticism — how would you suggest that he go about amending that part of his management?
WELCH: I assume that he truly picked the people, and they weren’t selected by — and I don’t know this one way or the other — by politicians taking care of other politicians, et cetera. And they weren’t stuff-jobs. So he picked them. He looked him in the eye and said, “This is the person I want for this job.” He owes them the loyalty, the respect, the decency. They’re his responsibility.
DUBNER: Do you think someone like him of his age, experience, and position, now, with everybody watching every move, do you think it’s possible for someone like that to change as fundamentally as you’re suggesting he change?
WELCH: We’ll see. I think he’s changed. I think he’s changed for the better in many ways in some speeches he gives. But the consistency isn’t there by any means. I mean he gives a U.N. speech that was remarkably effective. First class. Forget whether liberals will give him the credit for that. But in my mind he gave a great speech. And by the weekend, he was having a fight with the N.F.L. And what was the talk? You didn’t hear another day of the U.N. speech. So I mean, he’ll learn from that, I think, I hope.
DUBNER: When you look back at your tenure at G.E., it’s a big company with many tentacles. And you were there for many years, so there were an awful lot of different issues, controversies, occasional crises, you had financial, you had environmental, you had some involving personnel. Walk me through what felt at the time like the worst one and how you addressed it.
WELCH: The worst one, I think that I could think of off hand — I had a number of experiences in my life and while I was running it that were uncomfortable. I blew up a factory.
DUBNER: That was early on, right? Tell the story about how your boss, or maybe it wasn’t your immediate boss —
WELCH: My immediate boss didn’t know me. He made sure he got away from me, and I blew the roof of the factory. Fortunately, no one was killed. I was called down to New York to explain what happened by my boss’s boss’s boss. So I met this guy really for the first time.
DUBNER: This guy named Charlie Reed, I believe?
WELCH: Yeah. Good for you. You did some homework.
DUBNER: And Charlie, you’re expecting what from Charlie, now?
WELCH: I didn’t know him, so I didn’t know what to expect. But I expected I might get fired. I drove down in my Volkswagen from Pittsfield. I met Charlie, it turns out he was a Ph.D. Chemical Engineer from M.I.T. So, he took me through the Socratic method. You know, “Why it happened? What would you do differently? Why did you do that? Why didn’t you do this?” And he was coaching me, and it was — couldn’t be nicer. And I learned from that, never kick anybody when they’re down. Kick them when they start to swell and instead of grow, and whack ’em when that happens. But don’t kick somebody when they’re down; and the Charlie did a hell of a job of coaching me through the error I made in blowing oxygen through benzene without enough grounding. It’s a fairly remarkable— Forbes just had a — they pick the 100 best minds according to them, you know those silly lists. And they asked me to write the story that impacted me most, and that was the story. The sensitivity that guy gave me.
DUBNER: And you think that changed the way that you managed going forward? That was a long — I mean that was 1963, I believe? That was, you know, almost 20 years before you took over.
WELCH: Yeah, but it changed my mind forever.
DUBNER: Is that right?
WELCH: I mean because I had an Irish temper, and that wasn’t always good. It was probably the most impactful societal thing on me. But I had other disasters. We had a guy cheat in Kidder, Peabody. And I was going out the door on a Friday night, and the guy running Kidder, Peabody called me and said, “Jack we’ve got $400 million missing.” I got sick to my stomach. I went to the bathroom. I was torn up, and then I went down to Kidder, Peabody for the weekend to find out where the $400 million went; and I went through a bunch of — I had all the management in and we spent the Saturday, Sunday, Sunday night. We had to come out with a press release on Monday that our earnings were $400 million dollars short. I couldn’t have been in a worse position.
I went to the urinal that night. I was standing next to a guy, and he turned to me and said, “Jack, this won’t affect our bonus will it?” And all the G.E. people were with me for three nights down there, Friday, Saturday, Sunday night. I learned there, I never had a starker example about how much culture counts. That’s from banking, it’s all about bonuses. How much money I make, it isn’t even an absolute number. It’s relative. If Joe makes more than Bill, no matter what happens, Bill’s mad.
DUBNER: Now this is compounded, I’m guessing, by the fact that you wanted, you pushed for G.E. to buy Kidder, Peabody in 1986. Some board members disagreed, but you went ahead. Did that make that worse?
WELCH: Right, that’s true. I supported my team that wanted to do it. And a couple of board members were smart enough to challenge it, and they were right. We didn’t belong in a business where we were talking about sharing ideas, being a team, being a family to a bunch of lone rangers on horseback who would try to make more money than the next guy. So culture counts.
DUBNER: Now there are some people who would say that the astronomical growth at G.E. under Jack Welch was due in part to coinciding with a huge boom in financial services. And obviously, you acquired lot. Financial services became a huge part of General Electric.
WELCH: Forty percent.
DUBNER: So a huge part during that period. We should also note that that was the category that’s been most aggressively cut in the last several years. I’m just curious from telling me the Kidder story, did you regret that you had to take on so much financial services to drive profit?
WELCH: No. I thought we had tons of leverage there. We had a great balance sheet. We had a talent in financial services. We had our own homegrown financial management program where we could put people. We built great businesses. And I would still be in it if I was running it.
DUBNER: Oh really, that’s interesting. So you wouldn’t have invested all those —
WELCH: Wells Fargo is doing beautifully with the assets they bought.
DUBNER: Yeah, well, it helps when you’re making up a fake million accounts here and there. Right?
WELCH: Well, that’s not the businesses they bought.
DUBNER: So you’re saying that you would not have divested the financial services stuff?
WELCH: No, I’m not saying that. I am saying that I might not have gotten in the trouble that they got in by exploding in real estate, but that’s second guessing. You can’t second guess as C.E.O. That happened eight years after I left. That’s the normal tenure for two C.E.O.’s. So to talk about what I would have done or what somebody else would have done when I was there is unfair. I mean, I inherited a lot of nuclear liabilities. I inherited a Japanese assault. Jeff Immelt, when I left on September 7, on September 11 he had his world blown up. So, you know, everybody sees a different environment; so comparing one C.E.O. to their environment, how did you handle your environment? That’s the only question, not how somebody else would second guess somebody who did something.
DUBNER: Let me ask you this: in 1999, not long before you retired from G.E., you said that your ultimate success would be determined by how well your successor grows the company over the next 20 years. When you said that, G.E.’s market cap was up north of $450 billion. Now it’s almost 20 years later, it’s just north of $200 billion. So talk to me about that. I know that you —
WELCH: I don’t talk about that.
DUBNER: You don’t. Why not? I mean it’s public record—.
WELCH: You can comment on it in any way you want. But I haven’t commented on my successor once in the 20 years. And I don’t intend to comment now. You can judge me any way you want, on whether I picked the right guy or not, you gave numbers. And one, from those numbers, would question how well I did. But I’m not commenting. And if you want to give me a black mark, give me a black mark. I did the best I could. I picked the guy.
DUBNER: I’m curious whether you carry over this tradition from the U.S. presidential tradition, where it’s kind of standard for the former president to stay out of things, or did you come up with this on your own?
WELCH: My predecessor came up with it. He never commented on me. And I radically changed everything he did. And he sat quietly and was a friend. Immelt sold a lot of stuff. Now the first eight years he was there, he didn’t sell anything. Now eight years is a long time.
DUBNER: And as you said, the beginning of his tenure was marked by a huge tragedy.
WELCH: 9/11. And so he had his challenges there. And how he handled them, and how I would have handled them, that’s pure speculation.
DUBNER: All right, let me ask you this. Let’s pretend you had stayed on another 10 or 20 years. I’d love to hear you talk about what industries you never got included in the G.E. portfolio that you might have liked to.
WELCH: Well I went into private equity with Clayton Dubilier. And we have had 75 companies bought over 15 years. They range in size from $2 billion to $30 billion. And 74 of them have been big successes. We blew one in the last year. If you talked to me a year ago, I would have bragged about them all being good, but —
DUBNER: What was the one that failed?
WELCH: The oil patch. We bought a helicopter company serving the deep wells in Mexico and elsewhere out to sea to bring the crews out. And the deep drilling evaporated with fracking. And we are eating the helicopters.
DUBNER: But let me ask you — I know that pharma, for instance, was one big sector that G.E. never got into. Is that something that, if you had longer, maybe a different set of circumstances, you would have liked to include?
WELCH: No, I like pharma, and I always liked it. And we expanded medical dramatically when I was there. And we never had the multiple or the guts to buy pharma.
DUBNER: Seeing what the economy has done since then and what the economics of pharma has been since then, do you think of that as a mistake? Or do you think that you made the right decision considering the circumstances at the time?
WELCH: I don’t know. I don’t know what we would’ve done with pharma. Would we have got small entrepreneurials that have done so well over this period, or would we have got a Pfizer, a big, fat, slow-moving company? I don’t know. Would we have adapted Pfizer to the changing world, or would we let Pfizer sit there? And there’s been all kinds of consolidations and opportunities in that sector. You know?
DUBNER: You write really nicely in your books about you ascending to the C.E.O. position, and how grateful you were, and then handing off to Jeff Immelt, and how happy for him you were, how happy he was. You’d been there a while, and you were getting on in years, but I’m guessing, if you’d really wanted to, you could have powered through some more years. How do you know as a C.E.O. that it’s time to go?
WELCH: Well, I think it’s different from one to the other. I would say, the reason I left was not that I was tired. I worked for 15 years. I’ve given thousands of speeches around the world. I’ve taught at M.I.T. for six years. I started my old school. So energy was not the problem. The problem was you have expectations in a bureaucracy; and the expectations of these talented, wonderful people — whether it be Jim McNerney at Boeing or Rob Nardelli at Home Depot, or 65 other C.E.O.’s that have come out of our place — they expect movement. And I would have expected it when I was there. That there’s a certain rhythm; and 65 was the rhythm in G.E. Maybe it’ll go to 70 or 75 in the future, as 70 is the new 50, and all that stuff. I don’t know.
But I didn’t do it because I was tired or bored. I loved it. I did it because it was the right thing to do for the rest of the people. Because all kinds of movement takes place when the top goes, because I told the two guys that weren’t gonna get it, I told all three, six months before, “All three of you are going to have new jobs. One of you is going to be running G.E. And two of you are gonna be C.E.O.’s elsewhere.”
DUBNER: Right, so that was McNerney who went to Boeing, and Nardelli went to Home Depot?
WELCH: No, McNerney went to 3M.
DUBNER: Oh, 3M, I’m sorry.
WELCH: And then Immelt had the 3M job too.
DUBNER: Oh I see.
WELCH: 3M was hedging their bets.
DUBNER: It strikes me that C.E.O.’s in the media are generally portrayed as people who fly private, play a lot of golf, and make a lot of money, and have some meetings once in a while. Right? And the public doesn’t seem to really understand the role that well. Well I’m curious if there are one or two things that if you could tell the public who has that view of what C.E.O.’s do, a little bit more of what it’s really like.
WELCH: Well, I don’t want to make it sound anything other than great. So I think it’s the greatest thing in the world. You’ve got a chance to change lives. I mean rarely do you have such an opportunity at a job to totally change lives, make people rich, get second homes, send their kids to college, get vacation homes. I had plenty of money in the first three years I was C.E.O., the next 17 was spent making other people rich. I mean it’s a turn-on. I used to call guys in my office and give them a million bucks. You realize how good that feels? I tell them they were in the club, we had a club. A partnership. And I’d bring them in, sit them on the couch, and some of them would cry. I mean it’s amazing emotion. You’re in the club now. Here’s a million dollars stock. That’s power, it makes you feel good. They go home thrilled. Think of the party they’re having in their house that night.
DUBNER: Is it lonely at the top?
WELCH: No it’s not lonely at all. That’s the biggest myth in the world. You’ve got your friends there, you’re all in the well together. You’re all sharing everything you have. All that crap about lonely at the top. It’s nonsense. Pure nonsense. You’ve got your best friends you’re working with.
DUBNER: One more question for you. I don’t know if you’re familiar with the phenomenon or the phrase known as the glass cliff. It’s hard to hold all the numbers constant, and obviously there are a lot more men than women C.E.O. ‘s, but it does seem that often when women are appointed, it’s a company that’s really in trouble and it’s a way of kind of hedging the bad if you know she’s a scapegoat. What do you think of that notion and what do you think of the notion of female C.E.O. leadership generally, and what should, if anything, be done to provide more opportunity?
WELCH: I’ll give you my thoughts. I was pleasantly surprised, if you will, by the data that the researcher has done on the glass cliff. Mostly in politicians I thought that was fascinating and interesting research. My own feeling is that you don’t think gender when you think of solving a problem. You think, “How do I put the best person to solve that problem?” And you don’t think gender. She brought up some interesting points. But I would think you’d find data on males that have failed because they went into tough situations being pretty high. I think you could make the argument either way. I haven’t seen enough data. I thought, it’s an interesting question, and it’s one — my own view: We had, by the time I retired, 27 percent of G.E.’s earnings were coming from women C.E.O.’s, and that was 17 years ago. I had 33 percent of my board females all the time.
DUBNER: Was that kind of a floor you set?
WELCH: Way ahead of the times. So I don’t — I’ve been married a couple of times, and I always find strong women for whatever reason. And I love strong women.
DUBNER: Let me ask you though, going back to what we talked about earlier about if you’re a candidate for management or for leadership, you said you’ve got to have smarts, but you also have to be aggressive if you want to be around the leadership and you have to have a lot of self-confidence. You know men and women are fundamentally different in some ways, it can be uncomfortable for people, some people, to talk about it, but there are many dimensions on which there are a lot of obvious and demonstrably, empirically proven differences. Do you do you think that corporate culture, even now — 20 years removed from when you were running the firm, or 15 plus years removed from when you were running the firm — do you think that even now, corporate culture still conspires against — even unknowingly, subconsciously — against female leadership?
WELCH: I think it’s a lot better than it was. But it has a long way, way to go. We no longer have women coming to the meetings dressed as men, with those little ribbons that the bow is in, you know, in the suits. We don’t have that today. We have women more or less being women, and the strengths of women, the sensitivities of women. All those things. So we’re much further along. Plus it’s not all the way there. It’s better. We always had the odd woman down at the table. And until we got more of them there, they were quieter. It’s real.
DUBNER: Right. But then when they’re not the only whatever it is at the table, women and anyone else, then you get a little more confidence.
DUBNER: Well, Jack Welch, what a pleasure to speak with you.
WELCH: Stephen, I love talking to you.
Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Our staff includes Alison Hockenberry, Merritt Jacob, Greg Rosalsky, Stephanie Tam, Max Miller, Harry Huggins, and Brian Gutierrez. For this series, the sound design is by David Herman, with help from Dan Dzula. The music throughout the episode was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, or wherever you get your podcasts. You can also find us on Twitter, Facebook, or via email at email@example.com.