Copyright © 1999 by The McGraw-Hill Companies, Inc All rights reserved Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher ISBN: 978-0-07-136905-3 MHID: 0-07-136905-8 The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-058104-3, MHID: 0-07-058104-5 All trademarks are trademarks of their respective owners Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark Where such designations appear in this book, they have been printed with initial caps McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs To contact a representative please e-mail us at bulksales@mcgraw-hill.com The sponsoring editor for this book was Jeffrey Krames, the editing supervisor was John M Morriss, and the production supervisor was Suzanne W B Rapcavage It was set in Janson by North Market Street Graphics TERMS OF USE This is a copyrighted work and The McGraw-Hill Companies, Inc (“McGraw-Hill”) and its licensors reserve all rights in and to the work Use of this work is subject to these terms Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGraw-Hill’s prior consent You may use the work for your own noncommercial and personal use; any other use of the work is strictly prohibited Your right to use the work may be terminated if you fail to comply with these terms THE WORK IS PROVIDED “AS IS.” McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE McGraw-Hill and its licensors not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting therefrom McGraw-Hill has no responsibility for the content of any information accessed through the work Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise Contents Jack Welch Launches His Revolution PART Act Like a Leader, Not a Manager Chapter 1: Embrace Change, Don’t Fear It Chapter 2: Stop Managing, Start Leading Chapter 3: Cultivate Managers Who Share Your Vision Chapter 4: Face Reality, Then Act Decisively Chapter 5: Be Simple, Be Consistent, and Hammer Your Message Home PART II Building the Market-Leading Company Chapter 6: Be Number or Number 2, But Don’t Narrow Your Market Chapter 7: Look for the Quantum Leap! Chapter 8: Fix, Close, or Sell: Reviving NBC Chapter 9: Don’t Focus on the Numbers Chapter 10: Plagiarize—It’s Legitimate: Create a Learning Culture PART III Forging the Boundaryless Organization Chapter 11: Get Rid of the Managers, Get Rid of the Bureaucracy Chapter 12: Be Lean and Agile Like a Small Company Chapter 13: Tear Down the Boundaries PART IV Harnessing Your People for Competitive Advantage Chapter 14: Three Secrets: Speed, Simplicity, and Self-Confidence Chapter 15: Use the Brains of Every Worker—Involve Everyone Chapter 16: Take the “Boss Element” Out of Your Company Chapter 17: Create an Atmosphere Where Workers Feel Free to Speak Out Chapter 18: S-t-r-e-t-c-h! Reach for the Stars! PART V Push Service and Globalization for Double-Digit Growth Chapter 19: Grow Your Service Business—It’s the Wave of the Future Chapter 20: Look to Financial Services to Bring in Earnings Chapter 21: Have Global Brains—and Build Diverse and Global Teams PART VI Drive Quality throughout the Organization Chapter 22: Live Quality—and Drive Cost and Speed for Competitive Advantage Chapter 23: Make Quality the Job of Every Employee Chapter 24: To Achieve Quality: Measure, Analyze, Improve, and Control PART VII The Toughest Boss/Most Admired Manager in America Chapter 25: Jack Welch Deals with Adversity Chapter 26: Jack Welch Deals with the Next Generation PART VIII Jack Welch’s Vision for the Millennium Chapter 27: Bolstering General Electric Chapter 28: Advice for Other Companies Epilogue Acknowledgments Endnotes Index Jack Welch Launches His Revolution “Business is simple.” AUGUST 1997 It’s a perfect day for golf There isn’t a cloud in the sky on this glorious summer day at Martha’s Vineyard, and as the two men tool around the freshly manicured course, soaking up the sunshine and the easy conversation, they can’t help but reflect on how lucky they are just to be out of their offices, away from the usual, frenetic grind And it isn’t only the fresh air and sunshine that help them forget their worries—it is also the satisfying victory they have just chalked up against the other half of their foursome After all, these are men who hate to lose—at anything To an onlooker, the scene seems ordinary enough: two middle-aged men out for a day on the links: one tall and graying, with a slight paunch; the other shorter and at least a decade older They could be friends or colleagues, or perhaps a couple of salesmen playing hooky from the job But to a discerning eye, the scene conveys much more Muscular, crewcut figures clad in bulky business suits stand incongruously at the ready, speaking softly into walkie-talkies Set against the smooth, contoured green of the course, they seem wildly out of place, like some bit-part actors who have wandered onto the wrong movie set But their presence makes it abundantly clear that this is no ordinary golfing duo In fact, these are two of the most powerful men on earth The older of the two men is John Francis Welch Jr., chairman and chief executive officer of the General Electric Company; and the taller figure is William Jefferson Clinton, the forty-second president of the United States Golf is Welch’s favorite form of recreation In May 1995 he had openheart surgery and recovered quickly from the ordeal Now he’s out on the links every chance he gets, often playing as many as thirty-six holes a day (In the summer of 1996 he broke 70 for the first time; his 69 helped him win his club championship at the Sankaty Head Health Club in Nantucket.) Though Welch and Clinton have knocked off eighteen holes already, the two men agree to play another round It’s a rare moment of relaxation and freedom for both of them, and they’re not yet ready to quit In fact, no one wants the day to end Completing the foursome are Ben Heineman Jr., GE’s general counsel, and attorney Vernon Jordan, one of Clinton’s closest friends Pleased that Welch and the president are getting along so well, Heineman silently congratulates himself for proposing to Jordan that the two men, who happen to be vacationing at the Vineyard at the same time, get together for a round of golf The foursome plays another nine holes This time Clinton and Welch lose, but even that doesn’t put a damper on their day They are prepared to carry on, but Heineman has to catch a ferry, so the group finally breaks up Two days later, a photo of a relaxed Welch and Clinton, smiling in their golf cart, appears in The New York Times Welch has a lot to smile about He is the head of the most valuable business enterprise on the face of the earth, the most admired and powerful business executive in the United States Sure, the media pays far more attention to the Bill Gateses (Microsoft) and Andy Groves (Intel) of the world, but Jack Welch doesn’t mind others grabbing the limelight He is indisputably the most successful chief executive on the American scene, and he doesn’t need a newspaper or magazine article to validate his achievements Gates, Grove, and company may be flashier, but Welch has the distinction of presiding over a business that has few rivals in size and none in complexity And although Welch may not admit it, he takes great pride in the fact that GE is the envy of every one of its worldwide competitors Although Welch has much to crow about, he is not the boasting kind What other figure, having attained so much in business, would say, as he did in December 1997, “I take absolutely no comfort in where we are today”? Doesn’t he care that he has revived GE and turned it into the most dynamic company in the United States? Is this just false modesty? Not at all What he really means is this: I cannot afford to rest on my laurels If I do, I’m dead! Earlier in the summer, Welch’s General Electric led the Business Week list of Top 100 Companies in Market Value for the second year in a row, with $198.09 billion This was not just a list of American companies, but a list of all companies In second place was Coca-Cola ($169 billion), followed by Royal Dutch/Shell of the Netherlands and Britain ($168 billion), NTT of Japan ($151 billion), and Bill Gates’s Microsoft ($148 billion) ... discomfiting and unnerving the earlier part of the 1980s had been for these, the survivors While they had not lost their jobs, many of their friends had, and they themselves had spent the past decade... But Jack Welch despises these bureaucrats He regards them as relics of the past And Jack Welch hates the past What is the right way to manage a huge company? More specifically, in the case of. .. suggestions from the audience: They don’t know they are C’s They’re afraid of A’s They’re blah, neutral Then Welch said that all he wanted them to was to demand more of the A’s, to cultivate them, to