Title: THE JACK WELCH LEXICON OF LEADERSHIP
P A R T O N E
Evolution of a Leader:
The Welch Years
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Why a Jack Welch Lexicon of
Leadership?
Lexicon (lek-si-kon): (1) A dictionary; (2) A stock of
terms used in a particular profession, subject, or style; a
vocabulary.
—THE AMERICAN HERITAGE DICTIONARY
In his two decades at the helm of GE, Jack Welch did more to
add to the leadership literature than any other CEO of the
modern era. Not only did he give more thought to the business
of leadership,Welch devised principles, strategies, and tenets to
lead by.
In creating one of the world’s most competitive corporations,
Welch created his own lexicon, a new language that gave voice to
the new methods and strategies that transformed GE from a century-
old bureaucracy into a global juggernaut.
The Jack Welch Lexicon of Leadership is alphabetically organized
and includes more than 250 of the words, ideas, concepts, tools,
and strategies used or created by Welch and GE between 1981 and
2001. Some listings, such as “Boundaryless,” have already found
their way into the everyday language of business. However, there
are dozens of terms that have received less attention but also
played a vital role in advancing Welch’s leadership agenda. For
example, while most managers have heard of Six Sigma, there has
been less written about Master Black Belts and Green Belts. In similar
fashion, Work-Out?,Welch’s sweeping cultural initiative, has
garnered the spotlight in countless books and articles, while other
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concepts associated with the program, such as “high hards” and
“rattlers,” have received far less attention.
Many of the entries in the Lexicon were indeed the brainchild of
Jack Welch and GE. However, it is worth noting that the book
includes dozens of entries that were not invented by the GE chairman
but have some unique and pertinent Welch application. For
example, the entry for confidence does not include a literal definition,
but instead explains why Welch felt that “instilling confidence”
was one of his key responsibilities. In addition, to fully
grasp why the GE chairman attributed such weight to confidence
building, readers will learn the origins of Welch’s own self-assurance,
as well as the role it played in crafting his vision for GE.
The goal of the Welch Lexicon is threefold:
1. To give readers a guided tour of the language and strategies
of all things Welch. Readers will gain valuable insights into
the key management ideas that consumed Welch, while also
learning the significance of these concepts and programs.
The most important terms are clearly designated (with the
Six Sigma icon) so readers know which Welch words and
strategies formed the centerpiece of his leadership ideal. For
example:
4 THE JACK WELCH LEXICON OF LEADERSHIP
σσσσσσ
Bureaucracy: Productivity’s enemy.Welch told his people
to “fight it, kick it.” The GE CEO fought a two-decade war
against bureaucracy with initiatives like boundaryless and
Work-Out. GE’s list of values specifically addressed the
company’s intolerance for bureaucracy (it was at the top of
the list for many years), and stressed the importance of
building an organization of trust, excitement, and informality.
Welch recognized the adverse effects of bureaucracy and
knew that unless he rid the organization of the worst of it,
GE would never become a legitimate global competitor.
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2. To impart additional insights into Welch’s key companywide
initiatives. During his tenure,Welch launched four
growth initiatives (globalization, Six Sigma, Product Services,
and the e-Initiative) and one behavioral initiative (Work-
Out). All key initiatives are explored at length, as are the key
terms associated with each initiative. For example, not only is
Welch’s Six Sigma initiative explored in depth but so are more
than three dozen terms associated with that watershed program
(e.g., Defects,Variance, etc.).
3. To chronicle the evolution ofWelch’s leadership thinking.
Wherever possible, dates and chronology are included to help
trace Welch’s evolution as a leader.Many of Welch’s key concepts
and programs evolved over the years, and that chronology
often played a major role in implementing a particular
program. For example,Welch said that Six Sigma would not
have been possible without Work-Out, the behavioral program
that helped GE become a more boundaryless place in
the late 1980s and early 1990s.
The ultimate goal is to create a dictionary that is much more—a
road map of the language and programs employed by the GE
CEO in launching the many revolutions that earned Jack Welch
the sobriquet of world’s greatest manager (although Welch dislikes
the term “manager”—he prefers “leader”). It is intended to
be a complete reference that can be read in its entirety or accessed
for individual entries.
An Incredibly Brief Welch History
Welch, an only child, was born in 1935 and raised in Salem,
Massachusetts. An avid sports enthusiast as a child, he credits the
lessons he learned in a “scrappy place” called the “Pit” (the neighborhood
gravel pit turned into a makeshift park) with forging his
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leadership abilities. He later attended the University of
Massachusetts at Amherst, and then went on to the University of
Illinois, where he received a Master’s degree and a doctorate in
chemical engineering. In October 1960,Welch joined GE in the
plastics division in Pittsfield,Massachusetts. It was there that he
formed his leadership ideal.Working in that exciting, fast-paced
environment,Welch said, “Bureaucracy could not form, just as ice
could not form in a swiftly moving stream.” (Despite this environment,
Welch almost quit in 1961 when he received what he
called a “lousy” $1000 raise that brought his income to only
$11,500.)
In the beginning, there were only two employees, which
prompted Welch to liken his part of GE to a “corner grocery
store.” In a neighborhood grocery store, you know the customers’
names, what they buy, who they are.Welch believes that confidence
thrives in an informal arena. That metaphor would stay
with him as he moved up the corporate ladder, becoming the
company’s youngest general manager at age 33.Welch’s predecessor,
Reg Jones, started searching for his successor in 1974, six full
years before his retirement, and although the original list of 96
candidates did not include Welch, his name was added to the final
list of contenders (see Succession Planning).
In 1980, GE announced the name of it’s eighth CEO: 45-year-old
John Francis Welch. On the day of the announcement, corporate
America was in a tailspin. Interest rates were skyrocketing and the
economy was sandwiched between two recessions. The stock
market was in a shambles, emerging from its worst period since
the 1930s. The Dow 30, which had first pierced 900 in the mid-
1960s, was at 937. And GE, one of America’s premier corporations,
wasn’t doing much better. Despite the fact that Reg Jones
was voted the best CEO by the Fortune 500 CEOs, GE’s stock,
when adjusted for inflation, had lost half of its value over the previous
10 years.
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What happened next has been well-documented:Welch tells a colleague
of his bold plan to launch a “revolution” and spends his
first years reinventing the company. In the early 1980s he performed
a brand of corporate surgery that shocked even GE insiders,
selling off more than 200 businesses and acquiring 70, including
the $6 billion acquisition of RCA.Welch transformed GE from
an aging industrial manufacturer into a diverse, global juggernaut.
In doing so, he helped corporate America regain its once heralded
position as the world’s most valuable competitor. Not since Alfred
Sloan revamped GM’s bureaucracy half a century earlier has one
corporate leader had such a great impact on a large corporation.
While much has been written about the Welch initiatives that
became his trademark (e.g.,Work-Out, Boundarylessness), there has
been less ink devoted to his basic tenets of business.Welch has consistently
stated that “business is simple” and that “informal is a huge
deal.” Simplicity and informality are as much a part of the Welch lexicon
as “Work-Out” and “Boundarylessness.”When he speaks of his
greatest accomplishments, he doesn’t talk about GE’s financial
record, instead focusing on the “softer” aspects of leadership.
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