Life After GE? And How
He may call himself a pensioner, but Jack Welch, 68, has hardly retired from public life. The former General Electric Co. (GE ) chairman, who stepped down in September, 2001, continues to consult and speak on everything from New York City schools to corruption in Corporate America. But the man regarded as one of the great CEOs in history has endured questions over his generous pension benefits from GE, messy divorce, and romance with Suzy Wetlaufer, who is now his fiancée. They are working on a book called Winning, due out next year. Welch sat down with Editor-in-Chief Stephen B. Shepard on Feb. 19 as part of the Captains of Industry series at New York's 92nd Street Y. Excerpts:
Start by telling us how you're spending your time these days.
I have almost a dream life. I consult for CEOs....I ended up with Bill Harrison of J.P. Morgan (JPM ), Barry Diller in the interactive world, and Don Gogel of Clayton, Dubilier, which is a buyout firm. I ended up having a divorce, and on to a new life with a magnificent person. I'm madly in love. I've got four young kids -- hers. Man, is it good.
What are you doing with New York City public schools?
If you care about education, you've got to re-elect Mike Bloomberg because he really does care. We have these fabulous principals who come and spend two days with us, and we go over what makes everything work. We teach them about leadership. We teach them about training. They are really the CEOs of their school. We tell them to take control of their school.
Are there times when you sort of miss the action of being a CEO?
I don't miss it for a day. I love where I am when I'm with Barry Diller in his staff meeting. I love it like I was there. But guess what? When it's over, I meet Suzy, we go to dinner at a great place and have a bottle of wine. I don't worry about the quarter, the half year, or the year. But while I'm there, man, it's in the gut.
During your divorce, the details came out about the pension. Was the package justified in the first place? And if it was, why did you give some of it back?
Perfect question. It's 1996. I'm 61 years old. I just had a five-way [heart] bypass. All my predecessors had retired at 62 and 63. The board came to me -- I never had a contract in 35 years in GE -- and they said: "We'd like to give you $100 million in restricted stock to stay 'til you're 65 and make the succession work." I said: "I don't need $100 million. I'm too cheap to spend it anyway....But what I would like to do is keep the plane and the apartment, which cost about $1.7 million a year. Actuarially, if I live to be 115, it's a break-even for the company. It was an Irishman taking a deal. It was a retention agreement, and every time you say it was the golden handshake/pension thing, it sets me off. Then five years later I retired, and then I got divorced. If you get a couple of very sharp New York lawyers on the other side, they can make this thing sound awful. [To spare GE], I chose giving it back.
We have strong economic growth and weak job creation; productivity numbers that people never thought possible, and outsourcing. Is the world fundamentally different than when you were CEO of GE?
I don't think so at all. When I became CEO of GE, it was 1980. Outsourcing was happening -- Mexico. Textiles had already moved out of the Northeast. We recovered as we moved up the food chain.
Steve, we're going to move up the food chain again. The outsourcing rhetoric far outstrips the outsourcing numbers. Far outstrips....I don't know what the number will be, but we'll create 100,000 plus jobs a month. You can't run a 4.5% economy and not get jobs.
Are India and China a threat, or are they an economic advantage to the U.S.?
I see them as a real threat if we end up with stupid platforms that don't allow us to be competitive. If we put our head in the sand, we will definitely lose out, particularly to China. India is a great intellectual place, but it never got rid of the British bureaucracy. China, on the other hand, is going to be a fierce competitor. Intellectually, off the wall. You have an energy. You have a drive that's unsurpassed....We're going to have to do an incredible job of moving up the technology curve.
Let's dig into this a little bit more. In Bangalore, at GE's research center there -- which is called the John Welch Research Center -- there are 1,400 researchers, one-third of whom have PhDs. This is clearly good for GE. Why is it good for America?
Because these people can develop software, and we can develop it faster. The vision today is to sell somebody a CT scanner and tell them: "You can use that machine for 10 years." Before, we would sell the CT scanner for $2 million, and then three years later, we rip out the old one and put in a new one. Now, we will give them procedures with software. We ship a disk to a doctor, to a hospital, about a new shoulder procedure or a new leg procedure, and we will allow them a month's free trial.
They'll run that, developed in India. Our people will be here managing the process. If they like it, it stays live. If they don't like it, we shut it off right from headquarters, and they lose the ability to use the machine for that purpose. There is enormous intellectual capital that's being poured back into the U.S. by these ties. These engineers [in India] are making the engineers in Schenectady -- where the numbers haven't fallen off -- more productive.
So it's making us more efficient and productive.
You're not going to sell products that aren't competitive. How many of you go and say: "Give me the highest-price product, because I really want to keep jobs in America? That's what I'm thinking about, shopping here today." It isn't happening. Stop kidding yourself.
Given all that's happening in the world, is it harder today to run a company like GE than it was in the time you were there?
We had a recession, inflation was awful, we had to lay off tens of thousands of people. It was horrible. We weren't competitive. We used to give speeches to our people: "No one can guarantee you a job other than satisfied customers." That's the only thing that works. Nothing creates work other than products and services you provide that create satisfied customers. State and federal governments don't have any competition. I'm serious. If you don't live in a competitive world, you don't get it. If you've been drawing a government check in the Senate or somewhere else the last 20 years, you don't get it. No one is after your job except another politician every four years or six years.
We're going to outsource them all. So the qualities it took to be a good CEO 20 years ago are more or less the same now?
Without question. A passion to get great people. An inordinate desire to want to win in the global world -- maybe more intense than it was in the 70s. Integrity first. Always trying to raise the intellectual bar of a company, looking everywhere for ideas.
How interested were you in buying the Boston Red Sox?
I was fairly interested until I picked up the New York Post. On the cover was a picture of Pedro Martinez' body and my face. I said: "Wait a minute, this is way too much publicity for so little reward." So instead, I'm just an avid fan. Don't you talk about A-Rod today. I think Steinbrenner made a magnificent move.
So what would your advice be to Red Sox owner John Henry?
Not to whine about it. They decided not to pony up. I have been in business deals several times when I didn't pony up, and you've got to eat it.
How would you like to be baseball commissioner?
That is the last job [I'd want]. Owners control the baseball commissioner.
What's your take on the (CMCSK ) Comcast-Disney (DIS ) deal or potential deal?
Well, I would say that Michael [Eisner] has got some work to do. I think the Roberts family are people who generally win. Their history has been one of tenacious, determined commitment. I think that they're not going to get it at that price. How much of a squeeze will take place and whether or not somebody like Microsoft (MSFT ) comes in over the top, who knows?
If Michael Eisner were one of your clients, what would you tell him?
Right now, he's got a board that seems to be behind him. The Comcast bid is below his stock price. He's got no problem at this moment. Now he's got to line up his ducks, to get a great performance out of ABC in the first quarter. He's got to pray that we don't have another incident so the theme parks aren't hit. If he can move that stock price three or four dollars, Comcast is gone. His job is to deliver earnings, really deliver them.
For the first 10 years, Eisner did very well, but then he had a poor record and took a lot of money out of the company.
For Michael Eisner or anybody, I think it's pay for performance. I got paid plenty of dough, and everybody associated with us got plenty of dough. We had results. The problem here is that some bums get high pay....It absolutely blows my mind to see people that sunk the company walking out with a suitcase of money. It's just wrong.
Are you worried about the consolidation of media in fewer and fewer hands?
They always used to say when NBC was owned by GE that we would have something to say about it. If we ever whispered in Tom Brokaw's ear what to do, he would have raised a flag into the square. Sometimes I feel they are communists, but there's nothing I can do about it.
If different outlets are all owned by the same people, you might not have diversity. This doesn't worry you?
I don't stay up all night over it.
Well, I do.
Steve, get a life.
Is George Bush really good for Big Business?
The big myth is that George Bush is great for Big Business. I don't see this great connection. I never did, by the way. I never saw Ronald Reagan do it. I never saw [Bush's] father do it. Without Bill Clinton, we wouldn't have had NAFTA. Without the North American Free Trade Agreement, we would have been really behind the eight ball in competitiveness.
So Bill Clinton did a lot for business?
You heard it here first.