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Neutron Jack in His Own Words


 

This transcript has not been checked against videotape and cannot, for that reason, be guaranteed as to accuracy of speakers and spelling of names. (DSM, JES, TW)

CHARLIE ROSE Transcript #3059

October 24, 2001

CHARLIE ROSE, Host: Welcome to the broadcast.

As the war in Afghanistan continues, we take a look at another conflict...

CHARLIE ROSE: And part two of our conversation with the author of the number-one book in America, Jack Welch, the former chairman and CEO from General Electric.

JACK WELCH, Former Chairman and CEO of General Electric, Author of "Jack'': So we've got-- we've got a model here that wasn't supposed to work, the multi-business company.

CHARLIE ROSE: Yeah.

JACK WELCH: And in the end, the multi-business company is the whole game because what we get is the intellect of an NBC and the intellect of an aircraft engine business and [unintelligible] medical systems business building MR and CT machines. And all-- it's an idea factory that all comes together to raise the level of intellect in the organization every day. And that model works.

CHARLIE ROSE: And we talk about the final episode of a new PBS series on Africa, which ends this Sunday.

FRED KAUFMAN, Co-Executive Producer, "Africa,'' PBS: This is the Africa people don't see...

CHARLIE ROSE: ...

Jack Welch Says Liberation Is Key to Business Success

CHARLIE ROSE: And part two of our conversation with the author of the number-one book in America, Jack Welch, the former chairman and CEO from General Electric.

[excerpt omitted from October 24, 2001, airing]

Welcome back.

JACK WELCH, Former Chairman and CEO of General Electric, Author of "Jack'': Thank you so much, Charlie. It's great to be here with you.

CHARLIE ROSE: I want to talk about this book and a lot of the things that are in there, but first we have-- we are going through a traumatic time -- a), because of the tragedy of September 11th; b), because we have launched a major war against terrorism. And now we are feeling vulnerable to anthrax. It is hitting at CBS and NBC and the Senate of the United States and the Post Office.

Tell me about you and this week and what your thoughts-- where were you on September 11th?

JACK WELCH: I had just launched this book. It was the morning of the Today show. I was on the Today show with Matt Lauer from 7:15 to 7:30, and walked out to go to another show. The first day of a book after working that long. I went out to put the plug in my ear and looked on the screens. I saw horror like I've never seen before in my life. A book seemed so insignificant, so silly.

We packed it up. We went down and huddled together and thought our world had changed forever. We couldn't believe it.

CHARLIE ROSE: Has the world changed forever?

JACK WELCH: I don't think so. I think we're going to go through a tough time. We're going to have to deal with it. But I think-- I've never seen spirit like this.

I just came back from the Midwest. I've been through the Midwest at universities at Northwestern and the University of Chicago, the University of Michigan, talking to a thousand kids at a time. And the energy and the passion, it's a month later but they're determined. They're the same kids they were a month ago.

Now we've all got in our soul a lot of feelings. And we have a lot of different feelings than we've had before. We've come together more. This is a great country of determination. And the kids still feel it right in their gut.

CHARLIE ROSE: Well, some say that it in fact caused us to remember who we were and remember values and act on values that were part of our creed.

JACK WELCH: Well, I'm telling you, this week-- you would have thought this week -- and it was a very global group I talked to each time, so I ran into 3,500 kids -- about a third from outside the United States at least. It was like being in the 50's when I was in college. Determined, nose against the glass, wanting to know about careers, wanting to know about business, wanting to know about globalization, wanting to know about all these things. With an intensity you couldn't believe.

All of them reflective though of what happened. All of them concerned and all of them determined.

CHARLIE ROSE: There are some who would like to see you, because of your management skills, play a public role in the recovery effort. Would you be responsive to that kind of thing?

JACK WELCH: I'd listen to anything to help. I mean, I'm committed to doing anything for this country. I'm the luckiest beneficiary of America.

CHARLIE ROSE: Of America.

JACK WELCH: I'm just the luckiest guy going in this game. So I'd obviously give back in any way that I was asked to.

CHARLIE ROSE: When you sat down to write this book, at that time I think the highest ever paid for a non-fiction book. I don't know what they paid the president, so he may be competitive. What did you want to accomplish?

JACK WELCH: I wanted to reach young people. I want them to know that it's not a straight line to the top. I wanted them to know that everybody's got a shot at it. I wanted them to know that caring more than the next person matters. I wanted them to know that passion counts.

One fellow wrote me and said there's more passion in this book than there is in a steamy novel. And it's about emotion. It's about living to the fullest. It's about caring more than the next person. It's about fielding the best teams. It's about putting the best people in the field.

So I wanted everybody to know that. That's come out of it surprisingly. I had no idea. I spend a lot of time on my mother in this book. And I'm getting these incredible reactions from pediatricians and things who are saying, "I want all my young mothers to know what tough love is about.'' Because today in America, people are deciding how do I bring up my kids? Do I discipline them? Don't I? Do I-- my mother would whack me on the side of the head and then hug me later. And that isn't done today. I'm not saying it should be.

CHARLIE ROSE: I remember-- I remember what she told you about stuttering. She said -- if this is not a positive point of view of life, I don't know -- she said, "Son, it's because that brain is so big, you have so much to say.'' If that is not instilling confidence, I don't know what it is.

JACK WELCH: And that's been the reaction. The reaction has been as much from mothers, which is surprising.

CHARLIE ROSE: You want to reach people other than people who are looking for some principle of business.

JACK WELCH: This isn't a how-to book.

CHARLIE ROSE: Help me understand how to--

JACK WELCH: This isn't a how-to book.

CHARLIE ROSE: It is a what book?

JACK WELCH: It's a book about people. It's a book about creating organizations. It's a book about energizing others. It's a book about exciting people. It's a book about making people always come to work loving their job, reaching for the best, always trying to-- taking the drudgery out of a job.

You spend most of your waking hours at work. Why the hell would you ever make it awful? So I desperately wanted to get that across.

CHARLIE ROSE: That reminds me of, I think, your wife who said to you, "I know why you want to go to these meetings. You get to play golf. You're with a bunch of guys you like and women that you admire. And you're there and you're talking about things you care about. So no wonder you think going off to a retreat with GE guys is a pretty good thing to do.''

JACK WELCH: It is. But I want anyone to get that. And I want them to learn that celebration is a part of it.

Charlie, if I can get across the point that business is a game. It's a game not unlike the World Series we're watching this week. The guys that-- the team that fields the best players wins. And winning is a cause for breaking corks and celebrating. You see it after every great victory. You see it in a locker room. You see it anywhere. You see applause after a great singer leaves the stage.

In business, I found a way to celebrate every little victory there was and get people to be rewarded in the soul as well as the wallet, because it was such fun. Get a pizza. Get a keg. We talk about that maybe too much in here. But it's trying to make business more than this heavy-- people don't want to talk to you about it. They want to talk about the terrible decisions and the moments of all this. It's not like that.

CHARLIE ROSE: You feel strongly that the notion of business has to be understood as it's about people.

JACK WELCH: That's all it is. I mean, maybe you can have a good idea for a while and the good idea will-- but it won't sustain itself unless you have a team, unless you have the best people.

CHARLIE ROSE: Where did this come from for you? I mean, did you get this because of your experience at GE? Or did you know it going in, this was the principle that led you to be successful at GE?

JACK WELCH: A little bit of both.

I started out as a average ballplayer in every sport. And I always knew the best team won there. And very quickly I came to GE, and I started a business. And I hired the first employee and then the second and then third.

And I made some real mistakes. And every time you hired a good one, the game changed overnight. And every time you hired someone that wasn't so good, you took a step backwards.

Pretty simple stuff. So, in the end I always tried to find people smarter than I was. And that was pretty easy. And I did that. And I'd pile smart people all around me.

I just had a cadre of them. And we-- together we'd do--

CHARLIE ROSE: But did somebody teach you to invest in people? To understand that? Or did you just somehow-- I mean, does it go back to your mother? Or does it-- There's something that somebody came to you--

Or is it a natural instinct that people who like people have?

JACK WELCH: I think probably a little bit of the latter.

CHARLIE ROSE: Yeah?

JACK WELCH: Probably more of the latter.

I think-- I like being with people. I like challenging people. I like debate. I like all those things. And yet I love having a drink with 'em, too.

CHARLIE ROSE: Yeah.

JACK WELCH: I mean, I love being around people.

I mean, we started meetings-- We would schmooze for the first half hour and talk about what happened on weekend. These things-- we didn't run the most meetings for 20 years.

CHARLIE ROSE: Biggest mistake at GE was Kidder Peabody? Or not?

JACK WELCH: No question.

And there was a question of buying where the culture didn't come close to fitting.

CHARLIE ROSE: Yeah.

But did you buy it on instinct rather than, as some critic pointed, due diligence?

JACK WELCH: Well, on this one, I bought it 'cause I was too full of myself. I had bought a whole series of-- I had made about seven straight good deals.

CHARLIE ROSE: Yeah?

JACK WELCH: So, I was flying.

Christ, I might have bought anything at that moment.

CHARLIE ROSE: A can-do--

JACK WELCH: And a couple people on my board said to me, "You know, this isn't really--'' And, of course, I just blew right by 'em with gusto 'cause I was so convinced I was right. And I got one right in the nose.

CHARLIE ROSE: And what'd you learn from that?

JACK WELCH: That culture counts.

CHARLIE ROSE: Culture?

JACK WELCH: Culture.

And, if the cultures can't blend, if the people are different, if the motivation systems are different-- Investment banking is a cash-and-carry game. "Where's my $10 million?'' Got it, go home.

It's not about the team.

CHARLIE ROSE: Right.

JACK WELCH: It's about their own individual games. That doesn't work in our system. Our system's all about the team.

CHARLIE ROSE: Tell me about Honeywell.

JACK WELCH: Yeah.

CHARLIE ROSE: Some would argue, and some will say, "Jack had a-- His last year was not great. He did something terrific. He picked out the right guy to take over. And that was a careful, considered path.''

You know? And you did it right. Right?

JACK WELCH: That's one.

CHARLIE ROSE: That's one.

JACK WELCH: Two?

CHARLIE ROSE: Two?

JACK WELCH: I'll give you two.

CHARLIE ROSE: All right.

JACK WELCH: Two is that in the midst of this recession, in the midst of this tragedy, General Electric will grow earnings double-digit -- the model works, the business model works.

CHARLIE ROSE: Notwithstanding the fact that we're facing a recession? Notwithstanding the fact that advertising revenues are down at NBC? Notwithstanding the fact that--

JACK WELCH: The engines on the planes that crashed into the World Trade Centers were GE engines. The planes -- all four were insured by GE.

CHARLIE ROSE: A $400-million hit.

JACK WELCH: Six hundred million.

CHARLIE ROSE: Six-hundred-million-dollar hit.

JACK WELCH: Four hundred million dollars net income, GE [crosstalk] $600 million pre-tax.

CHARLIE ROSE: So, you took a hit there.

JACK WELCH: Yeah.

And yet we'll grow double-digit. Our earnings will be over $14 billion, our cash flow will be over $17 billion. In the midst of this dilemma.

CHARLIE ROSE: Now, why is that?

Because you've built in for the near term, near-- after your departure, an automatic 15 to 20 percent growth.

JACK WELCH: No, I didn't build it in. People have gotta deliver. People have gotta do things. But we've got a model that is diverse. And, while this business is bad and this business is bad, three others are doing very well. Five others are doing very well.

So, we've got a-- we've got a model here that wasn't supposed to work -- the multi-business company.

CHARLIE ROSE: Yeah.

JACK WELCH: And, in the end, the multi-business company is the whole game because what we get is the intellect of an NBC and the intellect of a aircraft-engine business and the intellect of a medical-systems business, building MRI and CT machines.

And all-- it's an idea factory that all comes together to raise the level of intellect of the organization every day. And that model works.

CHARLIE ROSE: One thing you believe in -- I want to come back to Honeywell--

JACK WELCH: Yeah.

CHARLIE ROSE: But one thing you believe in, as you think about that model, is the impact the Internet will have on the future.

JACK WELCH: Abso--

CHARLIE ROSE: In terms of selling. In terms of saving money.

JACK WELCH: Charlie, it's gonna-- It will revolutionize business, as I said the last time I saw you. It's the biggest revolution in my lifetime in business.

The fact that some business models didn't work has nothing to do with the funda--

CHARLIE ROSE: Some dot-coms didn't work.

JACK WELCH: Right.

The digitization of a company, taking all the bad scud work out of the back rooms, taking all the paperwork out, taking all-- digitizing a company and putting information transparent to customers, transparent to suppliers, transparent to employees.

Power will no longer be brokered by some information hog sitting one level above somebody else 'cause everyone will have the same information.

CHARLIE ROSE: We've talked about this before, but everybody didn't see that -- as much as-- as many people saw that interview, everybody didn't see it -- you went to Europe, I think it may have been London.

JACK WELCH: Right.

CHARLIE ROSE: And you-- somehow somebody shows you, who's on line.

Now, you knew about on line because--

JACK WELCH: Right.

CHARLIE ROSE: --somebody in your family had ordered on line before.

JACK WELCH: Right, right.

CHARLIE ROSE: But that was about the extent of your knowledge. Right?

JACK WELCH: That's not quite what happened.

CHARLIE ROSE: All right.

JACK WELCH: I went to Europe, sitting in a room, around a table like you'd have a meeting. And this young man who was running our global consumer finance company said, "I just came from a meeting with my mentor.''

I said, "Mentor? I thought you were the boss.''

CHARLIE ROSE: Right.

JACK WELCH: He said, "No, no. My mentor.''

I said, "Well, what do you mean?''

He said, "I've got a young woman -- 23 years old -- who comes in to see me two to three times a week and is teaching me the Internet.''

I said-- A light went on. I said, "What an idea.'' But that wasn't my idea. But quickly I ran home--

CHARLIE ROSE: Got a mentor.

JACK WELCH: Got a mentor. And got a thousand of GE's top people to get a mentor because the facts are-- The facts are-- Listen to this.

CHARLIE ROSE: Yeah, I--

JACK WELCH: No, the facts are that knowledge of the Internet at this point in time, Charlie, was inversely proportional to age and height in the organization.

CHARLIE ROSE: Yeah-- exactly.

JACK WELCH: OK?

CHARLIE ROSE: Yeah.

JACK WELCH: So, what we did was we brought these kids in.

So, we did two things. We learned the Internet from them. We tipped the organization upside down.

CHARLIE ROSE: Right.

JACK WELCH: And got all the gossip in the organization exchange along with the information on the Internet. It became a hell of a boundaryless thing.

CHARLIE ROSE: Now, did you express to them, "I'd like for you guys'' -- and I mean without respect to gender, "I'd like for you guys to think about getting a mentor''?

JACK WELCH: Yeah, sure, Charles.

CHARLIE ROSE: How did you express this idea?

"By Friday, you will have a mentor because it's good for you. It's good for GE. And it's good for all of us.''

JACK WELCH: It's good for the kids who are gonna be seeing you. You're gonna see new talent.

CHARLIE ROSE: Yeah, right.

JACK WELCH: "And you'll do it.''

CHARLIE ROSE: I'm just trying to get a picture for democracy within this corporate structure.

JACK WELCH: Well, there's a lot of democracy. But there's a lot of--

CHARLIE ROSE: Leadership.

JACK WELCH: --leadership.

Thank you for getting me out that one.

CHARLIE ROSE: Yes. I helped you there.

JACK WELCH: That's why my mother was--

CHARLIE ROSE: No, I know.

All right.

Honeywell -- you were going out in a blaze of glory. This was the biggest merger ever. Fit.

You had approval in the United States. Or about to get it.

JACK WELCH: I had it.

CHARLIE ROSE: Had it.

Overseas, the European Commission stopped Jack Welch--

JACK WELCH: Cold.

CHARLIE ROSE: --cold.

Just [makes sound effect]. Now, did you blow it? Did you somehow not play it right?

JACK WELCH: Let me put it for you this way -- my view of it.

What people don't realize is the European Commission is less than a decade old. But we think of America as a new country vis-a-vis Europe.

That's true in one sense. But the facts are the European Commission, lying on top of the Europeans, is less than a decade old. They're making laws. They're making currency.

I sat down with the president -- he's an old friend -- of the EU. And I asked Romano Prodi, "Romano, tell me about what's the job like?'' He was an old friend was on that board.

CHARLIE ROSE: Right.

JACK WELCH: "Jack, you can't believe the job. It's so much fun,'' he said. "We get up every day, and we make new laws.''

And I'm sitting there at dinner at Joy and Yuri's house. And he is telling that story. And I'm thinking to myself, "He's making new laws. And he's excited. And I'm sitting here trying to get a deal to roll.''

CHARLIE ROSE: Yes.

JACK WELCH: But what people have tried to do--

CHARLIE ROSE: Yeah?

JACK WELCH: --is describe it as an American-European fight, a Jack-Welch-Mario-Monti fight.

CHARLIE ROSE: Right.

JACK WELCH: Let me give you two quick examples.

CHARLIE ROSE: Mario Monti is the guy.

JACK WELCH: The guy that runs the European Commission on Antitrust.

CHARLIE ROSE: Yeah.

I assume Romano Prodi was the guy you were talking about.

JACK WELCH: Yes.

And he was the head of the--

CHARLIE ROSE: Right.

JACK WELCH: When Volvo tried to buy Renault--

CHARLIE ROSE: Right.

JACK WELCH: --he stopped 'em -- two European companies. The king of Sweden flew down to Brussels to make an appeal on behalf of Volvo. He got turned down.

Now, my first meeting with Mario Monti he told me that. He told me that story. I probably should have registered that story a little more than I did.

Last week, a fascinating thing happened. Two French companies -- Legrand and Schneider, two large companies -- were denied a merger already approved in France. The companies had practically put the things together.

Henri Lachmann, the chairman of Schneider, was a classmate of Jacques Chirac's and a friend. And Chirac went public with Mario Monti to get it approved -- rejected.

So, if the king of Sweden and the president of France can get stopped, an Irishman from Boston can sure as hell get stopped. This is-- this is a group making laws without any adjudication process.

CHARLIE ROSE: And, boy, there's nothing that you dislike more than that.

JACK WELCH: Nothing in the world.

No one would like it. I mean, if you got a traffic out here today, you could go get a hearing.

CHARLIE ROSE: Yeah.

You could have made a deal that was acceptable to them if you were willing to give up what?

JACK WELCH: Key parts of the company and part of what I had in GE to start with.

CHARLIE ROSE: Yes.

Here's how you expressed it to somebody. "I had to give up-- It's like a golf course. I had to give up the third hole, the fourth hole, the fifth hole, and the eighth hole, and they wanted to live in my house.''

JACK WELCH: Right.

That's about it.

CHARLIE ROSE: Yeah.

JACK WELCH: That's about it. And I-- and I coulda gone out, done.

CHARLIE ROSE: Did you see this paper today?

JACK WELCH: Yeah.

CHARLIE ROSE: All right.

Listen to this. This is by the guy who's chairman of Honeywell.

JACK WELCH: Right.

CHARLIE ROSE: All right.

Here's what he says about you. Listen. I know you read this at least five times.

JACK WELCH: Once, though.

CHARLIE ROSE: Once was enough.

"The book gave me--''

This is now by Michael Bonsignore, right? Former chairman of Honeywell.

JACK WELCH: Right.

CHARLIE ROSE: Right? This is the guy who wanted to make the deal with you.

JACK WELCH: Right.

CHARLIE ROSE: Right. No longer there.

JACK WELCH: Right.

CHARLIE ROSE: "The book gave me a renewed appreciation of the sheer force of Jack's personality and his singular focus and dedication to GE. The company has been, after all, an autocracy, which makes its success even more remarkable. Imagine a chief executive who personally manages the careers of hundreds of executives, approves thousands of corporate and product advertising storyboards, leaves deal-approval thresholds unchanged as the company grows exponentially, conducts hundreds of employee-training sessions, wallows with his team in any number of GE issues, and still finds time for sleep, a wife, and his scratch golf handicap. It is an amazing accomplishment.''

We like that so far.

JACK WELCH: You're not gonna leave it there, are you?

CHARLIE ROSE: No.

JACK WELCH: Why don't we just drop this and go on to another--

CHARLIE ROSE: He says, "Jack's disdain for protocol, diplomacy, regulators and government in general is palpable throughout the book.''

True or not true?

JACK WELCH: Generally true.

CHARLIE ROSE: That's right.

JACK WELCH: Generally true.

CHARLIE ROSE: He's got it right there.

JACK WELCH: Right, he has.

CHARLIE ROSE: Now, tell me what that's about. You think regulation's bad. You think government's bad--

Because we are living now in a time--

JACK WELCH: When we need government.

CHARLIE ROSE: --when we need government.

JACK WELCH: Absolutely.

CHARLIE ROSE: And we appreciate government--

JACK WELCH: More than ever.

CHARLIE ROSE: --more than ever.

JACK WELCH: No question.

Well, no. I don't resent government. I resent bureaucrats. I try and tell 'em this story about the blindness to total adherence to government-- that government--

I tell the story in the book of my parents growing up under Franklin Delano Roosevelt and thinking that all government people were absolutely perfect and the-- and the-- and the naivete of their thought process is frightening today after what I've been through.

But, God Almighty, we have many great government people.

CHARLIE ROSE: Government means many things. Government means bureaucrats. But also government means firemen and policemen.

JACK WELCH: Leaders. All kinds of good things.

CHARLIE ROSE: All of these people who rallied.

JACK WELCH: All kinds of good things.

CHARLIE ROSE: We are seeing the best of government now.

JACK WELCH: In every sense. In this city. In its people. I mean, in its firemen, its policemen. I mean, Rudy Giuliani has demonstrated leadership like there's-- with a capital "L.''

I happen to believe, as you know, I've believed this for a long time, the president is doing an incredible job. But I knew he would.

CHARLIE ROSE: Did you really?

JACK WELCH: Absolutely.

And you were at a conference when I said that. I said, "Who were two great leaders you thought?''

CHARLIE ROSE: Right.

JACK WELCH: And I said in March at Tina Brown's conference, "Rudy Giuliani and George Bush.''

CHARLIE ROSE: And they happened to be at the--

JACK WELCH: And I was not the most popular man at the conference at that time, you recall.

CHARLIE ROSE: Yeah.

Here's what he says.

[end of excerpt omitted from October 24, 2001, airing]

Let me continue with this just for a moment.

"Jack's relationship with Mario Monti, European Union Competition commissioner, was a case study in how not to handle the process and protocol'' blah-blah-blah.

JACK WELCH: Yeah.

CHARLIE ROSE: You don't buy that at all.

JACK WELCH: Well, I could hand three hand-written from Mario Monti to contrary.

Look, let's not-- let's take the good stuff and discard some of that. Let's take some of this--

This is a man who lost his job over this deal. This is a man who got fired the day after the deal didn't work. Now--

CHARLIE ROSE: He was--

JACK WELCH: --let's feel some sympathy. Let's feel some sympathy.

CHARLIE ROSE: Right.

JACK WELCH: I mean, he has-- he has a right to feel venom in some way about this. He lost his employment. He was fired.

CHARLIE ROSE: Because the Honeywell--

JACK WELCH: Deal didn't go through.

CHARLIE ROSE: --didn't go through.

JACK WELCH: That's tough stuff.

I understand it. I said on the front page of that story, "I've always had respect for the man.''

CHARLIE ROSE: You sure did. I mean, there was nothing but graciousness in terms of how you responded when they obviously brought it to you for comment.

JACK WELCH: Yeah, right.

I believe that. I understand his feelings. I just do.

CHARLIE ROSE: How much did it-- how great was your disappointment over that deal because--

JACK WELCH: No, it soured. It soured as they started taking it away. It wasn't all of a sudden a shock, this is what you're going to do. They started ripping it apart about halfway through it. So the last half was total torment.

The best line-- one of the best lines in the book was I was on the plane flying over and I've got some Honeywell experts with me on the plane. And we're going over with a little pad. "Well, if we give them this thing here and this thing here'' -- we're talking about $100 million here and $100 million here.

We get a phone call from our lawyers in Brussels saying they're at $6 billion now that they want us to give up and give it to our competition. We just took our book and folded it over. We were miles apart.

From that point on, we tried to make it work. We tried to put some logic in behind it, but we were dead.

CHARLIE ROSE: Did you-- any part of you say because you were coming, you had announced that you were going to leave and you had chosen your successor in a process that many admire because of the way it handled, because the competition for this number one slot was such that the other competitors that didn't win ended up in a very good place.

JACK WELCH: Great places. Great people. They got great jobs. It is--

CHARLIE ROSE: Did you view-- how did you view this, as a crowning achievement to leave with? I mean, did you think this is-- this is like Ted Williams hitting a home run at his last at-bat? Honeywell.

JACK WELCH: I didn't think that way at all.

CHARLIE ROSE: Ever?

JACK WELCH: Ever. The deal was this -- somebody else was buying it. My company was buying it. It was lying there.

CHARLIE ROSE: Somebody else was going to buy it and so you stepped in and said, "Not in front of me.''

JACK WELCH: I stepped in and said, "Not in front of me.'' Come on.

Charlie, you've got to understand, I could have made the deal.

CHARLIE ROSE: But you had to give up too much.

JACK WELCH: And I-- what good would I be? I stole a giant, and hand my successor a broken wheel? No way.

CHARLIE ROSE: What do you regret? What was your proudest moment, first, at GE? You took over when you were the youngest GE CEO ever. Replaced Reg Jones -- succeeded Reg Jones. Some say that the magic of the way GE has worked is that you were a dramatically different person than he was.

And now, Immelt is a dramatically different person than you are, even though I guess the line that continues is competence.

JACK WELCH: We'd like to think that. And I-- you know, as I talk about Giuliani's leadership, I have to talk about Immelt's leadership. He's been there a month.

Now imagine getting the job two days--

CHARLIE ROSE: Two days after September 11th.

JACK WELCH: And all these things happened here. This guy has been unbelievable. He's gone out to all his employees. He's just the same way Rudy has gone out to the city.

I call him the "Corporate Giuliani,'' if you will. He didn't cancel his analyst meeting, as many have done. He went right out there and told them, "Here's what I know. Here's what I don't know. Here's what I think. Here's what I'm not sure of.'' And captivated an audience of 300 people for two hours and told them everything about the company, seven days after it happened.

He made the demarcation line between Jack and himself so clear and made me feel 10 feet tall.

CHARLIE ROSE: Are you staying out of the way?

JACK WELCH: I haven't been near it.

CHARLIE ROSE: You're not staying. You're not taking calls from people saying, "Oh, Jack, God, man, I wish you were here''?

JACK WELCH: No, because no one feels that way, first of all.

CHARLIE ROSE: Are you taking those calls that say, "Thank God you're gone''?

JACK WELCH: No, I had the greatest run going. I had the most fun you can imagine. I got more out of that from-- you asked me what my proudest moment was.

I was in Chicago being interviewed the other day. And this is only one small example multiplied a thousand fold. The cameraman at the NBC O&O in Chicago -- I think he started at HQ. I'm not sure of the right number -- came out after the interview, came out from behind the camera, grabbed my hand, shook it and said, "Jack, you made me a millionaire. I love you, man.''

You know, I mean, that was multiplied thousands of times over. Forget what I got. I got more than I'll ever need. Thousands of people changed their lives. Their kids are going to college.

I had a book signing today with rows of people coming through, telling me, "I got my house. Thanks.'' All kinds of people.

CHARLIE ROSE: How did it happen, and is it just performance or something else, that you in this arch of CEO went from Neutron Jack -- taken after the neutron bomb which killed people and left the bomb-- left the buildings intact -- to business manager, leader, icon considered best of class? How did that happen? Is it simply the record at GE was so great? Or was it something else? Tell me.

JACK WELCH: Charlie, I think it was a misunderstanding in the beginning.

We came out of the war -- our country did -- and had the 50's, 60's and 70's with growth in the air. Germany was on its back. Japan was on its back.

What did we build? We built a military industrial complex. We built a hierarchy. We had a general called a CEO. We had generals, colonels, et cetera. And they were sitting on top of a company that could grow if it just breathed.

What happened? Foreign competition came. I was making things in the United States in 1980 in Syracuse, New York, that the manufacturing cost was more than the Japanese were selling them for in downtown Syracuse.

CHARLIE ROSE: So you couldn't compete?

JACK WELCH: I couldn't compete. So I had to take those actions. And we were the first big company to do it.

Now if those actions turned out to be wrong, I wouldn't be in this whatever people say nice about me. I wouldn't be in that situation. But it turned out to be right to liberate the people, to get the bureaucracy out, to ask them for their ideas, to create work out, to create celebrations, to make work more fun.

That turned out in the end to be the answer. It was a liberating thing. It was an energizing thing. Before big companies managed their size; we enjoyed our size.

CHARLIE ROSE: Do you think big is better because more swings at the bat?

JACK WELCH: Absolutely. Absolutely.

CHARLIE ROSE: What does that mean?

JACK WELCH: It means that people can try more. It's so important in an organization that the organization have the chance to take chances so that-- who do you build self confidence?

How did you become a great interviewer or a great commentator or stand up in front of a crowd and talk? You did it because you did it through a number of successful experiences where somebody comes up and says, "Charlie, you were great.'' That happened.

Well, that's what you have to do at work every day.

CHARLIE ROSE: My mother.

JACK WELCH: Your mother?

CHARLIE ROSE: Yeah.

JACK WELCH: Successful experiences. And that's what happens at work every day. You've got to give people-- if they just do what you tell them to do, they never get the satisfaction of reaching and trying and grabbing it. It's just-- it's so important.

And big companies in the 70's were managing, probably presiding over, their institutions. We came up with the idea of liberating the place, letting everybody free, letting the air in, letting them try, letting them fail.

I mean, we made 200 acquisitions a year, OK? Every one that was presented to me was perfect in its presentation.

CHARLIE ROSE: Except?

JACK WELCH: Twenty-five percent of them, at least, didn't work at all.

CHARLIE ROSE: Culture may be one thing.

JACK WELCH: Culture thing. Wrong bet. The wrong market. The wrong people. Any number of things.

But the facts are we weathered it and they were-- those who missed, learned from it and tried again.

CHARLIE ROSE: Tell me about Welch on risk. Risk.

JACK WELCH: More cautious than one would think.

CHARLIE ROSE: Really?

JACK WELCH: Not afraid to take them as long as they're containable. Love taking risks that I can take and not sink the ship.

CHARLIE ROSE: And the downside -- you can protect the downside.

JACK WELCH: Right. I'm always thinking about what's the downside, OK. I look like I'm a big risk taker.

CHARLIE ROSE: But you never took a risk that if you failed it would sink the ship.

JACK WELCH: Never. Never came close. That's the fun of it all. I was always taking the risk.

CHARLIE ROSE: You were always playing on the upside?

JACK WELCH: Absolutely. I always had more ups.

CHARLIE ROSE: Maybe you're not as big as we thought you are.

JACK WELCH: Probably not. I had more chips. I came to--

CHARLIE ROSE: So therefore you could take more risks.

JACK WELCH: Right. Remember in college--

CHARLIE ROSE: That's why bigger gives you more swings.

JACK WELCH: More chips.

CHARLIE ROSE: I'll get it eventually.

JACK WELCH: More chips on the table. So if you're-- if you're-- I remember playing cards in college and having my $3 allowance, or whatever it was, mailed to me by mother. And you'd be up all night playing and some guy would have 30 bucks. You could never call him. He'd raise. He'd get another hand. You couldn't call him, OK?

Well, that's what this is all about.

CHARLIE ROSE: Yeah. Does-- do you see any, any, any limits on bigness and any need for some kind of restraint at some point?

JACK WELCH: I think the only limit is the human mind, the creativity. I don't think-- there's this notion--

CHARLIE ROSE: Do you-- go ahead. Sorry.

JACK WELCH: There's a notion of the power exerted by big companies. I never felt that at all. I felt power against other companies in this poker game. Never felt it with governments. Never felt it with governments. Always felt governments had the upper hand. Always felt--

CHARLIE ROSE: Well, they did have the ultimate power.

JACK WELCH: They always have the power. You don't influence governments. There's always a discussion about that that goes on and on. You rarely influence government. You can't do it. You can't do it.

CHARLIE ROSE: Do you have any interest-- some critics -- and I mean by critics, people who review books -- have said a couple of things and I want you to respond to them. One was about introspection. We'll get to that in a moment.

Others have said they wanted to see Jack address big issues in this book, Straight from the Gut. They wanted him to talk about what corporations could do, the role of corporations in a society.

JACK WELCH: I do address that.

CHARLIE ROSE: Corporations and environment. They want to see you talk about that.

JACK WELCH: I do. I spend a lot of time on the environment. I spent almost a chapter on the environment.

I spend-- I talk about what corporations' roles are in society. And I'll tell you, I want you to listen to what I think it is because I feel so strongly about this, Charlie.

A corporation's role in society, first and foremost, is to win, to be successful, to be profitable, to grow. Because when you do that, you pay taxes. You have people who are not scared, hanging on. They give back to their community.

Fifty-five thousand GE people all over the world volunteer their time, on their own, to bring inner-city kids to graduation rates that are triple and quadruple what they were.

In Cincinnati, we had a school where five percent of the kids went to college, now it's 60 percent go to college. From GE engineers in the aircraft engine business we can give back.

So, Charlie, I've run the United Way drives for years. I've run the Inner City-- the Bridgeport drives. You go around to companies that are broke, that are busted, and you're asking for money -- "Sorry. Sorry, can't do it this year.''

CHARLIE ROSE: So your first goal is to make money.

JACK WELCH: And provide an atmosphere where people can do things. Because the whole thing is that if people are frightened of their own security, they're not going to give back to the community.

So a healthy company doesn't cut corners, doesn't cut corners on the environment, gives back its people. And all this nonsense about a corporation's role in society, it's to win. It's to have resources and happy, excited workers that can give back.

A broke company-- take a dot.com now. Go ask him for something.

CHARLIE ROSE: Well, you can't find him.

JACK WELCH: That's-- doesn't that tell you something?

Charlie, the bleeding that--

CHARLIE ROSE: Wait, wait, wait. Before you go down there, to talk about the role of corporations in society is not to suggest that-- you were going to say what? The bleeding hearts what?

JACK WELCH: I was going to say will tell you that a corporate's first responsibility is to the community. The facts are it is a responsibility but it can't be to the community if you don't have any resources to give to the community. So it's a circle, but it starts with a successful company.

CHARLIE ROSE: Let's start there. After the successful company, what's the payback that a corporation owes its-- after it's successful, after it has created an environment for its people to find themselves, after it has created programs that guarantee healthcare, that guarantee education, that guarantee for those who it's working for -- after it creates that, what is the responsibility? What is the demand?

JACK WELCH: Well, in every community we're in we lead in the giving for the United Way. That's one symbol. It's-- our number of volunteer hours of GE people dwarf anybody else in most communities.

CHARLIE ROSE: And you set that standard.

JACK WELCH: We have a volunteer organization called ELFIN. And people from any level can get into this. And they live in the community to make the community better. And the stories of reading to the blind and doing this and doing that and doing this. We celebrate the memory. We bring the best to its top management dinner for the evening. And they spend a weekend there. They're incredible.

That's what a good company does.

CHARLIE ROSE: You talk about-- you come back to this celebration thing. It really is important for people to feel the sense of recognition for contributions.

JACK WELCH: So important.

CHARLIE ROSE: To celebrate their successes.

JACK WELCH: Their successes in anything they're doing. Little victories. Big victories. Medium-sized victories. Inside the company and outside. We celebrate our volunteers.

CHARLIE ROSE: What's the issue with the Hudson River and GE? Why can't-- go ahead.

JACK WELCH: Go ahead.

CHARLIE ROSE: No. I mean, GE is not for clean rivers?

JACK WELCH: GE is totally for clean rivers. GE believes to its toes -- at least it did till the day I retired. Now I'm not speaking for GE, but I'm telling you the position we held during my time there.

We believe that disrupting a river that has cleansed itself 90 percent since they made a decision in '84 by government not to dredge because it was environmentally unsound, has improved by 90 percent. To go in there and remove eight billion pounds of mud by chasing molecules in a river where you can swim, where you can drink, where the fish and where the birds are coming back.

Let me tell you the risk assessment, EPA's risk assessment on fish, eating fish from the Hudson. Now eating fish is banned from the Hudson right now. But if you did eat fish, if you ate a meal of fish a week for 52 weeks a year, for the next 40 years, the probability of you getting cancer -- the probability, the possibility of getting cancer -- would increase by one in a thousand, Charlie.

Now to do that, you'll dredge for the next 10 years and you won't take out things as discreet as this. You'll take out parts per million. You're dealing now with five parts per million, you'll take it down to two.

CHARLIE ROSE: Do I hear you saying that we took the position that we did about dredging the Hudson River because we believed it was not good for the river, not because we didn't think it was good for GE?

JACK WELCH: We absolutely did not take it for the-- we took it because it was not right for the river. And the people up river who would be the victims of this dredging proposal, by a three-to-one margin, don't want it done.

CHARLIE ROSE: Then why are all these environmentalists and my friend over-- Bill Moyers so upset with you.

JACK WELCH: 'Cause you all live down here. You all sit and talk to each other. And you all think--

CHARLIE ROSE: "All.''

JACK WELCH: Right.

You all think that-- New York intelligentsia.

CHARLIE ROSE: Wait a minute.

Why do you you-all, you-all, you-all?

JACK WELCH: New York intelligentsia feels better to say that.

CHARLIE ROSE: Yeah.

The economy, today.

JACK WELCH: Yeah.

CHARLIE ROSE: Tell me where you think we are and what the tragedy of September 11th -- in terms of confidence -- has added to our difficulties and added to the recovery challenge.

JACK WELCH: Charlie, we've been going down -- decelerating -- for a year. Started last October. We're now a year into it. This would have been a negative GDP in my opinion in this quarter under any set of circumstances -- zero, minus .5--

It's been exacerbated by this incredible tragedy. Things are rough. We're in a deep, deep economic slowdown. Now, certain industries are hit much more than others. And you know the ones that are hit.

But we have an economy that's a $10-trillion economy. We have a budget that is balanced or maybe a little surplus. We've got inflation running well below interest rates.

We've got all the economic tools to fix this in a normal economic time. We would have stimulus packages. We would reduce taxes. We would do other things and this economy will recover some time between the second and third quarter of next year in my opinion.

But now we have laid on top of that something we've never had before, something that's gotten into our psyche. And how much uncertainty that's gonna create you're gonna have to get a smarter person than me to pick the shape of the recovery.

CHARLIE ROSE: Yeah, right.

We feel how much-- how deep is the vulnerability that shakes our confidence.

JACK WELCH: Right.

And I don't know that answer. I'm not smart enough to know the answer.

CHARLIE ROSE: You're troubled by it, though.

JACK WELCH: Yeah, I am.

But I-- but I'm confident that this strong economy will get back. It may be a longer haul. It'll be determined a lot by what happens, how effective our government is, how effective the policies are.

What I pray for is that we keep this bipartisan focus, that -- if we push for a tax cut for one group -- the other group gets an equal amount, that we don't rip ourselves apart publicly in any way, shape or form.

We need this wonderful expression we're seeing right now in Washington that makes us so much stronger. And, you know, when people have a pot of money to start givin' out, favorite old chestnuts have a tendency to come out.

I hope the pain or the gain is equally shared here so that we don't have any split. I think that's absolutely critical for the policymakers to live by.

CHARLIE ROSE: Clearly we'll have to wait and see. We don't know. No one knows.

But clearly there is some reason. There is a hope on lots of people that out of this tragedy comes a unique kind of opportunity. You know? That, when you face what we've all had to face, what comes out of it is some sense of something we'd forgotten about, that we're better when we work together.

JACK WELCH: Well, that's--

CHARLIE ROSE: Not that you don't have healthy debate.

JACK WELCH: Right.

CHARLIE ROSE: Not that you don't disagree on priorities.

JACK WELCH: Right.

CHARLIE ROSE: And not that you don't disagree and means.

JACK WELCH: No question, but look at how we came out of the Second World War. I mean, we came out as a powerhouse. We came out together. The patriotism was everywhere.

I mean, you can't-- being in the Midwest this week, it doesn't have the same shakiness as here. It is a little further removed.

CHARLIE ROSE: That's the media.

JACK WELCH: Yeah.

CHARLIE ROSE: Proximate.

JACK WELCH: But the flags are every bit as wide. The flags are in every corner and on every fraternity house on college campus had flags hanging from them.

Remarkable.

CHARLIE ROSE: What do you want to do now? 'Cause you-- I read about a deal you have in which you're gonna be part of a group and some former GE executives, a kind of-- not-- You've got a bunch of capital -- six billion plus -- and you make investments and what I loved about your deal was they said, "Jack is gonna be an equity participant, but he'll have no responsibilities.''

JACK WELCH: I'm not sure they said that, but it might-- the general idea--

CHARLIE ROSE: It is the general idea, isn't it?

I said, "I want Jack representing me the next--''

But tell me, seriously--

JACK WELCH: Yeah.

CHARLIE ROSE: Tell me about your future.

JACK WELCH: My future's gonna be to try and build -- working with CEOs, helping them -- build this modern corporation where everyone counts, where people have a chance to grow, where we build leadership teams where you can pick from five or six to make the next CEO, to work on leadership, to work CEOs as partners -- not to run their company, not to meddle in their business -- but to work on their management talent.

And I'm gonna-- and I now have six companies.

CHARLIE ROSE: Yeah.

JACK WELCH: And I'm very excited about it. I think it's gonna be a thrilling time.

CHARLIE ROSE: You know what I think? I think in the end, too -- and I really do believe this, whether rightly or wrongly -- that a lot of principles that have to do-- that you reflect here [points to book] in terms of your own internal beliefs that made a difference in a business have to do with lives, too, have to do -- in a sense -- enhancing, fulfilling and maximizing your own life experience.

JACK WELCH: You said it better than I'll ever be able to say it.

And the life experience of as many people as you can touch. Get in the skin of ask many people you can touch and give them the chance to flourish and grow and grow as high and as far and as fast as they can.

CHARLIE ROSE: Jack, Straight from the Gut, Jack Welch with John A. Byrne.

Britain has got a different title.

JACK WELCH: Yes.

CHARLIE ROSE: The subtitle is called what?

JACK WELCH: Lessons I've Learned Leading a Great Company and Great People.

CHARLIE ROSE: That's what the book is about.

Thank you, Jack Welch...

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