[NOISE] Well
Jack, we're
delighted to
see you here.
You said you'd never write another book, what made you write this one?
>> Well, I went around the world for the last three and
a half years, talking to audiences like this and listening to questions.
The first book was an autobiography.
It was all about me.
And this book is trying to codify some things
that I learned in business, in response to these questions.
So this book, hopefully, is about you.
And hopefully about audiences and some of
the things that people have been challenged
by in picking a company to work for, working for a bad boss, or anything.
>> The book's called Winning, so what is Winning anyway?
>> I think Winning is without question about defining what your objectives are.
Clearly laying them out, and then going for
it with everything you've got, and getting there.
>> So one of the things in the book that you're quite outspoken about is, candor.
You say let me tell you about the biggest dirty little secret in business.
That in every culture, in every country, in every
society, and social class there's this lack of candor.
Why is that so important, why is it so hard, how do you change that?
>> I think you have to build an organization, it's quite
good in a small start-up, where people are all comfortable with each
other, they know what the mission is, they understand the values,
they reward the values, and they go after it with a passion.
In a bureaucracy, it tends to get more and more subjective.
The pressure is from the side, from the top, from underneath.
People are afraid to speak out.
And what it does, it slows you down.
It, really puts gum in the years.
And it really doesn't improve the workplace.
People, I'm being told what they're doing
well and how they can improve the evaluation
process is not frequent enough we get into this I'm too kind to evaluate my team.
This morning I was in San Jose with about 500 executives from
start up companies down there and some pretty strong tech companies Intel and
others, and I asked the 400 people how many people thought they
had straightforward relationships in their company
with their peers and with their associates.
I didn't get four hands.
Four hands, that's frightening.
It's sort of frightening that people are sitting in organization and don't
feel that people are laying it on straight and telling it like it.
What's your experience?
>> I was lucky to work for a good
company where over time we really developed this honest feedback.
But it wasnt that way when I first joined.
>> It takes real time.
>> it takes real leadership and commitment, yeah.
>> And [UNKNOWN] reward that value.
In the end, you get the behaviors you reward.
If you reward candor, if you reward straightforward talk, you will get it.
If you, on the other hand, don't do that.
You'll get close to the best behavior.
>> You've also been outspoken, not only on candor, but on differentiation.
That part of candor's to be honest with people about where they stand.
And, you're noted for this top 20, middle 70, bottom 10,
>> Noted is a kind word.
[LAUGH] [NOISE].
>> Tell us a little bit more about differentiation, and,
shouldn't we be a little tougher on student grading, perhaps?
[NOISE].
>> Well I think you, I think you probably get a differentiating school.
And you recognize who the top students
are, and you recognize where the middle is.
And you recognize the bottom.
The thing that's crazy is, why is grading and differentiation okay in the
fourth grade through getting an MBA, but it in no way is applicable to adults.
It's nuts.
Why you would end up having this false kindness, where you
don't tell people where they stand until you run into trouble.
So on my view is, take care of the top 20
and this isn't a permanent thing, it changes all the time.
But take that top 20, make 'em feel loved.
How you give them cash, give him rewards in the soul, in the wallet.
Do everything for him.
That middle 70, show them what they need to do to get in the top
20, and that bottom ten, tell them not
that, that why they basically should move on.
And don't do it in a guillotine job.
Have a conversation that goes over a year or so about what their shortfalls are.
Tell them they're in the bottom ten.
Don't give em a raise of any kind.
Don't give them 2 or 3%, that fake raise that keeps people hanging around.
Cut off the, the salary issue and then ask him to leave.
And, let's say, over the next several months,
work together to get you in the right place.
That's so much better.
In these crazy situations, companies in, in the Valley here, they run into trouble.
What'll they do?
They gotta cut costs.
They, they gonna have a layoff.
They walk into people and they say, look, Joe, Mary, we've
got to cut you back, we've got to take you out.
We need to cut costs now.
And they say why us?
And they say, but you weren't that good.
And then they say, but we've been here 12 years and nobody ever told us that.
That's what happens in this false kindness thing.
People get misled.
And then, if you do it too late in your career, I
maintain that not having the differentiation
is the cruelest form of manager.
The cruelest thing.
If you have the responsibility, if you
lead people, they should know where they stand.
As you go out from school here now, with shiny MBAs,
when you go work with somebody, initially it's gonna be about you.
You'll be a leader.
You'll be an integral contributor, staring in something
and starting something up or doing something else.
But it'll be about you.
The day you become a leader, managing
five, eight, ten people, it becomes about them.
And your future is tied to them.
You no longer do the nitty gritty little stuff.
You build them into great people.
And you get a kick out of that, and then
you get the benefits of their success as you go up.
If you keep doing what you started doing when you joined the place, doing your job,
your project rather than building your team, you go nowhere in a layered society.
>> In the book, you use candor and differentiation
and a few other things, mission and values and voice
and dignity as what you call first principles, you just
got to have this in a company to be successful.
Are you surprised at how few organizations really have these first principles?
>> Shocked.
I mean it is, mission and values are
the most gobbley gooked conversation pieces in companies.
I mean, a mission statement ought to be so clear.
It ought to exactly know where you're gonna go.
Define it clearly and go after it.
Not have this mission of goodness and all of
these other words that get in our mission statements.
Make it very clear what you want to be.
And then have the values, which I call behaviors.
Values in missions, values are behaviors, the
behaviors you want to achieve that mission.
And then you measure and reward as I
said in the sole and the wallet, those behaviors.
And when people don't exhibit those behaviors and you want them
and you finally have to part company with people because they didn't
exhibit the behaviors and values you wanted, you can't say that
they went home to spend more time, personal time with their family.
You gotta say here's why these people didn't make it.
They're good people, they're this and that but they didn't have our values.
One of the craziest things you see in corporate America, it's run
by lawyers in some ways, where, where you end up with integrity violations.
And people say, well, we had to let so and so go.
They want to spend more time at home.
You got to say, you got to hang them publicly for doing bad stuff.
You've got to set the tone of your values in your behavior, and
if you're doing it right, you can't be afraid to put it out there.
And so I think that you set a mission, you set
the behaviors, you operate in an open candidate, you said it
takes time, build trust, transparent fashion and you give every employee
voice and dignity and you've got a foundation that means something.
>> You mentioned trust and I know in your section, in your chapter
on leadership and one of the key things leaders have to earn trust.
Nobody gives it to you, you've gotta go out and earn it.
Do you, I'd like to ask you a
question today with compensation and benefits and stuff.
Do you think it's possible that executives can be paid so much
that it's really hard for them to win the trust of their people?
If they don't think it's right or fair?
>> We, we have to lay out clearly what the game is.
I mean, we have a free market system.
We have capitalism.
It has its flaws.
There's no way to come to a perfect answer
to every single, what the absolute salary ought to be.
But it ought to be pretty transparent.
People ought to know what the opportunities are, and, and
the opportunities to grow on, and, and to get it.
And I don't think salary into a, into a lack of trust issue.
I think if you, now if you got a jerk boss getting too
much my money and not building a team, of course you'll have it.
But if you're building a team together around a common vision, you alone have it.
But the whole issue of salary and severance, and
all these things that are big popular subjects today.
And, severance in particular is, is one that drives everyone crazy.
And, the problem with severance is, we just one with Callie PP
Arena here in this area, where she got $22 million for leaving.
The problem is not Callie with her 22 million.
The problem is the board at Hewlett Packard that
did not, did not have a succession plan in place.
So that when the existing CEO failed, and they threw him out, they
had to go out and get somebody, and they had to offer them the world!
To get them.
If they had that succession plan that wouldn't have, most
of these problems come at the front end of these deals.
They, they get written up and beat up on the
back end, but the problem came on, the front end.
Tyco for example, you probably all know about Tyco
and Krovloski and all the mess that they had.
They didn't have a succession plan.
So they went to Motorola to get the number two person there, Ed Breen.
Now Ed Breen is not gonna go to
this tarnished place that's a disaster without a package.
Well they had backup [UNKNOWN] up, to get, to get Ed Breen to come there.
Ed Breen had had all the negotiating tools, because, there was nothing there.
When, when we had our success session at GE, we had three contenders at the end:
Jeff ML, Bob Nardelli, who went to Home Depot, and Jim McNerney who went to 3M.
All very capable.
All equally capable in, in many, many ways.
Jeff got the job.
Bob goes to Home Depot.
They didn't have a succession plan.
Jim goes to 3M.
They didn't have a succession plan.
Jim and Bob, Jeff got a raise.
Nice going, Jeff.
Congratulations, you got a raise.
[LAUGH] Jim and Bob, the trucks were loading the money on the back of the van.
[LAUGH] Cuz those two companies didn't have succession plans.
So my argument is, succession plans are the answer to controlling these outrageous
severance and these other [INAUDIBLE] where you don't have these deals.
>> Bob was here earlier in the year for a view
from the top, and he looked like he was doing well.
[LAUGH]
>> You say something in the book that, didn't
shock me, but it may shock a lot of people.
And that is, you said, you know, the chief human resources officer
is at least, if not more important, than the chief financial officer.
>> And I'll tell you, we're not even close to what we have to be in this area.
[COUGH] most unfortunately, I was in, I was in Mexico giving a
talk with my wife Suzie, who, by the way, wrote this book.
So I, I'm just a mouthpiece in this game.
We were in Mexico for 5,000, 5,000 HR people were, were there.
We asked, I asked a question to the audience.
Raise your hand if you're perceived by the organization to
have a seat at the table equal to the CFO.
I didn't get 50 hands.
Now if I asked that question at GE, there
isn't one HR person that wouldn't raise their hand.
Every one of them knows they're equal to
or more important than somebody counting the numbers.
I always liked to use the, the analogy if you were coaching a baseball team or a
football team, would you wanna hang around with
a team accountant, or the head of player personnel?
If you wanted to build a great team.
The accountant can't do a damn thing for you, except tell you how
much money you got left to offer to Barry Bonds, or anybody else.
But he can't do much else.
The idea that CEOs hang around with the CFO, the grunt.
The guy with the green eye-shades is crazy.
The HR person is the person that if, if
they're not the, most companies may make them the, uh-.
Picnics and plant newspaper people and the dental plan fell out the forms.
But if they use them right and they build seasoned executives into
the, these jobs they'll be an enormous aid to building great teams.
And so we, we use the line that great HR executives
are really [INAUDIBLE] in listening to people and parents in dissembling kids.
And so they're saying there's an enormous need to
have these HR people be upgraded, be the stars of
the organization, by not having HR professional's amendment, but taking
people that are in line jobs, that have a touch.
And, and [UNKNOWN] the reason why HR convinced the only reason
that HR is not received as a very important function in companies.
Everybody thinks they're HR experts.
How many of you don't think you're a people person?
[LAUGH] Okay?
I mean, everyone thinks they are.
Who, who needs a helper?
Is the view.
It's wacky you need somebody that's there and I'd like to see
a Sarbane's Oxley law that went in, that that were to hang triggered
companies that aren't straight forward with
the appraisal process that have the same
rigor around appraising and evaluating people
as they do around the financial statement.
If I didn't have my way they'd have a Sarbane's Oxley that would apply to that
human resource process to put discipline in the
company then you get better [UNKNOWN] from it.
>> As long as we're on finance.
Another thing that goes on a lot in
the finance industry is merger and acquisition activity.
You have a chapter on M and A and among other things you
say that cultural fit is more important than strategic fit.
>> Or certainly equal to.
>> Or at least as important.
>> Yeah.
>> And that it, but there is no cultural fit side to an investment bank.
>> That's why I, that's what I found out.
>> [LAUGH]
I mean, look I, I'm sure a lot of you are
going to the Morgan Stanley thing, Goldman Sachs and, and some of
the great firms on Wall Street again but you, you all
know because you're going there it's, you, you eat what you kill.
And [LAUGH] it's an environment around where the measurement
system is really my bonus, my bonus, my bonus.
And it's a whole different pattern of behavior than it is
in a company that's trying to transfer ideas across businesses as
a, a a, a, a desire of boundaryless thinking is moving
people around the world to build leaders and our individual contributive stars.
It's a whole different culture, but back to the, the MNA chapter Bob.
We spent a lot of time going over some of the aspects in MNA.
One of the silly things that hap, well first of all,
one of the, one of the big, big sense is deal heat.
And we're seeing deal heat right right now.
Money is relatively inexpensive.
Look at the the bidding for MCI.
I mean, it might have been a good deal at 6 billion.
I don't know how, other than, two investment banks trying to make a killing,
how it can be a good deal at 9 and a half to 10.
and, and now I don't know where it's, it's gonna stop.
But as once you get a deal heat, all rationality goes.
So we talk about the, the deadly sins of mergers and acquisitions.
First one is [INAUDIBLE].
Young investment bankers like you will, will be driving poor dumb CEO's to do
some of the stupidest things in the world, [LAUGH] when they get at a deal reached.
And, and their challenge is to kick you out as it gets too hot.
[LAUGH].
>> Not Stanford NBA?
>> No, no.
>> [LAUGH].
>> So and, and, and we talk a lot about the conqueror syndrome, where you go in
and you, you have all the answers and you
throw out all, all the knowledge that was there.
Because the, the, the, the conqueror wins, we talk about for, for, for a quiet
person, the dumbest thing that quiet people ever do, is when somebody buys the
firm they're at, they pout about the deal and they resist.
Let me tell you, if you spend billions of dollars for a company, and you show up
to see the new people, and they're just
giving you a sour face and a resistance look.
People will, will keep positive buy in people with average
IQ a lot more than they'll keep resistors with brains.
It's a crazy syndrome but it happens all the time.
That we sisters are not an attractive bunch in the take over process.
You've seen that in companies you've been involved in.
So we got a chapter here in winning
that, that, deals with all the personal elements.
Seven deadly sins and they, emanate in, in, in the book.
>> You also have a chapter about a subject that's very much on
the hearts and minds of our students that is called, the right job.
And you say a great job can make your life exciting and give it meaning.
The wrong job can drain the life right outta you, so how do we get the great job?
So I think that's [LAUGH] what people wanna know.
>> Page 257.
[LAUGH] We have a grid for five, five clear cut things to then think about.
One is people.
When you look for a, for a job, be sure you look for people that are like you.
They laugh at the jokes you, you laugh at.
They think the way you think.
They have the same sensibilities.
If you're a nerd, go hang out with nerds.
[LAUGH] But don't end up confusing the issue.
Never have to put, put on a persona to be in the job you pick.
As far as opportunities are concerned, always go to a
company where there're smarter people around you than, than you.
Where you can learn where you can grow.
Don't go to a place where you're gonna be the smartest person in the place.
It doesn't do much work for you.
Now, I'm, I'm all for, for, for startups and, and, and entrepreneurs.
And that may be right there, if you've got the idea, and you
got the vision and you're going after it and I applaud that totally.
But if you're going to a company, that's worthwhile.
Options are the third thing we talk about.
If you're going to a company
and you're not sure exactly what's right.
I would go to account company that has a brand.
A brand counts.
Whether it's Microsoft, J and J, GEE, you, you, you pick the company.
Wells Fargo, you pick the company.
You pick a company that has a brand because if things aren't right for you in
your first job, your brand will be very important as you look to the next job.
And people, in the company screen we used
to always want wanna hire people from DuPont.
They probably weren't any smarter than anybody else, but we thought they were.
And the same thing's true at Microsoft.
People around here wanna get a Microsoft person.
And, and they probably have a pot full of duds.
But nevertheless, [LAUGH], it's, it's a it's a wonderful,
it's, it's another one of those chits you have.
you, you're gonna ask [INAUDIBLE] when, when he comes here.
>> Whether he has a pot full of duds.
>> Of duds.
>> Yeah, right.
[LAUGH].
>> No, but have, but having options based on the brand is, isn't a blunt.
The, the fourth one is ownership.
Own the company you're going to.
Don't take responsibility for the job, job you take.
Don't blame it on somebody else.
My mother wanted me to always live here.
I've got a spouse and I can't travel.
If you're, if, if that's the case, make that deal going in knowing it.
But don't then come home and kick the dog
or punch the wall because that, that's what's happening.
And finally, work content.
Be sure the work turns your crank.
Don't go to the job for an extra $10 or $15 or whatever that number is.
Go to the job 'cuz the work turns your crank.
It really turns you on.
Excites you every day.
That's what you gotta work for.
You can't go to one because, it's, well, it's
a job but now as I look for another one.
The money, the money's good I don't like the work but I, but
I want some money for a while until I get work I like.
I mean those things don't work.
So I think this grid is worth, I, I gave this grid to my, to
my radiologists' doctor 'cuz I had some back problems and I wanted to play golf.
And, he gives me needles.
With steroids to try and get the back to calm down.
[LAUGH].
>> So I gave him the page 257, and he's got his lead apron on
and he's givin' me the shots and he's sayin', sheezus, I gotta get outta here.
[LAUGH].
>> He said, I don't like any of these things that I'm doing.
I don't like the people, I don't like the work.
[LAUGH].
>> You also have a chapter on a subject that's very
important to a lot of our students, and that's work life balance.
And you say, look, you can get it, but you have to earn it.
>> Yeah, I think it's right out the crack question Bob, I, they, they're a company.
You wanna be in a family friendly, friendly company that's for sure.
But I do think the, the work life bad balancing is not in a company brochure.
That's a recruiting tool.
What it really is, is an old-fashioned chit system.
You over deliver, you make your boss look good.
You put chips in the bag.
When you need flexibility, whether it be for ballet or whether it be for yoga or
whether it be for a kid that, whatever it is, you pull the chips back out.
But it is a old fashioned chip system.
And those that asize and those that deliver get to earn flexibility.
And it's something that is clearly earned.
And it's not something that is handed to you at the beginning of a game.
We, we tell this story in the book of this job where
a friend, a friend of ours was running a small operation, 60 people.
One of the women in the job had a second child.
She had been in the company 8 years, she was a real star she came in and said look
I, I wanna work at home on Fridays and Mondays
and, come in the office for 3 days a week.
Is that okay?
And they said, absolutely you're doing a great job.
You're doing it fine and then they're, they're gonna do it.
Immediately, down the hall prances this young man 6 months out of
school, and he says, I'd like to get Friday off and Monday off.
And, the boss said, why?
He said I wanna practice, perfect my yoga practice.
And the boss, she, she said, no.
No way.
And he said, you mean to say you're
making a judgement, and you're, you're not qualified, I'll
tell you that right now, to make a judgement
between motherhood is more valuable than my yoga practice.
You have no right to do that.
And she said I'm not making that judgement.
I'm making the judgement that you haven't earned a thing in the 6 months you've
been here, therefore, you don't get the
flexibility, you're barely doing your job now [LAUGH].
So, that's the way it's always going to be.
It's, you deliver, you get flexibility.
You, if every time your boss has a report, or needs something, desperately wants to
get it and you say, I can't be there, things aren't gonna go right for you.
You've gotta find your systems that allow
you to overdeliver, and then earn flexibility.
>> Jack, obviously, you've learned about management by doing it.
I mean, you were a manager and you learned
about leadership by taking on a management and leadership role.
But since you've left that active life, how much
just talking about it and going around to places like
this do you think, have you learned more by
having to reflect on it, write books or not really?
>> Oh, well, I mean, you, this is a lot easier to
reflect back on, as to how it works, than when you're doing it.
Doing it is a bunch of chaotic steps.
It now looks neat.
[LAUGH] But I mean, doing it are a series of trials and err-, trial and error.
This is codifying everything I know.
I think I've, I've learned more in the last 3
years than I learned in the first 40 at work.
>> Really?
>> Just by understanding what I did, or what we did.
How people responded.
What worked and didn't work?
I mean, when you're, when you're doing it, you're in the battlefield.
Shrapnel's coming from all sides.
You're not thinking through a lot of these moves.
I think hopefully, this book will give people some insights that can be useful.
I mean I, I'm a lot smarter writing it today than I was when I started.
So I'm I'd say that I've learned a hell of a lot now.
>> Thank you very much for being here again.
We really appreciate it.
A question that we've been debating in the Government and Politics Club
was actually raised by Obama and the duds I guess of Microsoft.
>> Now that, don't overstate that case, [CROSSTALK] I said they
may have a few duds in the middle of all of Microsoft.
We won't misquote you, Jeff.
>> Just Kidding, just kidding.
So one of the, the issues they recently pulled back their support for
this bill to, for gay rights, I guess in the state of Washington.
And so the question he raised, and I'd like to hear your view
on, is how involved, or where do you draw the line as a
corporation in social policy and what's your view on the involvement of
corporations in social policy that may not directly relate to their business per se?
>> You know in my view, and, and don't forget I'm from a different era.
My view was clearly that you stayed out of that.
That you didn't get involved in government social policy and that
GE state 18 miles is away from it during, during my time.
The time I don't it's our business right?
Our, our job is to be competitive,
provide valued products and services that create jobs.
And create an environment where people can grow and flourish.
That was our job.
And to be non-discriminatory.
But not to go to tell, [UNKNOWN] involve
ourselves in government pol, policy regarding those things.
Social policy.
[BLANK_AUDIO]
>> Next.
>> Yep, thaks.
So here at the business school.
We are given a lot of models and a lot of ideas and we spend a lot of
time thinking and talking about what we would do
if we were in certain situations or with certain information.
One of the things that still bothers me a bit
that I'm hoping you can shed some light on is,
when you're out working it's my, at least, past experience
that you're overwhelmed with information, that it's not given to you.
In a, you know, these are the three things you oughta think about.
So pick a model to put it into.
And if you can shed some light for us on how
you take maybe 1,000 pieces of information, find the 5 that are
valuable to make a decision as a manager, and then, then we
can apply the, you know, whatever model we have to those [INAUDIBLE].
>> Well I, let me just start out by saying, the day you go
to work will be the last time you'll think about a model, I think.
[LAUGH] Okay?
[SOUND] [LAUGH] You will be involved in real life situations.
[COUGH] Well your, [COUGH] excuse me.
Well your pattern of recognition will come, come into play.
Where, where all your experiences will build, and build,
and build til where when you see something, you'll act.
Or you'll say for example, the real estate boom is going like
this and you'll drive into a town and you'll see 50 cranes everywhere.
And some cherubic kid will be in, not you, but somebody
5 years from now will be in pitching you on, and
one more reel, just one more building, and you'll say, look
I've seen this before, these things don't grow to the sky.
There's way, there's o, over capacity now and there's cranes as far as I can see.
That'll be more valuable insight to you than any of the models you study.
You'll say get out of here, we've done enough in this segment in this cycle.
Let's get him on the down side when vacancies
are high we can buy a third on the dollar.
And, and so you'll give a whole series of
life experiences where your pattern recognition will come into play.
You'll meet people in the interviewing pro, process.
You'll do X % for 3 or 4, 4 years of hiring.
You'll get better and better but you'll never get perfect.
But you'll spot a phony better.
You, you, you'll understand that degrees mean one thing,
but the day after they show up degrees mean nothing.
It's really what they can deliver.
So all these things will come to you, from that.
And I, as far as being over deluged, I, I never found that to be a problem.
I, I, I always found, you know, you're always short of data.
You're really always short of knowing the final answer that's why you gotta go.
And you can't wait for all the data.
I mean anybody can make the decision in hindsight.
So you have to go with your gut, based on
the experience, life experiences you have had to hire, to invest.
The fire, all those things.
>> Thanks.
>> We have a question over here.
Dr. Welch, what is most important to you and why?
>> [LAUGH].
>> You realize Jack, that's a question we ask all of our students that are admitted.
What's most, what matters most to you and why?
>> I, I think it changes in time.
If I were here at this point in time getting
a job and paying off the loan would be highly important.
[LAUGH] All right?
[COUGH] at my stage in life, teaching, learning and money is not important.
So teaching and learning is absolutely critical to me.
I love the learning process.
I love the being a better family per, person than I ever was when I was working.
I, so it's not to give back here.
I like gi, giving back.
I teach principles in the, in the New York City school system.
I was never gonna go teach in a city's principles in New York City, but
when I was in my day job and today I do that, I love doing it.
So and I think things change, I, I don't think at any one moment in
time I think at any one moment in time that you, you can have the answer.
But as you go forward hopefully, things will change.
So, I, I don't have a particular thing
now, other than learning and teaching, and giving back.
[BLANK_AUDIO]
>> Where's Derek?
Should we admit him or not?
[LAUGH]
>> I had a question around, sort of, the
ethical problems we've seen in a lot of corporate America.
>> Yep.
>> And my question for a senior executive like you is,
is GE's ability to stay out of these problems based on,
you know, each executive reflecting on what sort of decisions they
wanna make before they become into situations that could be gray zones?
Or is it more about setting up systems around you
and people around you to help you make the right decisions?
>> Clearly the latter.
You couldn't have 350,000 people without systems.
And you don't have the perfect 350,000 people.
But you have, you don't see old line companies getting in fundamental trouble.
Because they've done everything wrong over the last 100 years, [LAUGH]
and there's a simple, when, when I joined GE, the first
6 months I was there, I was quizzed constantly about price
fixing, cuz GE come off a price fixing case in the 50s.
So policies were in place, we'll never do a price fix I don't
think again, because we've all been trained we have 18 ways to catch it.
In the 80s when, when I was CEO, and Cap Weinberger was going through
the $400 hammer, and the, and the toilet seat that cost $600, et cetera.
And they had a big fraud waste and abuse thing.
We had time CAD mess.
And some guys were, were putting projects
on one thing, and versus another pro, project.
Now in the organization.
And we had a fine, and it was a big scene.
We'll never have one of those again.
I mean we may have one, but it won't get any, any size, because
we got 18,000 policies and quizzes and tests to go through to solve 'em.
So, process is what happened.
If, if you go back to the Enron and the [UNKNOWN] cases.
This is a classic case of what can go wrong.
Enron, a good pipeline company, got energy from point A to
point B, had good processes in place, but it was boring.
So they decide to go into trading and they get the slick back MBA's
with their suspenders and the whole program
and they go out and start trading electrons.
First energy, then electrons, then everything else.
And, and then, and then broadband.
They start [UNKNOWN] but there was no culture to take care of that.
There was no rules of the road.
There was no processes.
Arthur Anderson.
Arthur Anderson used to be green eye shade grunts for 100 years.
They were a great accounting firm.
There wasn't enough money in accounting.
So they entered consulting in the 80s.
And you're all familiar with, you know, what's now [UNKNOWN].
But that was a piece of Arthur Anderson, on the consulting side.
They actually ended up in court in the
90s over dividing the profits between the two branches.
Accounting and consulting.
Now, when you've got that, that sense of, in a, in a company,
how can you have values and, and processes to control what was going on?
They were chasing the money.
So, breakdowns come when massive cultural changes occur, or
when there are no systems in place cuz com, companies
have started, like WorldCom, from a motel in Hattiesburg
Mississippi with a net of a bunch of small acquisitions.
No integration, no processes.
So the, the answer to your question is clearly the latter point you made.
Companies have to test I mean in Gena for example their online tests that
people have to pass to to the, before they can go to the next job.
It's all about integrity and violations that gray areas that might occur.
So, company does spend a lot of time and rigor to ring that out of the system.
[BLANK_AUDIO]
>> We have a big queue here.
Let's work it down a little bit.
Next, from the left wing, here.
>> Jack growing up as a kid, the big thing you
heard about GE was GE, we bring good things to life.
Since you've left, the models changed to GE imagination at work.
I guess my question to you is what does that really mean and
how do you see that fitting in with the direction of the company?
>> Well I think that they, what they worked out was [COUGH] based
on my best understanding, they looked at we bring good things to life.
And it looked like it was your father's program.
And imagination at work, convinced some ad kid that that was more young, youthful.
So, new, new team, new eyes, new slogan.
Nothing wrong with that.
That's a view that they have now of going after that's what change is all about.
And it's supposed to be a more exciting forward looking image for the company.
But that's, you know, we'll see.
What, what, what really matters is, is the company delivering and they are now.
We've just had a great quarter, we've had a great year and and
I, and I don't think whether the slogan changes or not is is critical.
But I'm, you know, I'm totally supportive of it.
[BLANK_AUDIO]
>> Thank you.
You've referred several times today to giving people
rewards of the wallet and rewards of the soul.
I'm wondering if you could speak a bit about how as a manager you thought
about motivating people by giving them the right
combination of rewards that would work for them.
>> Yeah.
I would, [COUGH] here's one of the problems.
If, if, if you asked managers tomorrow, if you all went around and did sort of
a middle managers and job managers you, and
you asked the question, do you celebrate enough?
You would be shocked at how everyone will say no, not here, we never celebrate.
You know, it never happens.
One of the things you can do is, when you go out, is have small celebrations.
For every little victory on the way to reaching your vision.
Excite people, give them better jobs.
Send them off to training.
Do things for them that aren't particularly
right on the button merger but they're recognition.
And you gotta do that as a, but again, plaques don't substitute for checks.
And so you've gotta have a combination of checks and plaques.
And you can't, and you can't, Investment banking is mainly checks.
But in most corporations, people try and get that balance right.
And recognition, awards, patents, all that stuff can be based on celebrations.
And I think that's the job of the manager.
To make, to come up with that balance that
feels right for your team that turns them on.
But, go ahead, follow up.
>> Thank you.
And how can you figure out what's right for your team, given that
each of us would have a different answer to what matters most to us?
>> Because, 'cuz I can't give you the, the concrete answer you [UNKNOWN].
You know, your question just raised that each of you have a different view.
Your job is to sense that remember, the day
you become a leader it, becomes about them, right?
If it becomes about them, your job is to walk around with a can
of water in one hand and a can of fertilizer in the other hand.
[LAUGH] And think of your team as seeds and try and build a garden.
Now you'll up with some weeds.
And you're gonna have to cut out some weeds.
[LAUGH] But, that's your job.
It's about building these people, you know in my case, if, if
they were dealing with me, they'd wanna make me feel 6'4" with hair.
And that's what you're gonna [LAUGH] wanna try and do.
You're gonna try and do that with your team.
And, and only you will know the change.
Some people will be mo, mo, motivated by this, some will be more motivated by this,
but you'll be the if you will, the
orchestra conductor that will bring it all together.
And I can't tell you what makes them what is the right answer.
I know one thing.
Money counts.
[LAUGH] It's important.
It's an important part of the mix.
And people get all caught up too much in the plaque and the other stuff.
You can't leave that out.
But I would err a little on the, on the monetary side of the reward system.
>> Dr.
Welsh, I've admired your managerial, leadership for a long time.
So it's an honor to have you here.
>> Thank you.
When you spoke about getting our, the right job for
us through your first point, which I really loved, is
to go somewhere where we feel comfortable, where people would
laugh at the same kinds of jokes that we would.
My concern about that is that research tells us that
we feel most comfortable around people who are similar to us.
Be it in gender, or race, or nationality, or socio and economic background.
How do we maintain comfort but also push ourselves to places where we can learn
from a diverse environment and you know,
learning from people who are different than us?
>> It's a great question.
I mean, not, but you wouldn't wanna go to a place where you couldn't be yourself.
I don't think you wanna be [UNKNOWN], you don't wanna
mirror on any, everyone you, you look at looking like you.
I think you do though, wanna be in a place, we, we tell
a story in the, in the book and I'll now confess it's Suzy.
We'd talk about this woman who went to look
for a job and she was looking at consulting
firms at the time, she was I think getting
her MBA from the other school on the east coast.
And she showed up in this place, and she
came to this one place, and the three people
waiting on the top of the stairs, and she
walked in, and she fell and did a face plant.
[SOUND] Like that.
And she said hi, I'm Gracie the ballerina the ballet teacher
and the three of 'em looked at her like this, you know.
What are you, weird?
[LAUGH] At the end of the day, they gave her
an offer and another consulting firm gave, gave her an offer.
She was much more comfortable going to a place that she didn't look weird with
a firm, with a line, which I think is funny, and she thought was funny.
Hi, I'm Grace, the ballet teacher, as she did a faceplant.
And they were quite serious and stiff about the whole event.
And it didn't feel like a very good place to hang out.
Both consulting firms were great.
Top three and why not go to the place you wanted to be?
I don't think it re, it relates to, to a personal style, as much.
It's just sensibilities.
If the sensibilities are the same and, you, if, if, if you're somebody that
likes to have fun and relax a lot, work like hell, but, have fun doing it.
And you go with a bunch of pompous stiffs, that's never gonna be any fun for you.
And, and they can be all different shapes, and colors.
That isn't the issue.
It's the sensibilities.
[COUGH].
>> With
so much external praise for your
management style, how do you evaluate yourself?
And what failures or shortcomings do you think have
in your career and what have you done about it?
>> Yeah I was probably too quick triggered early on.
I probably hired people on some superficial characteristics.
You know good looking and Stanford MBA, that's generally a pretty good package.
[LAUGH] And and that may or may not be any good after a while, okay?
And so these the things that you learn.
I I, at times in my career, I thought I was too big for my breeches.
And I made some bad acquisitions, because I thought
I could buy anything, it would all work out.
I think you just, you constantly reinvent yourself.
You know what you are when you, the question that was
first asked what do you wanna be, you know, it's gonna change.
And you're gonna get smarter as you go along.
You're gonna learn so much.
You're gonna laugh at how little you know now five years from now.
[COUGH] And that's the way you gotta see it.
It's okay.
I know so much more about, how managers think, and how they feel,
and, and what frustrates them, now, than I did when I was CEO.
So I think you're gonna constantly be learning
and evaluating and making mistakes, adapting your style.
And people say, oh good, he's changed, oh thank, thank God you've changed.
The whole world's changed.
I mean if you haven't, if you don't change,
I'm not saying change every day, but you certainly wanna
move from a learning experience to a new platform
and behavior that, that you picked up because of experience.
>> You had mentioned the importance of differentiation in
in a company that what, that aims to be successful.
And you made an analogy with academic settings.
And it seems to me that the difference is that if I choose to
be as competitive and cut throat as I want to be in an academic setting.
The only potential it has is for harm is
that it might hurt me because I don't build relationships.
If I do that in a company setting because I 'm
trying to get ahead it undermines your value of, of gender.
[CROSSTALK].
>> Your dead if you do that.
In a company that's got an value you're, you're dead.
You're more dead there than you are in school.
In school, you can do it and get grades
and, and take a lousy personality and go out.
In, in a company of peers will eat you alive, and spit you out.
That's what'll happen without behavior.
So, the idea of differentiation causing a lack
of teamwork is the silliest anti-argument in the world.
And it's brought up all the time.
How do you think teams win?
Do you think the Yankees pay the second
baseman the same as they pay Alex Rodriguez?
And yet as a team they win.
The idea of, of output of high performers and low performers, not
being able to work, immediate performers, not being able to work, work together.
If you set the behaviors you want, if you say cut throat
behavior, no sharing of ideas is, is a killer in your culture.
You get, you won't get it.
If you don't allow it in you culture, you'll get it.
Let's get back to values.
You set the values and the behaviors.
But now, let me let you finish your question.
[LAUGH].
>> As, as a manager, how do you keep track of who is doing what?
How do you know, which people are being cut
throat, and which people are just doing their job?
>> You mean of all, all of your own people?
>> All of your own people.
>> You mean ten people, and you don't know?
I mean, that's your job.
I mean, that is fundamentally the job you are gonna have.
If you got a horse's ass there, doing bad things.
And you'd rather go on, you'll disintegrate your whole team.
But that's why you're being paid they gave you that job to figure that out.
No seriously I mean that's really what your job is.
I don't mean to be aggressive here but that's what your job is.
>> [LAUGH] I was hoping you could share
some insight into how you manage your own time.
Particularly when you were heading a large company.
I'm sure everybody wants a piece of the
CEO, everybody wants to talk to the chairman.
>> You know, I, I knew what my job was.
I really understood that my job was not managing to find
a new comedy, build a jet engine, I build a medical scanner.
And within, it's an impossible job.
But I knew my job was building people, building talent.
And I came to work every day thinking about the people process.
And thinking about evaluations, when I went to factories, I sat down
with the union and talked with them about how things were going.
More to find out what the atmosphere in the
place was than to find out the specific, specific grief.
So, my job, if I, if we didn't build all these leaders, that now we
have 35 or so, for, Fortune 500 CEOs and for the Dow Jones 30.
If we didn't do that, we would have failed.
Cuz my job was not coming up with a, Seinfeld com,
comedy or a, an apprentice show, or any of these things.
My job was to get somebody to run that place, who will come up with those things.
So my time, which I'll say, 65% to 75% on that.
I have three things I had to do.
I had to, pick people.
I had to, allocate resources, based on what
the people were selling me, eyeball to eyeball.
And I had to transfer good ideas.
Generic ideas across the business.
That's all I did.
I didn't have any pricing power.
Any, design issues.
Any of those things, I knew my job.
And so I allocated most of my time to people.
>> Thanks.
Dr. Welsh, I have a question on the appraisal system.
>> Yep.
>> specifically, the grading curve we talked about.
And you mentioned earlier, that, spend a lot of
time just doing whatever to keep the top 20%.
For the next middle 70% you kinda tell them to be the top 20%
and the bottom 10% kinda help them out but help them out as well.
What I struggle with that it seems to be a
zero sum game the moment you put it in relative terms.
The 70, middle 70% cannot make it to the top 20%
without someone in a top 20% falling out into the middle 70%.
In terms of the actual application of this system, is
there, is it, does it work because GE is so large?
Because if you tried it to, to implement it in a small enough division or unit.
You may actually lose a lot of good people.
>> Yeah, but, aren't, aren't you raiding the bar all the time?
>> Yes.
>> Right.
>> Tell me a better system to raise the bar, all, all of the group.
Give me an alternative.
This is one I got that I think is one of the best that I've come up with.
I don't say that it's the only one.
It what I believe is better.
Now you tell me a better one to get a better chain.
>> I believe that the message is sending a good vibe.
But what I'm, what I'm uncomfortable with is the, the bottom 10% even
if they have improved in absolute terms, we would still be asked to leave.
Is, is it not [INAUDIBLE] in, in practice?
>> Oh, it's not, I mean, you're not,
you're not, down there with a fine tooth comb.
This is all directional.
But clearly you wanna get the, you don't wanna spend quality.
It's like ha, ha, ha, having the bad egg on the play, playground.
You don't wanna spend your time trying to take somebody that's not very good.
And, you wanna take great people and make
the unbelievably great, that's what your job is.
If you waste time trying to get someone
over the bottom ten thresholds, you'll be spending a
lot of energy on something that's not very
productive, and they can and they'll do find elsewhere.
If you do it early enough in their career.
So, so I just think it's the best way to do it.
I, I, but, I, I would never sit here in say, this is the only way.
And you get it by saying, I don't like this because after, after I do it twice.
I've already gotten rid, rid of the weak people, now, now I've got a perfect team.
That's not true because what'll happen is you'll get promoted
because you'll have a great team and if you don't
keep doing it, somebody else is gonna into your job
and they're gonna say, what, and what is your, your name?
What is your name?
Ron, Don.
So they're gonna take Don.
Don, Don got promoted.
He went to another place.
And then they come to Don's job and [CROSSTALK]
well, and they're gonna look at the people, okay?
They're gonna look at the people.
And they're gonna say they are gonna do a top 20 middle 70 bottom 10.
They're gonna say, my God how did he keep that person?
So you're not doing anyone any favors because
fresh eyes will look at it differently every time.
And so I just think it's the best way to build a team.
But I do not say it's the only way to build a team.
I found it to be a clear-cut, it forced
evaluations, it forced people to stop winking at people, it
was transparent, and people knew they got a fair shake,
one of the things that you'll find at a company.
Somebody does a great job and they say
let's give them something for doing that great job.
You have this incredible experience they'll say I can't
I, I don't wanna make the others feel bad.
Well if you can't identify what they did and justify the
great thing they did by rewarding them, he shouldn't do it.
But if you can do it, you should do it and make it transparent as can be.
It doesn't mean the others can't get something someday for something.
But this idea of leveling everything, it's like the
companies that give 100 or 500 stock options to everybody.
[INAUDIBLE] statement plan.
It's like having a dental plan.
I mean, what do you gain if everybody gets it?
There, there's no evaluation.
There's no differentiation.
People, people know who's, who's ca, ca, carrying the freight.
And they know who is not carrying the freight.
I, i, in our company, for example, despite this system, after seven
years, the top people thought we were tough enough on weak performance.
90 plus percent of the blind su, survey said we were.
As we went down the organization, there was a
massive complaint that we weren't tough enough on weak performance.
The people closest to the work know who's pulling the oars on the boat.
And so that matters how when somebody comes in two hours
late and they have to cover for them and this and that.
So the idea of being rigorous is something
that absolutely increases the moral of a company.
It does not decrease the moral of the company.
No one likes the company or a unit,
that [UNKNOWN] along just think of the row boat.
Four on each side.
Two aren't working on one side, what happens to the boat?
It goes right around in circles.
And everyone in the organization knows who's carrying the freight.
Your job is to find out as much as they know.
So, I, I like it.
It's the best system I've ever found.
We build great teams and the proof is the
enormous number of leaders that we build from that system.
I don't see another one, on that, on that system delivering that many leaders.
>> Thank you.
>> I think the one of your parts of
legacy will be what you left behind and, your successor.
Can you shed a little light in what went into your
decision, when you were left with very capable people at the end?
>> Yeah, it's back to the question we got asked earlier, got all this data.
A feeling, a smell.
Confirmation by a board that took seven years to come up with the answer.
A lot of times seeing a lot of different situations, we made a call.
We couldn't have gone wrong on either one, on any one of the three.
Couldn't have gone wrong.
And we made a call the best of our,, our
ability, and so far it's making us look very good.
But, I don't have a specific, just a gut, a
feel, and so do they have a gut, and a feel.
But the other two, I mean somebody else, some other group
could have come in and picked any one of the three.
We couldn't have lost under any circumstances, because
we spent all that time building that thing.
See, the interesting thing is, that was our job.
These companies didn't end up with no successes and they
gotta go outside, they have failed in their fundamental job.
The board's failed, the CEO's failed.
That's a big, massive failure.
Getting your successor, for the last six years, was the biggest thing on my mind.
But, i, it, there is no precise did he make a deal.
Bob Natelli who, who was here talking to you,
had by far the best financial results in GE.
By far, not by a little bit.
By far.
And, and he he still has trouble.
He even said it here.
>> He, he clearly does.
>> He still has trouble, and I say, why not me?
>> Yeah.
>> I have the best numbers.
And I said to him, I can't tell you why.
[BLANK_AUDIO]
[LAUGH].
>> Thanks.
>> One more, last question.
>> Earlier this year we heard from three senior GE executives who had
been very successful in their career and from their conversations
with us it was clear that they had to make some
serious family sacrifices along the way, to get to where they were.
And, so while the opportunities for maybe, balance were
there, it didn't appear that they took them up.
So I was wondering, from a relationship
perspective whether you think, it's the organizations
responsibility to, to deal with that or whether it's more up to the individual.
>> I think this is an individual call, Barbara's balance, my
balance, your balance, might not look like other balance to any
one of the others looking at it, but I think this
is something that each person has to come to grips with themselves.
I don't think an organization can make a balance decision for you.
I just don't think so.
I think you've got to decide what your priorities are.
What, what's important to you.
And, and be comfortable with those priorities.
This may be not politically correct.
But the organization's job is to win.
The organization, winning companies are the only thing that count.
Losing is of no value to anybody.
If winning companies pay taxes they give back.
GE, at 45,000 mentors teaching kids in inner-city
schools, do you think those .coms [UNKNOWN] had mentors?
The were hanging on for dear life.
Finally selling the furniture.
Okay?
They, that does no good for anyone.
So a companies job is to provide opportunity give
you a fair meritocracy, and give you a chance.
Your job is to choose your lifestyle what you want what you don't
want how much of this you want how much of that you want.
It is not the company the share owners job to figure out your balance.
That's something you've gotta do.
Now that may not be politically correct, but that's the way it is.
And only winning companies count, and get all this other stuff out of your mind if
you got any of it into it, that,
that anything other than winning counts in companies.
Because they get job security.
They get poised to get back.
They get self-satisfying lives.
People can choose balance, or not balance in those companies, but their job is
to win and create valued products and
services that allow the institution to go forward.
Remember, companies are the only thing that drive the society.
Successful companies.
Government creates no revenues.
They get it all from your taxes and
companies taxes, and then they do good things.
They defend us in war, they have judicial systems, they educate us,
they do all those things, but they do it from no income.
They only do it from successful companies.
So successful companies are the engine of the society.
Government is the support to that.
And the sa, and that's why a company's job is delivering winning products, happy
successful people, but they've gotta decide how
much they're wanna give here, there, everywhere.
>> Jack, thanks so much for sharing your time and your wisdom and insights.
The book is winning.
There'll be a book signing in upper Arbuckle.
>> And the money goes to charity.
>> That's right.
Please join me in thanking Jack?
[SOUND]