Neutron Jack’s Perfect Career

Jack: Straight from the Gut, by Jack Welch (with John A. Byrne). Warner Business Books, 479 pages, $29.95.

This is a pretty interesting book, though not as a business or how-to manual in quasi-autobiographical clothing. Don’t buy this book thinking it will turn you into a demon C.E.O.; it might, but most probably won’t-any more than parsing the score of a work by Mozart will equip you to write The Marriage of Figaro.

What makes it worthwhile, in my opinion, is that it gives a fairly good, often insightful picture of what an individual with an undoubtedly remarkable talent as an executive thought he was up to during his 20-year “reign” (I think that’s the right word) as C.E.O. of General Electric, the company that is by consensus the most admired organizational artifact produced by postmodern capitalism. And, by omission, it leaves open to question aspects of Jack Welch’s success that we might, with some justice, attribute to the operations of some higher power. “Luck,” remarked Branch Rickey, the Jack Welch of baseball in his day, “is the residue of design.” Those of us who have been around for a while, and have developed an appreciation of the role of contingency in human (and business) affairs, might also observe that luck seems frequently to be the residue of luck.

Not that Jack Welch doesn’t admit to being lucky. He does so at the very beginning of his book, and he does so near the very end; in between … well, the mentions of Dame Fortune are not so frequent. Luck, by his definition, would appear to be a function, largely, of being thrown together over the course of a life with the right people-from parents to board members.

But there is a form of luck whose invisible hand orders the affairs of great men and midgets alike, and which also needs to be kept in mind. I caution anyone reading Welch on Welch to bear in mind that he was chosen to succeed Reginald Jones as chief executive of G.E. in 1981, which was, by any estimate, simply superb timing. Approximately 18 months after Mr. Welch took office, the U.S. and the global economy literally exploded in a 20-year boom. A company like G.E. was well-positioned to prosper. Under Mr. Welch’s leadership-the word he prefers to “management,” and I think he’s right-G.E. not only prospered, it lapped the field: the right man in the right place at the right time. When this triangulation occurs, when the match of personality and style is so congruent, as it has been with Mr. Welch (and as it has been, I think, with Alan Greenspan), mortal genius-even if of a very high order-can seem transcendent, even godly.

Because I think this book is worth buying, I’m not going to paraphrase it, or summarize its contents. It contains enough in the way of sensible executive apothegms-”The people closest to the work know the work best”; “I’ve never seen a business ruined because it reduced its costs too much, too fast”-to satisfy the cravings of the sort of people who buy books about cheese-moving. The anecdotal material is O.K, the human interest adequate.

But the point of the book-and I write as one who has served as a director of or investment banker to companies run by C.E.O.’s ranging from the unspeakable (Darryl Zanuck of 20th Century Fox) to the quite extraordinary (Ian MacGregor of American Metal Climax)-is to help us understand how Jack Welch got it done. If a reader wishes to measure herself or himself against the man, so be it. As it happens, I grew up with and around Litton Industries-a predecessor in the style of G.E. and a name to be conjured with on ‘Change-and I kept wondering, as I read, how much better it would have turned out if Litton had been subjected to the same internal disciplines that Mr. Welch established at G.E. Quite a bit better, is my guess.

As a boy, Jack Welch picked up very useful values. A child of modest circumstances, he had strong, devoted parents who let him be himself. He played team sports, which developed in him an early appreciation of individual talent, that different folks are capable of different strokes. He caddied at a local golf club, which can only have sharpened his interest in people, his gift for observation and his respect for the rules of the game.

He came to G.E. with a Ph.D. in chemical engineering, and-collaterally-with an engineer’s faith in process and a graduate student’s taste for thinking. “Ambition” is not a word I can recall being used much in this book, and I’m not sure it’s quite the right word to apply to Mr. Welch in any case. What I think has driven him from the very beginning is a compulsion to get things done as well as they possibly can be. To be a scratch player across the board, in everything from quality control to golf, and to surround himself as much as possible with people who shared his commitment to being No. 1. At G.E., he made that happen. As someone who has spent 20 years dealing with publishers, his account of this process made me weep with envy.

This takes ingenuity; it takes a scientist’s respect for (more or less) immutable laws; it takes an intensity of focus so remote from the capabilities of most of us as to be unimaginable. These are the qualities that glow in this book, that glow in the man. In the Welch view of things, mediocrity is unacceptable. Mr. Welch’s genius was to implement practices, procedures and filters that made it almost impossible for mediocrity to gain a foothold. His was the equivalent, in management practice, of the great heavyweight champion Joe Louis’ observation with respect to a notionally quick-footed opponent: “He can run, but he can’t hide.”

He calls this “differentiation,” and it made him a hard boss-”Neutron Jack,” a name he loathes-but as the saying goes, cruel yet fair. G.E. promoted a culture in which you knew where you stood: 10 percent of the underachievers were let go every year. Not to add a farthing to the shareholders’ bottom line, but because, in a corporate culture dedicated to maximum accomplishment whichever way one looked at it, tolerance of people who don’t cut it pollutes from the bottom up. I’m sure there are people out there to whom the name Jack Welch is anathema, but as someone with a quarter-century of investment banking in my past, I can only say that any man who realizes “There are more mediocre people making money on Wall Street than any other place on earth” can’t be all bad.

On the whole, the book reads easily. Of certain technical passages, I can only say one would not wish them longer. There’s not a human being on earth who can render a halfway-intelligible lay account of “Six Sigma,” the quality-control scheme to which Mr. Welch attributes so much of G.E.’s success; I’m afraid this is just one of these things you have to see in operation to begin to understand. All in all, those readers will fare best who know a bit about business, and probably best of all those who own some G.E. stock.

At the end of the day, this isn’t a blowhard egotistical exercise like Iacocca. As an autobiography, it’s so-so. To do what Jack Welch did, he was perforce obliged to spend most of his working life in meetings, which doesn’t make for adventurous or gossipy reading. So what? You read a book like this to try to understand how.

Above all, Jack: Straight from the Gut is about something so rarely encountered in American life today-something that, in a tragic way, has just blown up in our collective national face-that it should be widely read and reflected upon. That something is called getting it right. Getting it really right.

Or, as Jack Welch would probably say, “perfect.”

Michael M. Thomas writes The Midas Watch for The Observer.