Passion for Reform Is the Motive Power of `GE Myth`

The best CEO in the first half of the 20th century is Alfred P. Sloan Jr., a MIT Ph. D. in electrical engineering, who helped to foster General Motors as the best enterprise beyond Ford Co. Then, the best CEO in the second half of the 20th century is Jack Welch, who earned a Ph. D. degree in chemical engineering from the University of Illinois and built General Electric (GE) as one of the best enterprises through structural and managerial reforms.

When Jack Welch took the CEO`s chair of GE in 1981, the company market cap was 12 billion dollar. Now its market cap is over 450 billion dollar, and GE has kept the unassailable top-ranking in the world. In addition to the excellent business outcomes, Jack Welch transformed GE as a center and text-model of various managerial reforms since 80s, and he was in the forerunner of these reforms.

Having built up GE`s market cap 40 times than when he took his office, he retired last month (The market cap of GE is almost three times of the sum total of the 1,000 companies that are listed in Korea Stock Exchange).

In his autobiography, Jack: Straight From The Gut, Jack consistently emphasizes, `` My lifework was abolishing terrible bureaucracy of the large enterprise.`` Although the titles of his various managerial reform movements were different, the final goal of the reforms was to make autonomous people and system without boundary. All the reform techniques were the expedient means to achieve this goal.

Jack Welch received severe criticism from the media with the nick name, ``Neutron Jack.`` due to his heartless layoff during the 80`s structure reform. He was recognized as a merciless CEO, who has been always listed on the `ten most cold-hearted CEO in America`. In this book, however, one can find that what he has contended and performed was the processing means of reform to break down bureaucracy and to establish strong and autonomous structure.

Although the interpretation is up to the reader, Jack Welch`s autobiography will provide some concrete hints to the political leaders, whose actions are often found to be in conflict between their words and deeds, and to the chairmen of conglomerates, who do not admit to the failure of the feudalistic business culture. Finally, while Korean companies need to take this book as a text for benchmarking the success of GE, they should develop their own practical programs, which reflect Korean situation, instead of following the GE without considering Korean context.

Jack Welch with John A. Byrne, Jack: Straight From The Gut, Translated by Lee, Dong-Hyun, 2001.