Jack Welch visits Baruch

As part of the Executives on Campus Program and co-sponsored by Sigma Alpha Delta, the 1st Annual Burton Kossoff Business Leadership Lecture on April 18 featured the celebrated former chairman and CEO of General Electric, Jack Welch. Welch became GE’s chief executive in 1980. Within two decades, under his direction GE’s capital increased by $400 billion dollars, making it one of the world’s most valuable corporations.

An overwhelming number of students and faculty showed up to hear Welch speak on the current U.S. economy, the reputation and state of modern business, the importance of no-nonsense management skills and the new directions business students should take to aim for success. After this special talk, Welch was on hand to personally sign copies of his new book, aptly titled Winning.

The following is an abridged transcript of some of the questions posed by the Baruch audience, which Welch obligingly and passionately answered.

In positioning our students for the next 50 years, what deals should they avoid, and what sort of deals should they seek out?

Avoid commodity hell. Commodity hell is where everybody makes the same thing, and you have to look for sharply piled pennies off a product where you have to have slivers that you need to differentiate yourself, but your product is [still] not unique. Wal-Mart has done a fabulous job in commodity hell, by delivering and executing in an incredible fashion. They don’t sell any hot jet balloons, yet they do a fabulous job….[but] most people are going to the dustbin with commodity hell. So you want to avoid those areas.

I was in Atlanta last Thursday, for a top 50 awards to business companies that are below $350 million dollars … there were 50 companies that they picked, each of whom had grown from less than $25 million dollars to over $100 to $300 million dollars since 2001. The amount of opportunity they give in this country, and the enthusiasm and excitement that people have for growing new businesses, gives you enormous hope for where we’re going.

The attitudes, as you go further east, get worse; as you go further south, they improve dramatically, whether it be Duke, Georgia Tech, and these other schools….Michigan, Northwestern. Fabulous excitement. People in the east, and in the further east, like up where I live, are wringing their hands about the world in business today. Let me give you one statistic. When I became chairman in 1980, the crime rate was 22.5 percent. Unemployment was 13 percent. Inflation was running at 15, and we had nine straight quarters of negative gross domestic product. Japan was taking over the world. Never could you even imagine that! Today, what do we have: we have growth at four percent; five percent unemployment; inflation between three percent and four percent. These are great times here. Don’t let anybody wring their hands in front of you…. don’t read all these melancholy stories about the demise, and the downfall, and the vanishing jobs, and all this moaning that goes on.

As the chairman of a major company, what did you personally do to grow, yourself, through the years?

At the end of this five-year period, I will have talked to 14,000 MBA students. And I’ll get nothing but questions, the whole time. And I realize now the incredible job we in business have, to get these kids to recognize they’re not getting into a “dirty” profession. The scars of the scandals have been greater than I thought, as it’s given the left wing faculty a chance to really do a job on the capitalist system. We’ve got to educate people with the fact that the government generates no money. Only business generates money. You then pay taxes to a government that disperses it, for protection, judicial system, and education, that we need. So government plays a role, but the engine of an economy is business.

These kids are going for life’s great work. They’re not coming into a dirty thing. Now, you have faculty that runs down and consults off these dirty things, and then preaches against them. So you got this crazy-guy economy talk, particularly up in the North. It’s incredible.

We as businesspeople have got to be out, talking about the benefits of business! Everyone’s afraid to talk about it. It’s like a turtle syndrome; everyone’s got their head under a shell because of a scandal. We’ve got millions of people getting up everyday, going to do good work. Because we’ve had some highly visible bad apples, it makes everyone feel a little uncomfortable.

Government generates no money. There’d be no jobs. Nothing would happen from government. You all have to understand that. No matter how liberal you are, no matter where you are on the spectrum: government has no money. They only get it from revenues, from taxation, from businesses and from the employees that work there.

How important do you think it is to have a MBA, to achieve success in business, since you had a degree in chemical engineering and you rose to the top? How important do you think it is to have any college experience, or, say, you major in something else besides business, is it important to major in that field?

Look, I think every time you get a degree, or successful experience, it’s another notch in your self-confidence valve. You’ve been able to see yourself against some peers, you see how well you do, you’re in classes, you’re delivering – it gives something to you. The day you join a company, no one cares you’re a MBA. No one cares. It got you a job, perhaps a higher salary most likely – but after that, it’s all you. Hopefully the experience will have given you the self-confidence and tools to do better once you’re there. But it doesn’t count, the day after you’re there.