He changed an industrial company in a postindustrial economy
The significance of what Jack Welch did for General Electric (GE) can't be overstated, as far as it applies to understanding the economic climate that existed when he headed the company.
If he hadn't taken the steps he did when he did, General Electric would have become one of the stodgy old companies that still exist but are largely forgotten and irrelevant in the overall scheme of things.
Even today we have business leaders and companies just starting to grasp the importance of globalization, as just one of a number of factors Welch knew he had to prepare the company for.
Watching General Electric today, their overall growth is almost entirely driven by its global business. Understanding the major changes that were about to come upon the world and how it would affect GE was one of the chief contributions Welch made to the company and overall US businesses.
He also understood the extraordinary competitive pressures that would come upon the many industries GE served, and streamlined and insisted upon cutting costs while going ahead with innovative ideas and strategies.
That's important because a number of people think it's either/or in reference to this. If you cut costs, they think innovation is neglected, and if they innovate, they think cutting costs goes against it. The truth is we should doing both to the best our abilities as part of our ongoing strategy all the time. Of course in cutting costs, we must cut costs in the right areas, not in areas that are significant and crucial to the success of the company.
We, like Welch, must have a good grasp of the economic conditions and the times we live in. To not understand what they are is to always be in a position of being acted upon, rather than acting. We become reactors to events rather than being in front of them.
We and our companies will struggle with the wrong things if we operate in a way that doesn't take into account the current and near future economic world we live in.
Other Jack Welch Resources:
Jack Welch's advice to MIT Sloan students
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