Best of Times and the Worst of Times

Jack Welch former CEO of GE’s Q&A at the World Business Forum

What going on with the economy today and who is at fault?

One crowd is these damn investment bankers – when these investment banking firms went public they were playing with others people money – before they were playing with the partners’ money. To let people without accountability make money where the only penalty was a cut in their bonus not in their head is wrong!

How much does leadership or lack of leadership have to do with this crisis?

These leaders did everything for yield – which caused all these complicated products come into play that they didn’t even understand. I owned Kidder Peabody for only 4 days when these investment bankers came into my office and wanted to do a $400 million dollar deal – I almost lost my teeth – we were in over our heads so we sold it. Look, if you don’t understand what it is – don’t buy it! And if the earnings are too good to be true – it’s NOT! But the failure has to be with the leadership since their bonuses were tied to all of this. We have to get leadership compensation tied to shareholder value!

Will it change capitalism here in the US?

Yes but for like this long (very short finger spread). But we are in for one hell of a tough quarter and first quarter next year – some real negative growth. So my advice is to get your cost structure in place and be sure you are not over leveraged. And be sure to take care of your best people – take care of your stars, the top 20-30%. You don’t want to dump your soldiers in a time like this.

What has been the biggest change since you left GE, seven years ago?

Globalization for sure – China is huge threat and also a huge opportunity – we have to be the most competitive skill based economy out there – Also the information age is faster and more prevalent – how many attendees have a slower more easy going job today? None right!

So what should a leader do?

You need to articulate a vision to get through this time – you can’t over communicate in this time. You have to be in front of them, anyone can run the railroad when it is going straight – if you got capital – put it to work – bury your competition or buy them. Go on the offense – look at your competitors and the landscape. Also you gotta think about how you can use credit terms to keep your customers alive – this is the best times but also the worst times.

What does corporate social responsibility mean to you?

One word – Winning – create jobs and make money then you give it back. If you don’t win – you have nothing to give back. All this Corporate Social Responsibility is all backassward you have to win first then give back. It all starts with winning!

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