Jack Welch: Be Like GE--Spend To Get Ahead

The former CEO of the $500 billion powerhouse urges investment in IT as a way to stand out from competitors.
He may be retired, but former General Electric Co. CEO Jack Welch hasn't stopped pondering the issues facing businesses today, particularly the need to increase IT budgets during a recession to gain a competitive advantage.

"Now is the time to widen the gap between you and the turkeys who aren't spending," Welch told an audience of 260 business and IT executives gathered at the InformationWeek Spring Conference last week in Amelia Island, Fla. Welch said he increased GE's IT budget 15% while most others were cutting spending. "This is the moment to differentiate yourself by investing in IT, and it's an opportunity you'll not have again."

Welch also emphasized the value of intellectual capital and curiosity. "A company's ultimate competitive advantage is its ability to raise intellectual levels," Welch said, adding that while in charge of GE, he made efforts to learn about innovative technology from cutting-edge IT users such as FedEx Corp. "Find out what other people know that you don't know, and find a better way to celebrate those in your organization who can find ideas and share them."

FedEx sets another example, too, Welch said: The strong relationship between CEO Frederick Smith and CIO and executive VP Rob Carter is a model companies should strive to emulate. "It's imperative that the CIO is an integral part of the business relationship," Welch said, sharing and helping to shape the company's vision.

Of course, everything is subject to change, including relationships, the economy, technology, and worldwide security, Welch said. But smart companies will use any opportunity to take change and make it a competitive advantage. "A company's fundamental strength is its ability to adapt to change, rather than predict it," Welch said. "Don't hide from it; grab it and do something with it."

Welch also drew attention to an issue near the top of his list of concerns: the role of women in the executive hierarchy. The three most prominent women in the tech business--Carly Fiorina of Hewlett-Packard, Anne Mulcahy of Xerox, and Patricia Russo of Lucent--are all leading companies in turmoil. It's imperative that their companies and the media respect their courage for having taken on such challenging jobs, and they shouldn't bear all the blame if they fail to succeed at what may be impossible tasks. "The worst thing that could happen for a diversity movement is that these three get shot for taking jobs that Christ wouldn't want, and where nobody else would do it," Welch said. "That would create a gender issue that the media will have a field day with."

Welch headed GE for 20 years, raising it from a $13 billion company to a $500 billion powerhouse before he retired in September.