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Business Books: Author says Welch's tough talk strengthened GE

(Note strong language in paragraphs 5, 13)

BOSTON, Jan 24 (Reuters) - Jack Welch transformed General Electric Co GE.N from an old-economy manufacturer into a modern conglomerate, in part because of his insistence on a culture of straight talk, according to a new book by his former speechwriter.

In “Jacked Up: The Inside Story of How Jack Welch Talked GE into Becoming the World’s Greatest Company” (McGraw-Hill; $26.95), author Bill Lane recounts how the former chief executive insisted on sometimes-brutal directness and shoved aside tolerance for muddy thinking.

The man who earned the nickname “Neutron Jack” for violently overhauling the Fairfield, Connecticut-based company in the early years of his 1981-2001 reign comes across as a passionate, sometimes rude boss, quick to praise people whose ideas he admired and ready to pounce on those who did not meet his standards.

For example, Lane recalls the tirade resulting from his choice of a photo of Welch for GE’s annual report.

“You asshole!” Lane quotes the corporate chieftain as saying. “You put the wrong picture in the back.”

Welch, who co-authored two of the more than a dozen books about him, did not return phone calls seeking comment.

‘EXAGGERATED EVERYTHING’

During Welch’s tenure, GE’s stock price rose 50-fold, a run Lane credits in part to the chief’s aggressive communications.

“He exaggerated everything,” Lane said in an interview. “From the first day he got up there, he said we’re going to be better than the best and every individual must give 110 percent of their effort.”

Such rhetoric was “very, very effective,” particularly with Wall Street, said Lane, who described his book as the first on Welch written by a GE insider.

GE shares have shown little growth after dropping sharply in the wake of the 9/11 attacks -- shortly after Welch’s retirement.

“Jack was probably overpaid as far as stock price while he was there,” Lane said. “I think (Welch’s successor and current CEO) Jeff Immelt is being underpaid for GE’s performance.”

At Welch’s insistence, Lane writes, GE managers eliminated the five-year strategic plans that had driven corporate planning meetings like the company’s big annual gathering of its top brass in Boca Raton, Florida.

“Anyone who even claimed they could see four or five years into the future was considered a bullshitter,” Lane writes.

Instead, Welch expected his team to provide simple but clear explanations of the challenges their businesses were facing and how they planned to overcome them.

“The old GE corporate civility, where a droning bore or dissembler worked through his script and was thanked regally by his boss, was over,” Lane writes. “Civility was no longer a corporate virtue. Spatters of blood began to fleck conference room walls.”

While much of the 315-page book focuses on Welch’s tough-guy persona, there are lighter moments.

He gorged on frozen yogurt when he first discovered it, until he realized that even fat-free foods could pack on the pounds, Lane writes. In another anecdote, Welch stumbles around the darkened estate of Microsoft Corp MSFT.O co-founder Bill Gates, unable to figure out the computerized lamps.

In the late 1990s, when GE was under fire from peace activists for producing weapons, Welch boarded a corporate helicopter and flew to a rural convent to meet with a Catholic nun who had been leading protests against the company.

The protests “really bothered Welch,” Lane writes. “He wanted GE to be loved by everyone.” (Editing by Lisa Von Ahn)

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