India is a place for low cost and high brains: Jack Welch

India's stellar software knowledge had impressed management legend Jack Welch in the late '80s. Over a quarter of a century later, the country's IT companies have only reiterated his fondness for Indian intellect

Image: Lucas Jackson / Reuters

In September 1989, General Electric’s (GE) then CEO Jack Welch visited India for the first time to aggressively market the company’s products. Welch, by then, had earned a reputation for being a formidable business leader who was shaping GE into one of the most admired companies in the world. And India, under Prime Minister Rajiv Gandhi, was at the cusp of an IT revolution.

In his 2015 book, Dreaming Big: My Journey to Connect India, Sam Pitroda, entrepreneur, technocrat and an advisor to Gandhi, describes a meeting with Welch during this visit. “Welch was already a living legend when he came to India,” he writes of the breakfast meeting that took place at Delhi’s Taj Mahal Hotel, and everyone knew that he had come to sell airplane engines and turbines. But, as the meeting started, it was Pitroda who put forward a business proposition: Would GE like to mine into India’s software expertise? Welch seemed interested and promised to send a team to explore the idea. Several meetings and a couple of years later, GE signed software development contracts with Indian companies, kicking off the outsourcing revolution in India.

Now, in his role as the executive chairman of the Jack Welch Management Institute, an online institute that offers business management courses, Welch is making another pitch to India. The institute, whose curriculum he has helped design, recently announced a tie-up with edutech firm Talentedge to bring an executive certificate programme to India. “I think with this Talentedge programme we can help educate thousands of people with the principles of leadership,” he says. “India’s got technology; they could use some leadership help.”

The 80-year-old Welch hasn’t visited India in over two years. “I always get sick when I come [to India],” he says, chuckling. “I have an Irish stomach. I’ve been there about 50 times, and I’m 50 for 50 in getting sick to my stomach.” But he still has an enduring love for the country. “Indian IT pours out more smart engineers than just about anywhere,” he tells Forbes India in an exclusive phone interview. Edited excerpts:

Q. How have you seen management education and leadership change since the time you were at GE?
One of the things people like to think about is… when I was at GE to now. I’m managing everyday. I’ve managed 74 companies over the last 15 years through my involvement with private equity firm, Clayton, Dubilier & Rice, as well as the media and internet company, IAC/InterActiveCorp.

I have today, in my portfolio, 24 companies. The basic principles of management haven’t changed; the speed at which things happen has. With newer online delivery technologies and communication techniques, management is more global and technology-driven. It’s easier to communicate with everybody and put together a global network. But the basic principles of leadership have not changed. The fundamental principles of building great teams, exciting people and ensuring everybody’s on the same page have endured.

But the changes that have happened modify the environment. In my view, traditional business schools are teaching too much of yesteryear’s theory. We [at the Jack Welch Management Institute] teach how to build a great winning team today. Try these techniques, learn them on Monday, practise them on Tuesday and share them on Friday. We use the Wall Street Journal in our school every morning for our online discussion. We pick two subjects. For instance: ‘Was the merger of LinkedIn with Microsoft a good idea? Did they pay too much?’ That’s a debate that goes on every morning in our school.

Q. Can innovation and entrepreneurship be taught?
I think the idea of taking risks can be taught. The idea of stretching and reaching can be taught. I speak a lot around the world and I run into young people, who say, “I want to be an entrepreneur.” And I reply, “Wait a minute. An entrepreneur is not like a doctor or a lawyer. An entrepreneur is somebody with an idea. What do you have as an idea that can change the game?” I don’t think that you can specifically teach entrepreneurship. You can teach the attitude of risk-taking, of trying, of testing. Today, on the internet, you can try all kinds of things. You can certainly teach behaviour, but you can’t teach how to get an idea.

Q. You were one of the early proponents of Indian IT in the late ’80s. How have you seen that industry evolve over time?
They’ve done a great job. Whether it is [HCL’s] Shiv Nadar or [Wipro’s] Azim Premji or the Tatas, these people have built a fantastic set of businesses in a global setting. On my book tour at The Indus Entrepreneurs (TiE) in California, I spoke with 4,000 Indian entrepreneurs and engineers. It was the most exciting day I had on my tour..[to see] thousands of Indian entrepreneurs dominating Silicon Valley. It’s amazing what’s happened. What India has done for Silicon Valley is unbelievable.

Q. India has seen a startup boom in the recent past. We’ve also seen the emergence of several Indian unicorns. What’s your take on their valuations? Are they justified?

All these companies go through this stage. And then there will be a shakeout. Some will prove to be undervalued today and several to be totally overvalued. I’m not knowledgeable enough to say which ones will be which. But you saw how Facebook looked terribly overvalued, and look at it today. You saw the valuations for companies like Instagram and look what’s happened. I don’t think any of us knows at any point what the right valuation is. And it’s been proven. Whether it be the 2000 bust in the US or today’s skyrocketing valuations for, say, Uber or Lyft. Who knows? I don’t, certainly.

Q. How do you view online education?
Transformative. It’s more rigorous, more accessible and less expensive. We don’t involve a bureaucracy, the deans and the assistant deans, fancy buildings with gyms and everything else. We are providing education. One of the industries that haven’t changed at all is education. You talk about all the changes. What’s happened in traditional education? Very little change. More overheads, fewer faculty, more support staff, more costs; that’s not a solution where everybody gets a chance. Education is absolutely the ripest thing for disruption. It’s very entrenched. It’s a highly regulated industry. But it will change. It will deregulate eventually.

Q. Have you noticed similar deregulation in India too? Has governance in India changed progressively?

It’s slow. The Indian government, to my knowledge, is still slow. But the companies in India are not part of that bureaucracy. The Indian companies are so exciting. And that’s because India is filled with intellect. Indian IT pours out more smart engineers than just about anywhere. When I first went to India in 1989, I went there for low cost. What I found there was low cost and high brains. That’s why I fell in love with India. [It had] such warm, caring people. My friend [DLF’s] KP Singh is in Delhi. He was a major force in directing me around. I hung out with Azim Premji and spent time with Shiv Nadar and those are relationships that have lasted all this time.

Q. What does the tie-up with Talentedge entail?

I’ve been a big supporter of India for a long time. We think we have some management techniques that would be valuable to Indian entrepreneurs and young Indian managers and can teach them how to be good leaders. The Jack Welch Management Institute is the fastest growing business school in America. We’re up to some 1,375 students this semester and we’ve only been going for five years. We would like to take some of these programmes from our MBA course and put them into certificates of management and bring them to India.

Q. You’ve continued to be an active investor. What kind of companies interest you today?
In the private equity company Clayton, Dubilier & Rice that I’m involved with, we look at lower-tech, service industries with large customer bases and no rapid changes. So we buy companies that are orphans within companies. We buy old industrials. We have not had a bust in 74 acquisitions since 2001. We don’t ply in high-flying businesses.

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  • Dave Sanborn

    My particular professional field is in international transportation and logistics. I saw, more than two decades ago, the potential for advances in intermodal transportation development within India, along with additional investment in cargo facilities. I have enjoyed greatly seeing such changes come about in India. The interest in India by entrepreneurs such as Jack Welch has resulted in a tremendous upsurge of development and investment. I am especially excited about the myriad of educational opportunities for talented young Indian students. It will pay to put more effort into the development of such highly motivated and disciplined people.

    on Sep 27, 2016
  • Chander Bhushan Vashishat

    Sam Pitroda's initiative with GE paved a way for software revolution. We truly have world class software companies like Wipro, TCS and HCL etc. Besides, India at present is open to start up companies. Our present Government too is encouraging fresh startups. It is nice to know despite his upset stomach during India visit, Jack Welch has respected Indian talent.

    on Sep 21, 2016
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