John-John: Do They Need to Get Along?

This is a partial transcript from "Your World with Neil Cavuto," July 6, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: Forget how business feels about John Edwards. How does John Kerry feel about him? Word is that the two do not get along that well personally, but they might not have to, looking at examples from corporate America.

How important is it for the top guy and the number two to get along? Let’s ask Jack Welch. The former GE chairman and CEO joins us on the phone from his fancy estate in Nantucket. And from Miami, Jeffrey Sonnenfeld, the associate dean of the Yale School of Management.

Jack, to you first. You were well known for grooming possible successors. How crucial was it that any of them get along with you?

JACK WELCH, FMR. CHAIRMAN AND CEO, GE: Look, I think that governing a large company -- now neither Kerry or Edwards have ever managed anything -- so they are not familiar with this. But, basically, managing a large institution, you need to have somebody that is compatible; that you trust, that you like.

It is less important in government here, because they’re talking about winning an election. And since Kennedy, no vice president has made an impact.

Now, here, they have to get elected, and John Edwards may fill in the likeability gap for Kerry. So on paper he’s helpful, but every CEO in America should be shuddering, and every employee who values their job should be shuddering, because there is nothing more dangerous to American competitiveness than the plaintiffs’ bar. Nothing.

CAVUTO: So, in your case, you are looking at the litigation background of Edwards as being worrisome.

WELCH: I think American workers ought to worry.

CAVUTO: Yes.

WELCH: Because it is just going to sap the competitiveness. If the trial lawyers continue to gain here, rather than have some form of tort reform, American competitiveness, at the expense of global competitiveness, just gets in trouble.

CAVUTO: Jeff, let me ask you a little bit about this idea of likeability and how the number one and number two guys get along. Corporate America is replete with cases where, when that was not the case, there were problems. And I’m reminded in the Viacom case of Sumner Redstone and Mel Karmazin. Ultimately, Mel Karmazin just upped and left. How important is it that these two guys really like each other?

JEFFREY SONNENFELD, YALE SCHOOL OF MANAGEMENT: Well, you know, they can like each other too much. It is good for there to be some degree of a healthy competition. You think of Andy Grove and Craig Barrett. They have a degree of constructive confrontation between them. But it’s worked out very well.

CAVUTO: You’re talking about at Intel there, right.

SONNENFELD: Yes, at Intel. And Bernie Marcus at the Home Depot, with his co-founder, Arthur Blank, they did very well at some degree of healthy conflict between them. But there were cases, when you go back to Harry Gray, United Technologies, where Ed Hennessy was so sure that Harry Gray was monitoring his every move that he suspected that his boss, the CEO, was bugging his office.

So he would tear open furniture at night. He’d talk into the lighting fixtures, saying, "Good night, Harry. Good night, Harry."

You remember at the old Bank One, Harvey Catanic (ph) and Bob Abud (ph) got along so badly the board fired both of them. And you can see that this can be dysfunctional. Just two weeks ago, John Mack’s exit, of course, with the strategic disagreement at the top...

CAVUTO: Yes.

SONNENFELD: The two couldn’t get along at CSFB.

CAVUTO: You know, Jack, as someone well schooled, and as a rising executive yourself, when you ultimately took over GE 20-plus years ago, and now, when you handed the baton to Jeffrey Immelt, was it crucial that you two were on the same page?

WELCH: Well, no. What I think is crucial, that Jeffrey Immelt and his team are on the same page. I agree with Jeffrey that you do want to have constructive conflict. And I think it’s very healthy in an organization.

CAVUTO: But wait a minute, Jack. Jack, you don’t want a guy coming in to undo everything you did, do you?

WELCH: Well, no. I think in many ways you hope for somebody who sees it differently, because if you are going to do the same thing, you might as well keep doing it.

No, that’s not the issue. And the issue here, I think, that is different than corporations, these guys are trying to figure out how to get enough electoral votes. In a corporation, the CEO is picked and then he or she selects the team. It is a totally different thing.

CAVUTO: Good point. Good point.

WELCH: These guys don’t have to like each other. They have to get elected.

CAVUTO: Go ahead, Jeff.

SONNENFELD: I was just going to say that, Jack, I so agree with you. And Neil, when you use the term, do you really want a successor reverse all of -- one of your biggest moves, Jack -- the many bold and brilliant things that you did -- and Reginald Jones was the first to agree with it -- was I believe one of your biggest moves was the sell -- the sale of Utah International, which was Reg’s biggest purchase and perhaps the biggest in GE’s history before the bold NBC move. And he celebrated it.

But there was obviously a difference of perspective and a difference of time. He said to the press, that hailed at him when they tried to get him to criticize you, he said it was a dandy time to by it, and if Jack thinks it’s a good time to sell, it’s a dandy time to sell it. Thank you, gentlemen.

And you can see with JFK and LBJ, one of the great things, or the many great things about Ronald Reagan was the selection of President Bush.

CAVUTO: Yes, right. They both bitterly fought for the nomination, right?

SONNENFELD: Yes. These were direct competitors that worked very much against each other.

CAVUTO: All right. Jeff, final word on the subject.

SONNENFELD: But they worked together as a team.

CAVUTO: Indeed, they did.

Jack, always a pleasure having you on, my friend. Enjoy Nantucket.

WELCH: Thanks a lot.

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