6 ms·

The article has a good summary of his legacy and his gracefulness: Under Mr. Welch, GE became known for consistent profit performance and a surging stock price

The article has a good summary of his legacy and his gracefulness: Under Mr. Welch, GE became known for consistent profit performance and a surging stock price. Much of those gains came from GE Capital, the finance arm that ballooned under Mr. Welch and would almost destroy the company during the 2008 financial crisis. GE’s profit has plunged in recent years, dragged down by hidden costs in the company’s Capital unit and losses in the core Power business. The troubles have prompted the company to break itself apart, overhaul its leadership and slash its once-generous dividend. GE’s share price tumbled roughly 75% in 2017 and 2018, erasing $200 billion of wealth for millions of investors. In his later years, Mr. Welch witnessed the GE he built get dismantled. The decline of the company pained him, according to friends, and he sometimes said he gave himself an A for his execution of its operations, and an F for his choice of successor.

Ididntdothis 7y ago
“he gave himself an A for his execution of its operations, and an F for his choice of successor.” That alone disqualifies him as a leader “I did everything right but others screwed it up”.
- tyre 7y ago
  What story does the evidence tell you? If you're going to disqualify someone as a leader, Jack Welch is not that guy.
  - unlinked_dll 7y ago
    It tells me that he built a house of cards and left before the wind knocked it over
  - buran77 7y ago
    He's the type of leader who grew the company on a minefield of figurative debt and real hidden costs. Leaving behind something with a solid foundation makes you a good leader. Getting out in time from a Ponzi scheme you built doesn't. Another trait of a real leader is to be able to grow another leader who can do the same. By his own statements he failed.
    - Ididntdothis 7y ago
      And you don’t complain publicly about the people you hired. Especially while loudly proclaiming how good you are at hiring.
      - michaelt 7y ago
        The quote does say "according to friends" - so maybe he only complained privately.
        rumanator 7y ago
        The problem isn't his choice of audience, but his choice of message.
        Ididntdothis 7y ago
        It doesn’t really matter. In his book he portrays himself as a great teacher and coach. So not his successor failed but Welch’s mentoring failed. He had all the tools available to bring up a successor but couldn’t do it. Reminds me a little of the US president. Take credit for everything positive that happens and when something goes wrong, point at somebody else and often at somebody he personally selected and hired.
    - tyre 7y ago
      GE crashed nearly a decade after he left. He spent decades building GE into a powerhouse in many industries. Finding a leader who can replace you is a miniscule piece of being a leader. Also, that's ultimately the Board's responsibility. The CEO reports to them.
      - buran77 7y ago
        Even a weak foundation takes time to crumble. Jack Welch built the foundation for GE's growth on the surface of a bubble that would burst in 2008. Perhaps the real mistake of his successor was not jumping off the pyramid soon enough. https://www.nytimes.com/2017/06/15/business/ge-jack-welch-immelt.html https://www.nytimes.com/2017/06/15/business/ge-jack-welch-im...
- hristov 7y ago
  And to be clear he was absolutely lying about that. Immelt was certainly a problematic leader, but a lot of the problems with GE happened under Welch. The biggest issue with GE was massive insurance liabilities for assisted living insurance which drastically exceeded anything GE predicted. Well Welch started the insurance business in GE and took on a lot of these liabilities. And while Immelt certainly had his problems, his mistakes were basically in the fact that he continued the Welch strategy rather than make new types of mistakes.
  - PaulHoule 7y ago
    I remember people like Suze Orman were always handwringing since the 1990s about "Why doesn't the market take off in long-term care insurance?" The obvious answer is that it doesn't work. One is that inevitably you get done in by cost disease, the other is that LTC insurance has a narrow market of people that can afford it but are not rich enough that they don't need it.
    - Spooky23 7y ago
      It is a deeper problem than that. Why buy insurance when you can create a trust to hide your assets and have the taxpayer pay? (Once you’re broke, you go on Medicaid) There’s no nice nursing home or homecare. You just need enough money to get in, and the provider can’t kick you out. If you have a good support network, the only “enhanced” level of care is hiring people off the books with cash.
  - devonkim 7y ago
    Furthermore, people asked Jack Welch about the GE Capital spin-off and he said he agreed it was the right decision for the business. So I find it contradictory how Welch could feel bad while agreeing with major strategic decisions. Was it an execution problem? Because no amount of execution would have saved GE Capital given all the scathing criticisms I read. The entire financial sector became hazardous waste during the financial crisis, so unless GE Capital was as strong as a top tier Wall St bank it wasn't about to survive I'd imagine.
  - rumanator 7y ago
- deleted 7y ago
  [deleted]
programbreeding 7y ago
>Much of those gains came from GE Capital >GE’s profit has plunged in recent years, dragged down by hidden costs in the company’s Capital unit >he gave himself an A for his execution of its operations, and an F for his choice of successor Am I reading it right that the reason GE Capital was so successful during his time was because there were hidden costs, making it appear more profitable than it was, that didn't come out until later? Or did this hidden costs actually not exist until choices that were made after he left?
- deleted 7y ago
  [deleted]
- pdonis 7y ago
  > Am I reading it right Yes.
- salawat 7y ago
  Yes. You are reading it right. The best way to describe the management style of the 80's onward would be a financially engineered pump-and-dump characterized by putting workers through the meat grinder, and shirking any social responsibility that could be conceivably avoided by any means possible. Those are the basis of the hidden costs. Each person that got sacked took more institutional knowledge with them, and each responsibility shirked was just a matter of time before it came back around to bite the company on the balance sheets. Once 2008 hit, seeing as most of the value the Capital part of the company had was found to be a house of cards, nearly taking the company out with it. When the price of growth is to be an absolute bastard; one should wonder whether the price is too high. Note also that Reich's management style basically required the Reagan era deregulation to thrive. He was far more reserved when Unions actually had teeth. Really a shining example of what not to emulate in my book. If you have to sacrifice long-term stability for short-term growth, you're misreading the landscape.
  - sgt101 7y ago
    >If you have to sacrifice long-term stability for short-term growth, you're misreading the landscape Or eyeing your bonus pot and the golf course / opera house. Shareholders are holding for 3-6mths, executive incentive is aligned to those time spans.
geodel 7y ago
> he sometimes said he gave himself an A for his execution of its operations, and an F for his choice of successor. As Michael Scott would say "My biggest flaw is working too hard" Jack is upset that his successor did not turn out to be person of questionable moral values and shady accounting genius.
jpmattia 7y ago
> Much of those gains came from GE Capital Worth noting: The only reason GE did not go bankrupt in 2008 was because the government bailed out GE Capital. It's doubtful that GE Capital's risks were being properly accounted for when Jack was in charge, and it was a large fraction of Jack's balance sheet.
lquist 7y ago
I've always subscribed to the theory that the true measure of a leader is what happens after they are gone.

Ididntdothis 7y ago

“he gave himself an A for his execution of its operations, and an F for his choice of successor.” That alone disqualifies him as a leader “I did everything right but others screwed it up”.

tyre 7y ago
What story does the evidence tell you? If you're going to disqualify someone as a leader, Jack Welch is not that guy.
- unlinked_dll 7y ago
  It tells me that he built a house of cards and left before the wind knocked it over
- buran77 7y ago
  He's the type of leader who grew the company on a minefield of figurative debt and real hidden costs. Leaving behind something with a solid foundation makes you a good leader. Getting out in time from a Ponzi scheme you built doesn't. Another trait of a real leader is to be able to grow another leader who can do the same. By his own statements he failed.
  - Ididntdothis 7y ago
    And you don’t complain publicly about the people you hired. Especially while loudly proclaiming how good you are at hiring.
    - michaelt 7y ago
      The quote does say "according to friends" - so maybe he only complained privately.
      - rumanator 7y ago
        The problem isn't his choice of audience, but his choice of message.
      - Ididntdothis 7y ago
        It doesn’t really matter. In his book he portrays himself as a great teacher and coach. So not his successor failed but Welch’s mentoring failed. He had all the tools available to bring up a successor but couldn’t do it. Reminds me a little of the US president. Take credit for everything positive that happens and when something goes wrong, point at somebody else and often at somebody he personally selected and hired.
  - tyre 7y ago
    GE crashed nearly a decade after he left. He spent decades building GE into a powerhouse in many industries. Finding a leader who can replace you is a miniscule piece of being a leader. Also, that's ultimately the Board's responsibility. The CEO reports to them.
    - buran77 7y ago
      Even a weak foundation takes time to crumble. Jack Welch built the foundation for GE's growth on the surface of a bubble that would burst in 2008. Perhaps the real mistake of his successor was not jumping off the pyramid soon enough. https://www.nytimes.com/2017/06/15/business/ge-jack-welch-immelt.html https://www.nytimes.com/2017/06/15/business/ge-jack-welch-im...
hristov 7y ago
And to be clear he was absolutely lying about that. Immelt was certainly a problematic leader, but a lot of the problems with GE happened under Welch. The biggest issue with GE was massive insurance liabilities for assisted living insurance which drastically exceeded anything GE predicted. Well Welch started the insurance business in GE and took on a lot of these liabilities. And while Immelt certainly had his problems, his mistakes were basically in the fact that he continued the Welch strategy rather than make new types of mistakes.
- PaulHoule 7y ago
  I remember people like Suze Orman were always handwringing since the 1990s about "Why doesn't the market take off in long-term care insurance?" The obvious answer is that it doesn't work. One is that inevitably you get done in by cost disease, the other is that LTC insurance has a narrow market of people that can afford it but are not rich enough that they don't need it.
  - Spooky23 7y ago
    It is a deeper problem than that. Why buy insurance when you can create a trust to hide your assets and have the taxpayer pay? (Once you’re broke, you go on Medicaid) There’s no nice nursing home or homecare. You just need enough money to get in, and the provider can’t kick you out. If you have a good support network, the only “enhanced” level of care is hiring people off the books with cash.
- devonkim 7y ago
  Furthermore, people asked Jack Welch about the GE Capital spin-off and he said he agreed it was the right decision for the business. So I find it contradictory how Welch could feel bad while agreeing with major strategic decisions. Was it an execution problem? Because no amount of execution would have saved GE Capital given all the scathing criticisms I read. The entire financial sector became hazardous waste during the financial crisis, so unless GE Capital was as strong as a top tier Wall St bank it wasn't about to survive I'd imagine.
- rumanator 7y ago
deleted 7y ago
[deleted]

programbreeding 7y ago

>Much of those gains came from GE Capital >GE’s profit has plunged in recent years, dragged down by hidden costs in the company’s Capital unit >he gave himself an A for his execution of its operations, and an F for his choice of successor Am I reading it right that the reason GE Capital was so successful during his time was because there were hidden costs, making it appear more profitable than it was, that didn't come out until later? Or did this hidden costs actually not exist until choices that were made after he left?

deleted 7y ago
[deleted]
pdonis 7y ago
> Am I reading it right Yes.
salawat 7y ago
Yes. You are reading it right. The best way to describe the management style of the 80's onward would be a financially engineered pump-and-dump characterized by putting workers through the meat grinder, and shirking any social responsibility that could be conceivably avoided by any means possible. Those are the basis of the hidden costs. Each person that got sacked took more institutional knowledge with them, and each responsibility shirked was just a matter of time before it came back around to bite the company on the balance sheets. Once 2008 hit, seeing as most of the value the Capital part of the company had was found to be a house of cards, nearly taking the company out with it. When the price of growth is to be an absolute bastard; one should wonder whether the price is too high. Note also that Reich's management style basically required the Reagan era deregulation to thrive. He was far more reserved when Unions actually had teeth. Really a shining example of what not to emulate in my book. If you have to sacrifice long-term stability for short-term growth, you're misreading the landscape.
- sgt101 7y ago
  >If you have to sacrifice long-term stability for short-term growth, you're misreading the landscape Or eyeing your bonus pot and the golf course / opera house. Shareholders are holding for 3-6mths, executive incentive is aligned to those time spans.

geodel 7y ago

> he sometimes said he gave himself an A for his execution of its operations, and an F for his choice of successor. As Michael Scott would say "My biggest flaw is working too hard" Jack is upset that his successor did not turn out to be person of questionable moral values and shady accounting genius.

jpmattia 7y ago

> Much of those gains came from GE Capital Worth noting: The only reason GE did not go bankrupt in 2008 was because the government bailed out GE Capital. It's doubtful that GE Capital's risks were being properly accounted for when Jack was in charge, and it was a large fraction of Jack's balance sheet.

lquist 7y ago

I've always subscribed to the theory that the true measure of a leader is what happens after they are gone.