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> As the Corner Office columnist for The New York Times, I've spent the last several years speaking with hundreds of top CEOs about their careers, their mentors

by whack 4y ago

> As the Corner Office columnist for The New York Times, I've spent the last several years speaking with hundreds of top CEOs about their careers, their mentors, and their approaches to management. Over the course of these conversations, it's become clear that the best leaders share a common set of attributes — characteristics like emotional intelligence, the ability to think long term, and a commitment to serve multiple stakeholders at once. > In my new book, I explain what he got wrong. It seems odd to accuse Welch of poor long-term results. The guy was CEO of GE for 20 years. To put this in context, that's longer than Google's entire post-IPO history. And during these 20 years, he grew GE by 30x, and outperformed the index 3.3x, despite GE already being a large blue-chip corporation when he took over. How many of the people interviewed by this author have a more successful long-term track record? If you're judging Welch by metrics such as "compassion" and "empathy" and "humanity", you can argue that he got a ton wrong. By that same lens, you can also argue that people like Steve Jobs, Elon Musk, and Alex Ferguson were absolute failures. But if you're judging Welch as a businessmen, using the same metrics that most businessmen aspire to attain, it's downright silly to condescend to him.

jacquesm 4y ago
That's one way of looking at it. Alternative view: he burned up a cash cow for short term gains and it ended up being a shell of the company at its peak. You can get a lot of mileage from a loom if you burn it, so much heat! What will you even do with all that heat? And then you need to make more fabric. Too bad you burned your loom.
epups 4y ago
> He did it by embracing financialization. GE was an industrial company when he took over — making most of its money selling appliances, light bulbs, power turbines and jet engines. By the time he retired, the company derived much of its profit from GE Capital, which was essentially a giant unregulated bank. Welch called it 'the blob' — it was an amorphous, ever-changing collection of financial assets, capable of delivering whatever adjustments were most advantageous to the parent company in a moment’s notice. The finance division became GE's center of gravity, ultimately accounting for 40 percent of its revenue and 60 percent of its profit. With so much money coursing through the finance division, Welch used it to his advantage, shifting zeros throughout a sprawling international web of subsidiaries, and extracting whatever he needed to meet or beat analysts’ estimates for nearly 80 quarters in a row, an unprecedented run. It was what one influential analyst called 'earnings on demand.' "There was very little transparency," said Beth Comstock, a longtime GE marketing executive. "GE had a financial army that was able to close the quarter the way we’d said we would." And Welch pursued his quest to inflate GE's valuation with a gusher of share buybacks and dividends that fundamentally altered expectations about who is entitled to the riches of this land. After decades when corporations proudly talked about how much they were spending on payrolls, research and development, and even taxes, Welch made it clear that if companies wanted to succeed on Wall Street, they ought to put investors first. The article explains this apparent contradiction. His sole objective was to increase share price at any cost, including derailing GE's core business and practicing all sorts of financial tricks. And the company collapsed after his exit, it is now worth less than before Welch took over. This is not what success looks like to me, even purely as a businessman.

by whack 4y ago

jacquesm 4y ago

That's one way of looking at it. Alternative view: he burned up a cash cow for short term gains and it ended up being a shell of the company at its peak. You can get a lot of mileage from a loom if you burn it, so much heat! What will you even do with all that heat? And then you need to make more fabric. Too bad you burned your loom.

epups 4y ago

> He did it by embracing financialization. GE was an industrial company when he took over — making most of its money selling appliances, light bulbs, power turbines and jet engines. By the time he retired, the company derived much of its profit from GE Capital, which was essentially a giant unregulated bank. Welch called it 'the blob' — it was an amorphous, ever-changing collection of financial assets, capable of delivering whatever adjustments were most advantageous to the parent company in a moment’s notice. The finance division became GE's center of gravity, ultimately accounting for 40 percent of its revenue and 60 percent of its profit. With so much money coursing through the finance division, Welch used it to his advantage, shifting zeros throughout a sprawling international web of subsidiaries, and extracting whatever he needed to meet or beat analysts’ estimates for nearly 80 quarters in a row, an unprecedented run. It was what one influential analyst called 'earnings on demand.' "There was very little transparency," said Beth Comstock, a longtime GE marketing executive. "GE had a financial army that was able to close the quarter the way we’d said we would." And Welch pursued his quest to inflate GE's valuation with a gusher of share buybacks and dividends that fundamentally altered expectations about who is entitled to the riches of this land. After decades when corporations proudly talked about how much they were spending on payrolls, research and development, and even taxes, Welch made it clear that if companies wanted to succeed on Wall Street, they ought to put investors first. The article explains this apparent contradiction. His sole objective was to increase share price at any cost, including derailing GE's core business and practicing all sorts of financial tricks. And the company collapsed after his exit, it is now worth less than before Welch took over. This is not what success looks like to me, even purely as a businessman.