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Was Jack Welch the greatest CEO of his day, or the worst?
- mitchbob 4y agoArchived: https://archive.ph/dlnS6 https://archive.ph/dlnS6
- breck 4y agoGE capital was a mistake IMO. I worry Apple might make the same mistake with Apple Card or whatever. Easy money in the short run, attracts the wrong kind of zero sum people in the long run (and takes away focus from engineering and building things of positive sum value)
- PaulWaldman 4y agoApple is continuing to invest and do well in their core business though. GE had a policy during Jack's tenure that if GE were not number 1 or 2 in a business segment, they'd get out it. This caused GE to shed many of their traditional capabilities.
- breck 4y agoAh I vaguely remember this from reading his autobio a long time ago. Seems like a non-sensical rule.
- kamaal 4y agoIn hind sight, yes. While aiming to be at the top 1 - 2 of the stack is always a nice thing to do. Shutting down established revenue streams to achieve it is equally bad. In many ways it is also lazy. If you won't work on a business to make it the top 1 - 2, you just shut it down. That says better people need to be CEO, especially for a conglomerate like GE. You are supposed to make money by expanding existing businesses, not by tuning the knobs and dials of the existing ones.
- PaulWaldman 4y agoI read the book too and thought it was ironic that both businesses and employees were subjected to stack ranking within GE, yet Welch was praised while failing to maximize long-term shareholder value.
- tkk23 4y agoFrom that book I vaguely remember that he negotiated a deal with his wife that he was proud to break while she maintained her part. It was something like he visits art installations with her if she plays golf with him. He didn't seem to realize that he most likely killed his marriage with that attitude. He was winning while losing.
- Spooky23 4y agoI don’t like Jack Welch but you need to consider that policy in context. GE was a weird company with a professional management class that were sort of like military officers. They were lifers and would travel around the country to run factories or whatever. You lived in your little GE town, and the location and size of your house was based in your corporate stature. You may be a plant manager building turbines in upstate ny, and then be promoted to some new role making washing machines in Kentucky. The problem, like the military, it that it creates an insular and sort of incestuous culture that is hard to control centrally. It was similar to IBM in some ways. Alot of the “genius” of Jack Welch was reverse engineered as some visionary nonsense but was really about killing the old GE hierarchy.
- datavirtue 4y agoIf that was the goal then he completely failed. That company's manager class mindset is burned in and they will passively ignore the CEO or whatever manager is above them. This mindset trickles down through the hierarchy and makes the place immovable. It's passive aggressive power play all the way down.
- ksherlock 4y agoShed businesses and narrowly define their business segment, eg #1 in servicing GE nuclear reactors vs #3 in servicing all nuclear reactors
- bredren 4y agoI see the opposite. Apple has no choice but to tackle some aspects of finance because existing banking is so predatory. So far each component they’ve taken on has set new expectations unseen in consumer banking. Notably privacy of purchase history and shared credit history between couples who share a credit card.
- breck 4y agoIt's dangerous though. If you hit a problem you leave Apple world and are routed to GS. I was loving the card then went through the worst customer support experience of my life (literally almost cost us our mortgage b/c they ended up filing a mark against our perfect credit, for a $4.99 WaPost charge I disputed, until finally an email to the big man Timmy himself landed and some deputy called us and got it settled—god bless her). So maybe they've fixed all of that, but it was a year long customer service nightmare
- voakbasda 4y agoWere you in the process of closing? I can’t imagine a scenario where a $5 dispute would cause problems with an established loan.
- breck 4y agoYes. I mean it was the first time I had been in that situation, so maybe the mortgage was never in jeopardy. I just remember coming home to a message from our banker asking about a negative report from an Apple card and freaking out until Apple/Goldman withdrew it.
- bredren 4y agoThanks for sharing this. I'd say its a lot of responsibility to get right, but not necessarily dangerous. And fwiw, I've seen old, established banks make reports that are objectively incorrect but then do everything possible to avoid fixing it. On something like this, though, I'm glad you were able to get an email routed down from TC. I had multiple instances of this with matters addressed to Bezos but never with Apple.
- lotsofpulp 4y agoApple is not the lender with Apple (credit) Card.
- scarface74 4y agoCobranded cards are always managed by the bank. The bank takes the risks not the partner
- HWR_14 4y agoThe Apple Card is a partnership with GoldmanSachs, IIRC. That is, they outsourced the zero-sum thinking to Wall Street.
- mc32 4y agoI am under the impression Jeff Immelt inherited a barn of cards and the cows finally came home under his watch -making him look less than stellar. It looked like Jack was your great Engineer-cum-MBA but instead there were accounting tricks that eventually caught up to the company after he retired. On the other hand, aiming to be among the top three of anything you were heavily in seems like a good idea to drive improvement and growth to stay there.
- apohn 4y agoThere's a good book (albeit, a bit repetitive as you read it) about the fall of of GE. If I remember correctly the book basically confirms what you said about Immelt inheriting a lot of problems that were hidden behind accounting complexity at GE. https://www.amazon.com/Lights-Out-Delusion-General-Electric/dp/0358250412 https://www.amazon.com/Lights-Out-Delusion-General-Electric/... Not that Immelt was a star either, but he he wasn't the person who created a lot of these problems.
- noneeeed 4y agoI’m sure I remember an interview with him looking back at his time taking over from Welch where a bunch of people basically commiserated him on his appointment because they knew what a bunch of short term financial engineering he was walking into.
- lkrubner 4y agoJack Welch was one of many voices in the 1980s and 1990s that oversaw the deindustrialization of the USA. The USA lost almost 2 million manufacturing jobs in the 1980s. We shouldn't blame Jack Welch for much of that deindustrialization, as there were other, larger forces at work. At least in the early part of the 1980s, President Reagan sought a "strong dollar" which made the dollar so strong that USA manufacturers had no hope of competing on international markets, and so in that sense, Jack Welch was only responding to the circumstances he was dealt. But his focus on "shareholder value" also meant that he signaled, and was in favor of, the end of the era when big USA corporations were making long-term bets in speculative technologies. And allowing the rise of GE Capital meant he was very much part of the movement that saw the USA retreat from manufacturing and focus instead on finance. So to the extent that he was simply reacting to circumstance, we can admire his flexibility, but his focus on short-term results, and his retreat from long-term results, we can blame him for his part in the deindustrialization of the USA. More about that deindustrialization here: https://demodexio.substack.com/p/why-did-the-west-deindustrialize https://demodexio.substack.com/p/why-did-the-west-deindustri...
- jasonlotito 4y agoFYI: Not sure if you know, but that article works to block you from reading it and asks you to sign up for something. I don't know, I just back out of any user hostile BS like that point. Maybe you have a better article from a source that isn't clearly hostile to visitors?
- CPLX 4y agoThis isn’t a hard call. He destroyed one of the most established and valuable companies in history by fabricating financial results and siphoning off company money.
- beckingz 4y agoWorst. He was great at hiding how much damage he was doing though!
- adventured 4y agoNot necessarily, he got quite lucky with the macro context. The roaring 1990s stock market temporarily helped to camouflage a lot of disasters, such as Worldcom, Enron, Adelphia, and the disease spreading inside of GE. When times are that good, big shareholders ask a lot fewer questions generally.
- thomasjudge 4y agoThis is a Malcolm Gladwell article
- mjhay 4y agoA broken clock is right twice a day.
- thrillgore 4y agoHe's not that bad of an author, he just covers topics from a snide populist angle. When you keep that in mind, even Blink is tolerable.
- dontbenebby 4y agoI like how Betteridge's law of headlines breaks down when there's "or" logic in the headline.
- deleted 4y ago[deleted]
- skhm 4y agoWell, not necessarily - he's almost certainly niether the greatest nor the worst CEO of the time, and so "No" is still the answer.
- dontbenebby 4y agoI laughed -- you're correct. It's so hard to say what a perfect 10 (or 1) is, that one could say that part is... subjective.
- lordnacho 4y agoHis legend could hardly have been bigger back in the day. A lot of it is the public's desire for a hero to worship. Whatever happened to celebrating the safe-pair-of-hands guy who just stirs his pot? That's still a difficult job, but we absolutely have to have action-men who do cold-hearted things like stack ranking.
- thrillgore 4y agoRank and yank is a poison and GE is now using OKRs. Let that set in.
- adventured 4y ago> Whatever happened to celebrating the safe-pair-of-hands guy who just stirs his pot He's running Apple, the world's most valuable company, and he's modestly celebrated for being a competent, fairly quiet, safe pair of hands. He's not a product-visionary person like Jobs, and he's not a loud salesperson like Ballmer; he's a relatively boring logistics person. He's very well paid and so far Wall Street has been quite happy with him and the results he has helped to deliver. While most of the tech side of the stock market cratered, Apple held up well and Apple keeps producing record profits year after year (while not hollowing itself out ala an IBM for short-term gains).
- nytesky 4y agoWasn't this already broached in depth with a book showcased on NPR? https://www.npr.org/2022/05/31/1102165413/did-jack-welch-break-capitalism https://www.npr.org/2022/05/31/1102165413/did-jack-welch-bre...
- rexreed 4y agoWhat does Greatest CEO even mean? Great for who? The shareholders? The employees? The customers? The world? Maybe we shouldn't be looking for "greatness" from a CEO.
- TuringNYC 4y ago>> What does Greatest CEO even mean? Great for who? The shareholders? The employees? The customers? The world? Maybe we shouldn't be looking for "greatness" from a CEO. Great question. Since the CEO works for the board, which works for the shareholders, I assumed "great for shareholders" -- however, I was asking myself a different question -- "great on what timeline". It is easy for CEOs to borrow from the future, have great earnings, improve stock prices...only to let the company fail in the long term.
- WeylandYutani 4y agoTimeline means "buy low sell high" for investors. Who cares if the whole thing collapses after your exit?
- TuringNYC 4y ago>> Timeline means "buy low sell high" for investors. Who cares if the whole thing collapses after your exit? Some investors care. "Buy low sell high" might be good for low and medium latency traders, corporate raiders, and the like. Long-term investors (mutual funds, etfs, index funds, pensions, endowments) care very much. Many expect to hold for a decade or longer.
- objektif 4y agoWhy not all? We should definitely be looking for greatness from CEO and other top level execs.
- rexreed 4y agoWhat is great for shareholders is often not great for employees. What is great for customers is often not great for shareholders. These are often tradeoffs, so "all" is rarely an option.
- deleted 4y ago[deleted]
- newsclues 4y agoFinancial engineering for short term profit at the expense of long term success is not unique but GE is a remarkable case study.
- thrillgore 4y agoI generally think Jack got it right with performance evaluation, but Rank and yank has done so much damage to the American Worker, corporation value, and deindustrialization that he earns no love from me.
- mensetmanusman 4y agoHe was great for: -financial engineers -increasing profit margins - he was bad for: -blue collar manufacturing (which got outsourced to countries with low regulations) -the environment (due to lack of regulations) -culture of business leadership -next generation of workers / young people
- Tangurena2 4y agoAlso: "stack and rank" or "stack ranking". He made that popular in the business journals, so all sorts of companies introduced it. It doesn't matter if every one of your staff are supergeniuses, at least one has to be ranked "subpar" and fired that year. Stack-ranking turned Microsoft from a great place to work for into a festering bunch of backstabby politicians. It isn't enough to be a good or great worker, you must be better than your coworkers - so sabotaging their work becomes job number one. https://www.theverge.com/2013/11/12/5094864/microsoft-kills-stack-ranking-internal-structure https://www.theverge.com/2013/11/12/5094864/microsoft-kills-... https://slate.com/technology/2013/08/stack-ranking-steve-ballmer-s-employee-evaluation-system-and-microsoft-s-decline.html https://slate.com/technology/2013/08/stack-ranking-steve-bal...
- datavirtue 4y ago"festering bunch of backstabby politicians" This is the most succinct description of GE I have ever seen.
- namelessoracle 4y agoWelch's apprentices at GE went along to wreck havoc on several companies as well.
- refurb 4y agoGE failed to innovate in their core business and ended up using financial offerings to boost earnings. It worked great until the financial crisis and they woke up and realized there wasn’t much left.
- ElfinTrousers 4y agoWell, depending on how you define "his day", perhaps Ken Lay would qualify, so in that case Welch would only be second worse.
- Tangurena2 4y agoJack liked to film his "town hall" meetings. At one, an employee asked about "company loyalty". Jack replied "if it is Friday, and you got paid, then we're even". I disliked many things about him, one of which was the insistence that every department had to be a profit center. Like the service department. Do you ever wonder why repair parts are so expensive? Or why they might not be available at all? You can thank Jack for that. Or the prevalence of "stack and rank"? That's Jack again.
- mikestew 4y agoJack replied "if it is Friday, and you got paid, then we're even". That's probably one of the few Welch quotes I actually agree with. Granted, I take it from the "employee loyalty" POV, but it works the same going either direction. Ironically, I get paid today, so we are even. Tomorrow, the company and I start over.
- MilStdJunkie 4y agoGreatest? Then where is General Electric today? It's gone.
- zrobotics 4y agohttps://archive.ph/dlnS6 https://archive.ph/dlnS6
- _448 4y agoThe book "Jack: Straight from the gut" is an interesting read. He has earned his accolades. But the part where he describes and justifies the "5-X-5" strategy of firing people is somewhat disturbing. We are seeing the repercussion of that even today through out various industries. The BBC's "Billion Dollar Deals" series had dedicated one episode to this very subject.