(iStockphoto/josefkubes)Jack Welch’s leadership practices and accomplishments as CEO of General Electric for 20 years have once again come under scrutiny.
He is the subject of two recent books. Their titles—David Gelles’ The Man Who Broke Capitalism and William Cohan’s Power Failure—leave little doubt about what they think of Welch as a leader, although Cohan's is a more careful, balanced appraisal. For the Gen Zers and Millennials among us who don’t even recognize the name, this is a guy who, when he retired, was called “the CEO of the 20th century” by many business observers. Thirteen years into his tenure, GE became the most valuable company in the world.
Gelles and Cohan cite everything from failed acquisitions and strategies to brutal downsizing, forced ranking of managers, a poor environmental record, legal accounting practices designed to manage earnings, and failures of GE-trained leaders after leaving the company, just to cite a few anecdotes.
In the interest of full disclosure, several of us on the Harvard Business School faculty knew or had contact with Welch and his organization during his tenure. In my case, the contacts were several. They were academic in their orientation. Welch visited (and taught) in my General Management classroom. I both taught and watched him teach at GE’s executive development center in Crotonville, New York. I wrote and taught a case about the company.
Welch, of course, was a complex person. He reminded me of a backstreet brawler, but one with a PhD. and unbridled curiosity. With Jack Welch, one experienced an idea a minute. Some hit home, some didn’t. He and his team tried a lot of things—many of them were ideas developed elsewhere—and presumably kept most of what worked.
After all, Welch was a product of a GE talent development process heavily influenced in previous years by resident scholar Peter Drucker. GE ran a business school. Managers both taught and learned just as their CEO did. But in Gelles’ opinion, the school and the company turned out some real duds.
Welch fancied himself a good judge of people and character. He didn’t hire acolytes. I first met him in 1981, after he visited the class of the late HBS professor Richard Vancil, not long after he had become CEO. As we left class, he was in deep discussion with a woman student in the class who had gone toe to toe with him on several issues. Women in business faced incredible barriers at the time (and arguably still do)—there had only been two women CEOs in the Fortune 500 at that point.
As we gathered for lunch, Welch arrived a few minutes late and said, “Remember the woman in class that gave me such a tough time? I just hired her.”
When teaching about GE, warts and all, I liked to show a clip from an episode of Late Night with David Letterman on which Letterman, upon the acquisition of NBC by GE, decides that he’ll take a fruit basket over to the old Lexington Avenue headquarters of his new boss, GE. The clip shows the old building over and over, his problems even getting into the building, and what he calls “the official GE handshake.” The GE handshake was demonstrated by the head of building security who prevents Letterman from getting past the lobby of the building. Every time Letterman sticks out his hand to shake hands, the super first extends his hand then thinks better of it and avoids the handshake. He shows it over and over, in both real time and slow motion.
Letterman concludes the segment by commenting that it might be too early to tell how the marriage of the two companies will go but he sure hopes they’re going to enjoy that fruit basket.
It’s a complete roast of GE, its outmoded headquarters, and, by implication, its policies and other traditional ways. After nearly wearing out the tape, I misplaced it. Knowing Welch, it occurred to me that it was worth asking him if he had a replacement copy (obviously this was pre-YouTube). He said he used it all the time with GE colleagues to help them maintain perspective. And he sent me a new copy.
You may wonder why I’m having trouble with the question in the title, even if we ignore Welch’s post-retirement comments and public political posturing. GE employed some strategies that would be regarded today as archaic. I don’t doubt that the earnings were managed to come in close to target; GE’s management had the means to do so legally with its financial service businesses.
When necessary, the company downsized. More than one of its many manufacturing businesses polluted. Management repeatedly bought and sold companies, maybe more than they could manage coherently.
After Welch’s departure, his successors couldn’t maintain his performance (something both authors believe was inevitable given the mess in which some of the people they interviewed think Welch left the company).
On the other hand, under Welch GE either pioneered or stamped its approval on many useful practices that might not have otherwise enjoyed such widespread adoption. They include the Work-Out, Six Sigma quality, boundaryless behavior, firing managers who made their numbers but couldn’t manage according to the GE values, reverse mentoring in which young GE employees taught seniors how to use new technologies. And the company regularly rewarded investors.
So let’s assume you are both a practitioner (maybe even a former or current GE employee), a student of management, and even old enough to remember who Jack Welch was. You’ve had a couple of decades to look back on Welch’s accomplishments, both good and bad. And you’ve observed changes in the leadership environment since the turn of the century.
How would Jack Welch’s style of leadership fare in today’s world? What do you think?
Share your thoughts in the comments below.
References:
- William D. Cohan, Power Failure: The Rise and Fall of an American Icon (Portfolio/Penguin, 2022)
- David Gelles, The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America—and How to Undo His Legacy (New York: Simon & Schuster, 2022)