Was Jack Welch the Greatest CEO of His Day—Or the Worst? | Rare Techy
Reginald Jones, it seems, backed no one up against the wall. And he will never get sick in it The North Donate palm.
Did he see something in Welch that he didn’t see in himself? Was he so critical of his own position in the mainstream American corporation that he thought the revolution of the eighties was good? The most conservative explanation is that the transition from Jones to Welch came at the end of one of the most turbulent decades in the history of American capitalism, and Jones may have felt the sun was setting on him. in his degree of corporate paternalism.
After Welch, then forty-five, was named the new CEO of General Electric, Jones called him into his office to offer some final words of wisdom. Another recent book on Welch, David Gelles’ “The Man Who Broke Capitalism” (Simon & Schuster), discusses the transition:
Jones then beat his successor at a party at the Helmsley Palace Hotel, in midtown Manhattan, where Welch had too many cocktails and slurred his words to the group. The next morning, Jones burst into Welch’s office. “I’ve never been more embarrassed in my life,” she told Welch. “You embarrassed me and the company.” Welch is worried that he will be fired and lose his chance at glory before the start. Cohan writes, “He was depressed for the next four hours.” At lunch, he seems to have put his past problems behind him. That’s our Jack.
Welch believed that a corporation’s responsibility was to provide predictable and economic returns to its shareholders. In pursuit of this goal, he exploited a loophole in corporate finance. Companies that make things—companies like GE—have long been allowed to give money to their customers. They can act like banks, that is, but they are not real banks. Banks were plagued by all sorts of regulations that had the effect of reducing their cash flow. The markets considered it risky, so they paid more to raise money. But none of those blue-collar GE pressures mean that, when it comes to making money, Welch’s unfunded bank can put traditional banks to shame. He used the proceeds from GE Capital to buy hundreds of companies. During a warm day at GE’s property, Welch shared a series of principles his colleagues held. Get the unemployed without regrets. Eliminate businesses that are not first or second in their market segment. Your job is to enrich your shareholders.
In his interview with Varney, Welch asked the audience how, in implementing these principles, the CEO can show the difference between the leaders who create the “screen ” and those who only create “fear.” Welch explained that there are four types of managers:
In a perfect world, the interviewer would ask a follow-up question: What are these “values” you’re talking about? It’s true that the need to meet Wall Street’s quarterly estimates—something like that listen as a value in Welch’s world—it does not correspond to a true belief system. And the following may be repeated: Doesn’t the fourth category—the “powerful” manager who does the numbers but has no value—sound exactly like you, Mr. Welch?
But questions like Welch’s are rare. So the individual remains opaque, and the best we can do is try to piece together the clues scattered throughout “Power Failure.”
Once during Welch’s sophomore year of high school, his hockey team lost to a cross-town rival, and Jack, who had scored his team’s only two goals, threw his stick at on anger. Cohan writes:
After college, at the University of Massachusetts, Amherst, he earned a Ph.D. in chemical engineering at the University of Illinois. His thesis is about decompression in nuclear power plants. “I thought it was the most important thing in my life,” he told Cohan. For many people, years of immersion in complex mental work can leave a mark. Not for Welch. Radiation does not occur in nuclear plants.
Golf, by contrast, was “one of the few things in Jack’s life,” Cohan writes. “One way or another, it’s still golf.” But did he like the game for its own sake? Or is it normal, to adapt Clausewitz’s expression, to continue business by other means? After Welch left GE, there were rumors of his retirement package. A pension of $7.4 million a year and a mountain of benefits. He used a company Boeing 737, which costs $3.5 million a year. He got an apartment at Donald Trump’s 1 Central Park West, with deals at the Jean-Georges restaurant downstairs, courtside seats at Knicks games, car and driver insurance, box seats at the Metropolitan Opera , prices for diamonds and jewelry, and so on—all this for a man worth nearly nine hundred million dollars. And finally, GE agreed to pay the monthly fees at the four golf clubs where he played. It would be nice to hear from a premium attorney who chose that last line item. Is it a labor violation? Welch believed that golf was the most important part of his job as CEO, and should the company’s shareholders pay those monthly fees?
A few months after recovering from her bypass surgery, Welch went to see her cardiologist, Cary Akins. They were friends. “He’s very kind for a very strong person,” Akins told Cohan. Welch wanted the deal done on Friday, giving him three days of recovery under his belt before the news hit the stock market—and Akins agreed. Now Welch wanted to talk.