Jack Welch, Manager of the 20th century, dies at 84
NY: Jack welch , who led General Electric through two decades of extraordinary corporate prosperity and became the most influential business manager of his generation, has died. He was 84 years old.
The cause was kidney failure, said his wife Suzy Welch.
Combative and direct, Welch became the CEO of General Electric in 1981, a few months later Ronald reagan assumed the position of president of the United States. It was a time of huge profits for many of the large multinational corporations in the United States and their leaders, who were helped by lower taxes and business-friendly policies.
GE led the pack. The company's revenues increased almost five times, to $ 130 billion, during Welch's tenure, while the value of its shares in the stock market skyrocketed from $ 14 billion to more than $ 410 billion.
It was a time when successful and luxuriously paid corporate executives were more admired than resentful. Welch received a record compensation payment of $ 417 million when he retired in 2001. The magazine appointed him the manager of the century, and in 2000 the Financial Times named GE the most respected company in the world for the third consecutive year.
Welch's stardom extended beyond the world of business. At a 2000 auction for the rights of his autobiography, the Time Warner book unit won with an offer of $ 7.1 million, a record at that time. Jack: Straight from the Gut, written with John A. Byrne, was published the following year and finally sold 10 million copies worldwide.
Welch's years at GE combined strategic ideas with managerial innovations. At first, Welch recognized the emergence of Asia, then led by, as a manufacturing power, and abandoned the GE businesses he considered vulnerable, and moved to new ones.
He attacked the bureaucracy and made payroll cuts, creating a more entrepreneurial, albeit more Darwinian, business culture. He led the globalization of GE's business, expanding sales and manufacturing abroad. And it made GE much more dependent on finances, as banking and investment grew as part of the US economy.
Welch distils his management concepts in nuggets of a sentence. Control your destiny, or someone else will. Be honest with everyone. Bureaucrats must be ridiculed and eliminated. If we wait for the perfect answer, the world will pass us by.
Welch wrote in his autobiography that his goal at GE was to create a company full of self-confident entrepreneurs who would face reality every day.
Welch's formula was a sharp leap of management style in large corporations until the 1970s, with cadres of intermediate managers and large planning departments.
In the early 1990s, with the sharp increase in earnings and the price of GE shares, GE seemed to offer a model to make large companies more agile and competitive. It was a different form of management and took over, said Joseph L. Bower, professor emeritus at the Harvard Business School , who wrote a case study widely taught about Welch and interviewed him over the years.
Welch was also attacked while leading GE, especially for drastically reducing GE's workforce, which earned him the nickname of Neutron Jack. But most of the doubts about him and his legacy of management have arisen in recent years. The executive director of the superstar, focused on the laser to enrich shareholders, is often criticized today as a symbol of corporate greed and economic inequity.
The widely diversified corporation that Welch built is also in disuse, an idea underlined by GE's precipitous decline in recent years.
New York Times business columnist James B. Stewart wrote in 2017: “Almost no one considers Mr. Welch as a management model, and the conglomerate model he defended at GE: that with strict discipline, he could successfully manage any business provided that its market share was first or second, has been completely discredited, at least in the United States.
The financial crisis of 2008 hit the fortune of GE hard. In the years before the crisis, the company had built expanding loan operations that helped boost its growth. But financial businesses became a paralyzing responsibility when, during the crisis, credit markets froze and borrowers struggled to pay off their loans.
GE, like many large banks, used emergency government loans to help it overcome the turmoil. In the years after the crisis, GE sold most of its loan businesses, but other problems arose, some of which were in its large energy unit.
The price of GE shares now trades approximately 80% below the maximum reached in 2000. The company has significantly lower revenues than those of that year. Last year, GE reported a loss of $ 5.4 billion.