He moved GE into businesses almost too numerous to count: computers, office products, internet servicing, CAD/CAM. That notion of interchangeable management expertise, like interchangeable parts in an assembly line, contributed to massive strategic stumbles under Welch. Soon after assuming office, Welch began a dizzying spiral of business pile-ups – making him the epitome of the “serial acquirers” of the 1980s. He also invested heavily in management development believing that general management expertise rather than Edison’s technological synergy was GE’s core competence. Welch did not care about fancy educational credentials, clubs, or social status. He encouraged people to speak their minds and relentlessly visited major customers and GE facilities, by surprise, for candid feedback. The son of a railroad conductor, Welch shattered rigid hierarchical structures and mediocre performance as a champion of the meritocracy. industrial giants such as Westinghouse, Bethlehem Steel, Woolworth’s, Litton Industries, Kodak, American Motors, Bendix, and the original AT&T. Welch stepped in to reverse that apparent industrial decline so that GE did not yet go the way of other once iconic U.S. Welch was named CEO in 1981 as an upset choice, bypassing a generational cohort of prominent executives who went on to run other companies as consolation prizes-among them American Express, International Paper, and Rubbermaid. Jones, the father of the Corporate Social Responsibility movement-the predecessor of today’s ESG movement-was a revered corporate statesman, but the company’s innovative edge had become blunted. GE’s revolutionary creations, from incandescent lamps to phonographs movies and household appliances and engines, were driven by the common core of synergistic expertise in electricity and electrical devices-much of which derived from GE’s pioneering industrial research laboratory.īy the late 1970s, this model had lost much of its energy, with GE losing 21% of its market value under Welch’s predecessor, Reginald Jones. Most of Edison’s inventions were not truly from his personal genius but came from his creative GE engineers, yet he never shared that credit as historian Jonathan Hughes described in his 1986 book The Vital Few: The Entrepreneur and American Economic Progress. Welch was not an inventor like Thomas Edison, but they were both accomplished engineers and relentless self-promoters. GE was incorporated in 1892, built on the assets of the Edison Electric company founded by Edison. If you also consider the frailty of Welch’s GE legacy through his successor the disadvantage becomes even more lopsided: The total shareholder return of GE from 1984 through last year was a sickly 745% vs 3,385% for the S&P 500 and 10,254% for Colgate. Over Welch’s same extended 18-year tenure, Mark produced 3,372% total shareholder return vs Welch’s 2,504%. In reality, Welch’s performance was overshadowed by more humble industrial titans such as Reuben Mark of Colgate-Palmolive. GE’s stock fell a full 25% his final year despite his self-congratulatory autobiography that year entitled Jack: Straight From the Gut. By the end of his reign in 2001, however, Welch’s model of a highly diversified industrial conglomerate was already faltering. Sure, there were some missteps in timing under Jeff Immelt as CEO, with the ill-advised purchases of Baker Hughes oil services and Alstom.īefore Immelt, GE was the darling of Wall Street under the leadership of Jack Welch, becoming the nation’s most valuable company. Culp is GE’s first outside hire as CEO in its 140 years, and having personally known his four predecessors, I can appreciate the different approach he has introduced.
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