Jack Welch, ‘Manager of the 20th Century’, dies at 84

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NEW YORK: 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. The cause was renal failure, his wife Suzy Welch said. Combative and blunt, Welch became the chief executive of General Electric in 1981, a few…

NEW YORK: 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. The cause was renal failure, his wife Suzy Welch said. Combative and blunt, Welch became the chief executive of General Electric in 1981, a few months after Ronald Reagan took office as US president. It was a time of outsize gains for many of America’s big, multinational corporations and their leaders, who were helped by lower taxes and pro-business policies. GE led the pack. The company’s revenue jumped nearly fivefold, to $130 billion, during Welch’s tenure, while the value of its shares on the stock market soared from $14 billion to more than $410 billion. It was a time when successful, lavishly paid corporate executives were more admired than resented. Welch received a record severance payment of $417 million when he retired in 2001. Fortune magazine named him the “manager of the century”, and in 2000 the Financial Times named GE “the world’s most respected company” for the third straight year. Welch’s stardom extended beyond the business world. In a 2000 auction for the rights to his autobiography, Time Warner’s book unit won with a bid of $7.1 million, a record at the time. “Jack: Straight from the Gut”, written with John A. Byrne, was published the next year and eventually sold 10 million copies worldwide. The Welch years at GE combined strategic insights with managerial innovations. Welch early on recognised the rise of Asia, then led by Japan, as a manufacturing powerhouse, and he shed GE businesses that he deemed vulnerable, moving into new ones. He attacked bureaucracy and made sweeping payroll cuts, creating a more entrepreneurial, if more Darwinian, corporate culture. He led the globalisation of GE’s business, both expanding sales and manufacturing overseas. And he made GE far more dependent on finance, as banking and investment grew as a share of the American economy. Welch distilled his management concepts into one-sentence nuggets. “Control your destiny, or someone else will.” “Be candid with everyone.” “Bureaucrats must be ridiculed and removed.” “If we wait for the perfect answer, the world will pass us by.” His goal at GE, Welch wrote in his autobiography, was to create “a company filled with self-confident entrepreneurs who would face reality every day”. The Welch formula was a sharp break from the management style at large corporations through the 1970s, with cadres of middle managers and large planning departments. By the early 1990s, with GE’s profits and stock price rising sharply, GE seemed to offer a model for making big companies more nimble and competitive. “It was a different way of management and it took hold,” said Joseph L. Bower, a professor emeritus at the Harvard Business School, who wrote a widely taught case study of Welch and interviewed him over the years. Welch was also attacked when he was leading GE, especially for slashing the GE work force, which earned him the nickname “Neutron Jack”. But most of the second thoughts about him and his management legacy have arisen in recent years. The superstar chief executive, laser-focused on enriching shareholders, is often criticised today as a symbol of corporate greed and economic inequity. The widely diversified corporation that Welch built is also out of favour, an idea underlined by GE’s precipitous decline in the last few years. The New York Times business columnist James B. Stewart wrote in 2017, “Hardly anyone considers Mr Welch a management role model anymore, and the conglomerate model he championed at GE — that with strict discipline, you could successfully manage any business as long as your market share was first or second — has been thoroughly discredited, at least in the United States.” The financial crisis of 2008 delivered a blow to GE’s fortunes. In the years before the crisis, the company had built sprawling lending operations that helped drive its growth. But the finance businesses became a crippling liability when, during the crisis, credit markets froze and borrowers struggled to pay back their loans. GE, like many large banks, tapped emergency government loans to help it get through the upheaval. In the years following the crisis, GE sold off most of its lending businesses, but other problems emerged, some of which were in its large power unit. GE’s stock price now trades roughly 80% below the high it hit in 2000. The company has significantly lower revenue than it did that year. Last year, GE reported a loss of $5.4 billion.
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