For years, Jack Welch and his management principles (particularly in human resources circles) have been praised, copied, written and talked about more often than any CEO I can remember in my lifetime.
No doubt he was a great CEO (he would be the first to tell us so).
Not so fast says an increasing body of research and opinion.
Was Jack Welch "the beneficiary of felicitous timing" and his unique ability to “manage earnings”? Was Jack Welch at best a "competent [people] manager" but nothing more?
Yes, according to a recent blog on the Economix | New York Times Blog titled Jack Welch and the Lone Ranger Theory written by Uwe E. Reinhardt. Read the aricle - it's excellent and he makes a ton of great points.
As the chart on this page shows, GE is in big trouble these days. Their stock went from a high of nearly $60 per share in 2000 to about $ 8 last I checked. And they just slashed their dividend by nearly 80%.
But what does this have to do with Jack Welch? He left the company in 2001 with a stock price in the 50s. True, but he also hired, trained and hand-picked his successor Jeff Immelt and left Mr. Immelt a "hodge-podge conglomerate" with one division (GE Capital -a financial services company!) responsible for over 50% of the company's profits. So when the global financial house of cards collapsed so did GE - this had nothing to do with light bulb demand. The fact is GE was ill prepared to weather a downturn in financial services.
As I wrote in a blog posting last year titled Leadership. Lessons from Peter Drucker Part 2 of 3, "there is an old saying in the military that says ultimately, the most effective measure of a leader is the performance of their unit in his his/her absence....".
To be sure, this is not intended to be a pick on Jack Welch blog so much as a let's not get caught up in the flavor of the day mentality like we so often do in the human resources field and marketplace.
If this economy is teaching us anything, it's to be a little more humble; that the fundamentals of building great businesses and great leaders never really change - regardless of what the latest business book may tell us; that there are no tricks or gimmicks - or as Buffet says, "when the tide goes out, we find out who’s been swimming without a bathing suit"; and that there are no CEO messiah's - it takes a team, a big team, working together to make a great company, not a hundred million dollar (with benefits) man or woman.
Labels: GE, Jack welch, leadership