Jack Welch’s biggest failure after the BIG BIG ! mistake of his own designed GE Capital very short-term funding strategy... was the selection of his successor.
Jack Welch, quite a character. He built GE as we knew it in its glory days. His style may be questionable, but the results were always there. I worked at GE for almost 20 years, and years before, I handled the GE account as a banker at Citibank. What I saw in both cases was excellent performance. I agree that the choice of his successor was a mistake. Jeff Immelt wanted to be like his predecessor but never had the vision nor the stature, in addition to facing a couple of situations that undoubtedly were game changers definitively: September 11th and the financial crisis of 2008-2009. The combination of these factors proved to be fatal for GE as we knew it years ago. I highly recommend reading one of his books, especially this one: "Jack: Straight from the Gut."
GE Capital was a cluster**** waiting to happen in the years before it blew. It was taking on increasingly large risks with no concern for low probability (but very high risk) transactions and many of them were designed for optics of goosing earnings rather than economics. I remember reading one of GEs annual reports and marveling at the obfuscation of exactly what was transpiring. Not so different from Freddie Mac and Fannie Mae during the similar time period. Some of Welch's management style and goals made sense but "feared" managers almost always end up blowing up because they become victims of "persian messenger syndrome" as Charlie Munger put it: nobody wants to deliver bad news to the boss. Can't imagine what it would have been like to be the executive telling Welch he couldn't make earnings if he was dealing forthrightly (damn the risk). Doubt he would have lasted a day.
Not been too familiar with him, really appreciate your insights here
Thanks for reading, Tobi!
Jack Welch’s biggest failure after the BIG BIG ! mistake of his own designed GE Capital very short-term funding strategy... was the selection of his successor.
That's a sentiment that many share with you, Martin. Thanks for reading!
"Rank and yank" sounds like what any well-run corporation does. The alternative (punishing excellence, rewarding failure) is unbearable.
I agree. The term might be a bit brutal, but the main goal of a corporation is to make money. And the way you get there is through optimizing talent.
Jack Welch, quite a character. He built GE as we knew it in its glory days. His style may be questionable, but the results were always there. I worked at GE for almost 20 years, and years before, I handled the GE account as a banker at Citibank. What I saw in both cases was excellent performance. I agree that the choice of his successor was a mistake. Jeff Immelt wanted to be like his predecessor but never had the vision nor the stature, in addition to facing a couple of situations that undoubtedly were game changers definitively: September 11th and the financial crisis of 2008-2009. The combination of these factors proved to be fatal for GE as we knew it years ago. I highly recommend reading one of his books, especially this one: "Jack: Straight from the Gut."
GE Capital was a cluster**** waiting to happen in the years before it blew. It was taking on increasingly large risks with no concern for low probability (but very high risk) transactions and many of them were designed for optics of goosing earnings rather than economics. I remember reading one of GEs annual reports and marveling at the obfuscation of exactly what was transpiring. Not so different from Freddie Mac and Fannie Mae during the similar time period. Some of Welch's management style and goals made sense but "feared" managers almost always end up blowing up because they become victims of "persian messenger syndrome" as Charlie Munger put it: nobody wants to deliver bad news to the boss. Can't imagine what it would have been like to be the executive telling Welch he couldn't make earnings if he was dealing forthrightly (damn the risk). Doubt he would have lasted a day.