Even during his final year as the CEO, wide diversity in a conglomerate fell out of fashion with both investors and customers and some cracks were starting to show. The dot-com crash, the 9/11 terror attacks and the 2008 financial crisis added several more nails to the GE model and the brand was significantly tarnished.
It was in 2001 that I had a chance to meet Jack Welch – the legendary CEO of GE, who recently passed away. It was just a few weeks after the 9/11 terror attacks and Jack had just retired as the CEO of GE. Both of us were at a conference in Orlando, Florida and Jack was the main draw of the event. I was one of the speakers at a breakout session. He had just released his book “Straight from the Gut” and I spent some time with him and got an autographed copy. It was certainly a dream meeting!
Fix it, close it or sell it…
Jack had attained mythical status as GE’s CEO for almost 20 years – a period during which the company’s market value grew from under $13 billion to over $400 billion – and Fortune magazine famously called him “manager of the century.” His relentless push towards market-share growth and shareholder returns both brought out the best in GE for a long time and, in hindsight, also masked several concerns. GE was so diversified – from electric bulbs and entertainment to healthcare devices and aircraft engines but Jack wanted every segment to be number 1 or 2 in its category. One of his famous statements around that maniacal focus was “fix it, close it, or sell it.” Despite being around for more than 100 years, GE was referred to as “the house that Jack built.”
hE helped trigger india’s back-office ascent…
The economic ascent of the country and business in the United States certainly helped, but Jack was both a visionary and a ruthlessly-focused leader who capitalised on these. He was one of the first global leaders who helped trigger the entire technology outsourcing boom. The story of how he enabled Azim Premji and Wipro (then a modest tech firm trying to make it big) grow is quite an interesting one. India’s ascent as a technology back-office expert and the subsequent value-additions up the chain owe a lot to Jack and GE.
Even during his final year as the CEO, such diversity in a conglomerate fell out of fashion with both investors and customers and some cracks were starting to show. The dot-com crash, the 9/11 terror attacks and the 2008 financial crisis added several more nails to the GE model and the branding was significantly tarnished. Soon after retirement, his stature also took a hit when his extra-marital relationship with Suzy came to light and led to an acrimonious divorce from his wife Jane. IE covered this episode in his magnum opus (Straight from the gut – IE 15-29 Sept 2002).
GE is now has its third CEO after Jack and struggling to be both relevant and respected. The once-famed policies around growth at all costs, the people strategy of ‘shedding’ annually the bottom 10 per cent of performers, the lack of cohesion amongst its various businesses, all came under harsher scrutiny.
It is always easy to criticise yesterday’s happenings with today’s lens, but it isn’t always fair. What used to be acceptable in society in general and business in particular, is much more debated today. Social media has also provided the platform to highlight many of the issues (not all of them good) that previously would have been okay.’ RIP Jack Welch.