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The Flawed, Twisted Legacy of Jack Welch
The GE icon became famous for conflating leadership with stock price — a practice that still haunts most businesses today
Jack Welch had terrific timing. Or at least he did in one key aspect of his long tenure as the chief executive officer of General Electric: Welch, who died yesterday at age 84, took the reins in the early 1980s — shortly before the start of the one of the great bull market runs in the history of the U.S. stock market. He retired in September 2001; his successor took over just a few days before 9/11, and right in time to absorb the dot-com meltdown.
This is not to say that the G.E.’s share price rose through Welch’s tenure simply because the broader markets did (although having the wind at your back never hurts). Indeed, G.E. decisively outpaced the market in those years. So much so, in fact, that it became one of the true glamour stocks of the 1990s — an era when the stock market became a kind of pop culture phenomenon, obsessed over on CNBC, open to wider participation through cheap online trading, hyped relentlessly by a business and finance press experiencing its own parallel boom.
This is the period that kicked off the dubious practice of measuring business leadership prowess almost entirely through the prism of share prices, or valuation more generally. And that is where Welch’s timing was exquisite: It was a time that practically demanded heroes (somebody had to be on the cover over all those magazines!), and Welch was happy to oblige.
Welch’s actual track record and legacy at G.E. the business (as opposed to GE, the ticker symbol) has proved rather more complicated.
By the time he retired, a slew of books claiming to reveal Welch’s leadership ways and wisdom clogged the business section of Barnes & Noble, and finance pundits called him “the CEO of the century,” among other accolades. In the years after, he wrote his own (mega-selling) books about his business philosophy, opined in the finance media, and founded the Jack Welch Management Institute. He was famous enough to cameo as himself on 30 Rock.
