Why Jack Welch won't be missed
Commentary:
(MoneyWatch) So Jack Welch is leaving Fortune and Reuters, and apparently they aren't terribly sorry to see the former General Electric (GE) CEO go. Neither am I.
The ostensible reason for his departure is that he tweeted criticism of the U.S. Labor Department's September job report last week, implying that they were manipulated. He had no evidence, merely suspicions.
For "Neutron Jack" to pose as an expert on jobs creation was bizarre. After all, on his watch GE had eliminated some 100,000 jobs, an odd legacy for a company that was supposed to be growing. But creating business was never Welch's forte. What he was famous for was a stock price that rose almost every quarter, with an accuracy and reliability that suggested his core capability was closer to accounting than business creation. (GE did subsequently settle accounting fraud charges in 2009, paying a fine of $50 million.)
The one time GE made less money than the preceding year was in 1994, when its Kidder, Peabody banking unit wracked up derivatives-related losses of $350 million, a huge sum at the time. Welch conceded that he didn't really understand derivatives and, rather than answering awkward questions about the firm, he got rid of the subsidiary. If he'd taken the trouble to understand the business he'd been in, we might all have understood how lethal derivatives could be a good deal earlier.
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For years now, Welch has been an embarrassing dinosaur. In his self-congratulatory memoirs, while boasting of how committed he was to diversity, he also regaled his readers with how much fun it was to spend his Saturdays at the office with the boys, working most of the day and finishing off with golf. The image and the facts he conveyed said more than a million diversity statements ever could.
Well-known as a leadership guru, it's always struck me that his legacy hasn't proved inspiring. Never mind the fiasco of his departure, when the largesse of his exit package proved so embarrassing that he had to give much of it back.
The alumni of Welch's reign have hardly done him proud. Robert Nardelli, disappointed not to get the top job at GE, left to run Home Depot (HD) and nearly destroyed it. Jim McNerney, another disappointed contender, took over Boeing (BA) in 2005, and its stock price is still pretty much where he found it. Not a great track record for a leadership expert.
But I think the most damaging aspect of Welch's legacy is the style of leadership he helped perpetuate.The embodiment of the heroic soloist, Welch has always promoted the idea of business leadership as something done by a single brilliant, uniquely gifted man who towers above his minions in intellect, power, insight and foresight. That he regularly enjoyed publicly intimidating his executives and belittling their skills has become the stuff of legend.
This concept of leadership is, and always has been, dangerous nonsense. That it should produce the hubris required to accuse the U.S. government of conspiring to cook federal jobs data without a shred of evidence is no surprise. And like a sulky boy, Welch is now taking his ball away and refusing to play with Fortune, which had the guts to call him on his allegations. He now prefers the warm embrace of the Wall Street Journal. Now there's a media outlet that should know a lot about heroic soloists as leaders.
