We offer this remembrance in honor of Jack Welch, who passed away at age 84 this week. He was the legendary CEO of General Electric during its hey day.
We divide this post into two parts. First, reflections on Welch’s career. Second, insights from Welch on what makes a great firm.
Reflections in Honor of Jack Welch
To many expert observers, Jack Welch (who served as CEO of General Electric from 1981 to 2001) was the “Manager of the Century,” as he was called by Fortune. According to 60 Minutes, the value of GE stock rose by several thousand percent during Welch’s tenure as CEO.
“The Welch years at GE combined strategic insights with managerial innovations. Mr. Welch early on recognized the rise of Asia, then led by Japan, as a manufacturing powerhouse. And he shed GE businesses that he deemed vulnerable, moving into new ones.”
He attacked bureaucracy and made sweeping payroll cuts. Thereby, creating a more entrepreneurial, if more Darwinian, corporate culture. He led the globalization of GE’s business. How? By both expanding sales and manufacturing overseas. And he made GE far more dependent on finance, as banking and investment grew as a share of the American economy.”
“The company’s revenue jumped nearly five-fold, to $130 billion, during Mr. Welch’s tenure. At the same time, the value of its shares on the stock market soared from $14 billion to more than $410 billion.”
What Makes Great Firms Great
After his retirement from GE, Welch was not idle on the business front — far from it. He engaged in business education, did numerous speaking engagements, authored/co-authored books, served on corporate boards, and did a whole more!
In March 2016, we wrote about Welch’s best business practices. Next, we present the highlights of that post:
Recently [February 2016], Jack and Suzy Welch contributed an essay on “6 things that distinguish great companies from average ones” for Business Insider. Great companies:
- “demonstrate a real commitment to continuous learning.”
- ” are meritocracies.”
- “Great companies not only allow people to take risks but also celebrate those who do.”
- “understand that what is good for society is also good for business.”
- ” keep their hiring standards tight.”
- “are profitable and growing.”
Click the image for an explanation of each of the above points.