[KKKKkkkk1]

The article has a good summary of his legacy and his gracefulness:

Under Mr. Welch, GE became known for consistent profit performance and a surging stock price. Much of those gains came from GE Capital, the finance arm that ballooned under Mr. Welch and would almost destroy the company during the 2008 financial crisis.

GE’s profit has plunged in recent years, dragged down by hidden costs in the company’s Capital unit and losses in the core Power business. The troubles have prompted the company to break itself apart, overhaul its leadership and slash its once-generous dividend. GE’s share price tumbled roughly 75% in 2017 and 2018, erasing $200 billion of wealth for millions of investors.

In his later years, Mr. Welch witnessed the GE he built get dismantled. The decline of the company pained him, according to friends, and he sometimes said he gave himself an A for his execution of its operations, and an F for his choice of successor.

[Ididntdothis]

“he gave himself an A for his execution of its operations, and an F for his choice of successor.”

That alone disqualifies him as a leader “I did everything right but others screwed it up”.

[hristov]

And to be clear he was absolutely lying about that. Immelt was certainly a problematic leader, but a lot of the problems with GE happened under Welch. The biggest issue with GE was massive insurance liabilities for assisted living insurance which drastically exceeded anything GE predicted.

Well Welch started the insurance business in GE and took on a lot of these liabilities.

And while Immelt certainly had his problems, his mistakes were basically in the fact that he continued the Welch strategy rather than make new types of mistakes.

[PaulHoule]

I remember people like Suze Orman were always handwringing since the 1990s about "Why doesn't the market take off in long-term care insurance?"

The obvious answer is that it doesn't work. One is that inevitably you get done in by cost disease, the other is that LTC insurance has a narrow market of people that can afford it but are not rich enough that they don't need it.

[Spooky23]

It is a deeper problem than that. Why buy insurance when you can create a trust to hide your assets and have the taxpayer pay? (Once you’re broke, you go on Medicaid)

There’s no nice nursing home or homecare. You just need enough money to get in, and the provider can’t kick you out. If you have a good support network, the only “enhanced” level of care is hiring people off the books with cash.

[rumanator]

> And to be clear he was absolutely lying about that.

So his legacy is not only a management style that imploded and dismantled a collosal corporation but also him being the kind of person that throws people under the bus, including his closest associates and hand-picked successors.

[devonkim]

Furthermore, people asked Jack Welch about the GE Capital spin-off and he said he agreed it was the right decision for the business. So I find it contradictory how Welch could feel bad while agreeing with major strategic decisions. Was it an execution problem? Because no amount of execution would have saved GE Capital given all the scathing criticisms I read. The entire financial sector became hazardous waste during the financial crisis, so unless GE Capital was as strong as a top tier Wall St bank it wasn't about to survive I'd imagine.

[tyre]

What story does the evidence tell you?

If you're going to disqualify someone as a leader, Jack Welch is not that guy.

[buran77]

He's the type of leader who grew the company on a minefield of figurative debt and real hidden costs. Leaving behind something with a solid foundation makes you a good leader. Getting out in time from a Ponzi scheme you built doesn't.

Another trait of a real leader is to be able to grow another leader who can do the same. By his own statements he failed.

[Ididntdothis]

And you don’t complain publicly about the people you hired. Especially while loudly proclaiming how good you are at hiring.

[michaelt]

The quote does say "according to friends" - so maybe he only complained privately.

[Ididntdothis]

It doesn’t really matter. In his book he portrays himself as a great teacher and coach. So not his successor failed but Welch’s mentoring failed. He had all the tools available to bring up a successor but couldn’t do it. Reminds me a little of the US president. Take credit for everything positive that happens and when something goes wrong, point at somebody else and often at somebody he personally selected and hired.

[rumanator]

The problem isn't his choice of audience, but his choice of message.

[tyre]

GE crashed nearly a decade after he left. He spent decades building GE into a powerhouse in many industries.

Finding a leader who can replace you is a miniscule piece of being a leader. Also, that's ultimately the Board's responsibility. The CEO reports to them.

[buran77]

Even a weak foundation takes time to crumble. Jack Welch built the foundation for GE's growth on the surface of a bubble that would burst in 2008. Perhaps the real mistake of his successor was not jumping off the pyramid soon enough.

https://www.nytimes.com/2017/06/15/business/ge-jack-welch-im...

[cxr]

> It goes like this: you can do the wrong things but be in a long enough feedback loop that the effects only really start to show themselves some time later. So rather than successfully correlating results to their real causes, what happens instead is:

> a) people fool themselves in the meantime that bad things aren't bad, and

> b) in the aftermath, when the consequences do start to appear, the temporal offset from the real root cause is so large, and they have so many other things to attribute failures to, that they can (and probably will) go the intellectually dishonest route

https://www.colbyrussell.com/2018/10/11/mozilla-and-feedback...

[hitekker]

> Finding a leader who can replace you is a miniscule piece of being a leader.

Is this view based on the way Seneca Systems was terminated?

[unlinked_dll]

It tells me that he built a house of cards and left before the wind knocked it over

[programbreeding]

>Much of those gains came from GE Capital

>GE’s profit has plunged in recent years, dragged down by hidden costs in the company’s Capital unit

>he gave himself an A for his execution of its operations, and an F for his choice of successor

Am I reading it right that the reason GE Capital was so successful during his time was because there were hidden costs, making it appear more profitable than it was, that didn't come out until later? Or did this hidden costs actually not exist until choices that were made after he left?

[Digory]

Correct. GE recognized fees up front, and pushed costs to the future.

The Wall Street Journal published a massive article on GE's problems back in 2018.[0] Well worth your time, if you want to understand how big companies game their earnings.

https://www.wsj.com/articles/ge-powered-the-american-century...

[AtlasBarfed]

Voodoo accounting 101, followed by every strike-price-chasing CEO to the detriment of everyone.

[markus_zhang]

For anyone who can't break WSJ paywall

https://outline.com/M22bbL

[salawat]

Yes. You are reading it right.

The best way to describe the management style of the 80's onward would be a financially engineered pump-and-dump characterized by putting workers through the meat grinder, and shirking any social responsibility that could be conceivably avoided by any means possible. Those are the basis of the hidden costs. Each person that got sacked took more institutional knowledge with them, and each responsibility shirked was just a matter of time before it came back around to bite the company on the balance sheets.

Once 2008 hit, seeing as most of the value the Capital part of the company had was found to be a house of cards, nearly taking the company out with it.

When the price of growth is to be an absolute bastard; one should wonder whether the price is too high. Note also that Reich's management style basically required the Reagan era deregulation to thrive. He was far more reserved when Unions actually had teeth.

Really a shining example of what not to emulate in my book. If you have to sacrifice long-term stability for short-term growth, you're misreading the landscape.

[sgt101]

>If you have to sacrifice long-term stability for short-term growth, you're misreading the landscape

Or eyeing your bonus pot and the golf course / opera house.

Shareholders are holding for 3-6mths, executive incentive is aligned to those time spans.

[unlinked_dll]

Most shareholders are interested in holding for more than a year because they get 7-10% more money for free due to tax incentives.

But regardless there are many kinds of investors. The bottom feeders interested in 3-6month time spans are just one of them.

[sgt101]

This is so for retail investors. I do not think it is so for funds.

[pdonis]

> Am I reading it right

Yes.

[ipython]

Previously discussed here on HN: https://news.ycombinator.com/item?id=20753510

[geodel]

> he sometimes said he gave himself an A for his execution of its operations, and an F for his choice of successor.

As Michael Scott would say "My biggest flaw is working too hard"

Jack is upset that his successor did not turn out to be person of questionable moral values and shady accounting genius.

[jpmattia]

> Much of those gains came from GE Capital

Worth noting: The only reason GE did not go bankrupt in 2008 was because the government bailed out GE Capital. It's doubtful that GE Capital's risks were being properly accounted for when Jack was in charge, and it was a large fraction of Jack's balance sheet.

[lquist]

I've always subscribed to the theory that the true measure of a leader is what happens after they are gone.