Former GE chief executive Jack Welch dies aged 84
Under his leadership, GE's market value grew from $12 billion to $410bn
Jack Welch, who grew General Electric during the 1980s and 1990s into the most valuable public company in the US, has died at age of 84, the conglomerate said on Monday.
Mr Welch — known as "Neutron Jack" for cutting thousands of jobs (because he left buildings intact but empty) — bought and sold scores of businesses, expanding the industrial giant into financial services and consulting.
Under him, GE's market value grew from $12 billion (Dh44bn) to $410bn. But his push to build out the GE Capital financing business nearly proved the undoing of the entire enterprise during the global financial crisis more than a decade ago, and GE now trades at a fraction of its peak value.
"When the book about business leaders in this century is written, Jack Welch will be near the very top," said Thomas Cooke, professor at Georgetown University's McDonough School of Business. "What he did as the leader of GE was remarkable."
President Donald Trump tweeted: "There was no corporate leader like “neutron” Jack. He was my friend and supporter. We made wonderful deals together. He will never be forgotten. My warmest sympathies to his wonderful wife & family!"
In December 1980, it was announced Mr Welch would succeed chief executive Reginald Jones and in April 1981 he took over as the company's eighth chairman and chief executive. He served in that position until he retired in September 2001, succeeded by Jeff Immelt.
“Today is a sad day for the entire GE family,” said H. Lawrence Culp Jr., GE’s chairman and CEO, in a statement. “Jack was larger than life and the heart of GE for half a century. He reshaped the face of our company and the business world.”
GE witnessed great growth and expansion under Mr Welch's leadership. Through streamlining operations, acquiring new businesses and ensuring that each business under the GE umbrella was one of the best in its field, the company was able to expand dramatically from 1981 to 2001.
“Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others,” Mr Welch wrote in a book called Winning.
Mr Welch's aggressive, in-your-face style and edict to be number one or two in every major sector was embraced by both management consultants and business school faculty, said Tim Hubbard, assistant professor of management at the University of Notre Dame’s Mendoza College of Business.
"It's very difficult to predict how things would have worked out if Jack stayed on deck, but certainly what happened to General Electric after he left is not a very positive story," said Mr Hubbard. "The failure of subsequent CEOs underscores how important Welch's leadership was to GE."
After hitting its peak under Mr Welch, GE’s scope narrowed and its market value fell under successor CEO Jeff Immelt. The company spun off much of its insurance business into Genworth Financial in 2004.
The transformation to industrials accelerated after GE needed a bailout during the 2008 financial crisis. In 2015, activist investor Nelson Pelz’s Trian Partners bought a $2.5bn stake in GE and pushed for further focus on core industrial businesses, prompting Immelt to sell of most of the remaining parts of GE Capital.
Mr Welch was born in 1935. He received his BSc degree in chemical engineering from the University of Massachusetts in 1957 and his masters and PhD degrees in chemical engineering from the University of Illinois in 1960.
In 1960, Mr Welch joined GE as a chemical engineer for its plastics division in Pittsfield, Massachusetts. He was elected the company's youngest vice-president in 1972 and became vice-chairman in 1979.
In 1980, the year before Mr Welch became chief executive, GE recorded revenue of roughly $26.8bn; in 2000, the year before he left, revenue was nearly $130bn. The company was one of the most valuable and largest in the world at the time of his retirement, up from America's tenth-largest by market cap in 1981.
Under Mr Welch, GE became a training ground for business leaders who often carried his ideas to other corners of the economy. He put a premium on training leaders though a tough system that targetted advancement only for those who showed the best results.
He continued this work after retirement, briefly teaching a leadership course at MIT’s Sloan School of Management and, later, founding an online MBA programme called the Jack Welch Management Institute.
In 1999, Fortune named him the "Manager of the Century," and the Financial Times named him one of the three most admired business leaders in the world.
Updated: March 2, 2020 07:41 PM