Jack Welch Screwed Up GE and Boeing, and with Them Much US Climate Action | Hacker News Reader

Jack Welch Screwed Up GE and Boeing, and with Them Much US Climate Action

cleantechnica.com

66 pointsclumsysmurf24 comments

A mess of an article, focusing on issues 10 years after Jack left. Ignores Jack's big quality push via six sigma and the hands-on work he did to dive deep and fix quality issues at GE during his long career. Jeff Immelt deserves much more blame during this period at GE, but his name won't get the clicks. Jeff was his own man is was not a puppet of Jack, the two hardly talked after Jeff got the top job.

I agree this article is a mess.

There is plenty of legitimate criticism about Jack and his management style. In fact, the book referenced at the end of the article is a well rounded detailed account of how his management style really did end up long term gutting GE and lead to their decline, but its not wholly ignorant of the facts like this.

I think Jack Welch deserves a share of the blame as well—if you had to attribute GE’s fall to one thing (which you shouldn’t), it would probably be the funding crisis at GE Capital when they couldn’t roll their commercial paper at the height of the GFC. Jack loved GE Capital because it was the perfect cookie jar to reach into when he needed another penny or two of EPS to hit the Street consensus; just realize a capital gain somewhere in Capital, and voila, you’ve met your number again. But of course the article doesn’t discuss the financial crisis at all, or for that matter anything that happened during Jack’s tenure or the first half of Jeff Immelt’s. Or any non-Energy/now Vernova business lines.

It's an interesting thought experiment for how Jack would handle the financial crises. I don't think it would play out in the same way. Maybe I'm too much of a fan boy, but Jack would have seen the writing on the wall far sooner than Jeff and had more time to pivot.

Maybe so, but I think the actual problem was too much of a black swan. There were certainly executives who voiced concerns about the asset side of Capital’s balance sheet and were vindicated in the crisis; Jack might have listened to them better than Jeff did. But I don’t think anyone really even considered the idea that you wouldn’t be able to find buyers for the commercial paper of a AAA-rated issuer pretty much until it was happening.

That said, there were outside commentators who’d raised questions about GE’s liquidity in the 2000s (notably Bill Gross) which did get Immelt and co. to term out some of GE’s debt. Maybe Jack would have been foresighted enough to do more. But that would have hit earnings (you’d pay a higher interest rate on longer term debt), so it would have been a tough sell, I think.

>Ignores Jack's big quality push via six sigma

in my experience with six sigma (back at Sun Microsystems) and its various incarnations later it is among the worst things which can happen (though the company has to already be in significant rot to let such parasite in), last nail into the coffin so to say, it is the moment when totally clueless, this time by-design, management - all those six sigma certified belts - overtake the product development and kill whatever last reason and sense that was still there. And that is what article describes happened with GE and Boeing when they got overtaken by such a management. Anyway, the point of the article seems to be not the details of how Jack and his spawn ruined those companies, the point is the climate change related effects of that.

Six sigma's main push in the 80s was to drastically reduce defect count by diving deep into manufacturing processes, the opposite of the quality issues discussed in the article. It sounds like your experience is similar to what happens to a lot of management philosophies when they get popularised into airport books and watered down.

> management philosophies when they get popularised into airport books and watered down.

You’ve just gravely offended all those top consultancies hired by the companies I worked at. Basically you repeating the favorite argument of management consultants - if Scrum isn’t working for you then you’re doing it wrong.

Sat through three weeks of brutal Sun Sigma training back in the day. What a total waste of time and money. Scott lost the plot being hypnotized by JW.

Yeah, I agree. I took a Six Sigma class and somehow a planning class taught by Welch himself back in the late 90's. I really only spent a day with him but I remember him talking a lot about quality. This article feels like a stretch from the tiny bit I know about him.

>The two giants of American industry have had a string of engineering and product debacles in recent years as a result of the decades of sidelining and firing their engineering talent

I think the article was very informative.

To me it is saying Jack Walsh and his acolytes changed the companies from creating very good engineered products to a company that only cared about what Wall Street said.

This can be said about almost every fortune 500 Company. I wonder when the shoe will drop for Nvidia. Just look at Intel, IBM and a few others.

Jack Welch retired from GE in 2001. He was voted Manager of the Century in 1999.

https://en.m.wikipedia.org/wiki/Jack_Welch

Indeed.

This article: > In 2015, GE was the third largest manufacturer of wind turbines globally by both capacity and revenue, trailing only Vestas and Siemens. By 2023, it had fallen to 8th and had a more limited geographical market than either Siemens Gamesa or Vestas.

Translated: 14 years after Jack Welch retired (edit to add: and 14 of 17 years into Jeff Immelt’s term as CEO), GE was #3. 8 years later, they had fallen to #8, so clearly Jack Welch is to blame for the slip. /s

The two ways to measure a leader is how an organization performs with them at the helm and how well it performs when someone else replaces them.

This also ignores the impact of long term bets and changes in the environment may cause you to be unsuccessful in the path you’ve taken for nearer term success and survival.

Agree, though my conclusion is that Jeff Immelt (CEO from 2001 to 2017) is far more proximal to the 2015-2023 change cited than Welch.

https://en.m.wikipedia.org/wiki/Jeff_Immelt

> The two ways to measure a leader is how an organization performs with them at the helm and how well it performs when someone else replaces them.

We live in a world where CEOs get truly absurd pay packages. I don't think that it's unreasonable to expect Welch's successors to justify their own pay.

What came out after Welch's retirement is that the company was really overvalued because of the growth of the financial sector.

His rank and yank also highly optimized for the short term, and stock markets loved it. He may well have given rise to that whole corporate mindset - "quarterly profits over long term results", leading to debacles like their battle with the EPA (Welch hilariously argues that it was a witch hunt, and that PCBs are apparently just fine to go in the water supply).

We could just as easily argue that Welch kept their turbine business afloat. Or, that someone else tanked it. Or that they were just beat out by competitive foreign markets! So we basically know nothing.

>Welchian capitalism

This is a good phrase to describe a certain kind of late-stage industrial corporate strategy.

I was at IBM when Sam Palmasano was doing the same thing at big blue. People thought he was a genius because of the short term business results. But in retrospect he was strip mining the company, selling the next two decades of revenue this quarter for pennies on the dollar.

I’ve seen shitty CFOs do the same thing at small and midsize tech startups. I used to say name a company that cost cut their way to IPO but nobody listened to me.

> Welchian capitalism

It's a form of stock valuation chasing that's fueled by currency devaluation and inflation from government money policy.

When the government forces interest rates low (whether it's 2% but especially when it's 0), people start pushing their money into whatever equities that promise the highest rates. Jack Welch is just "selling yield". Tons of examples when this has been shown to be disastrous in history and always precedes the fall of once-great economies.

Not capitalism, unless you want to call it crony capitalism which is of course downstream of government.

Give it a rest already.

First, Welch never worked at Boeing. If you're going to blame someone for what happened at Boeing, blame someone who actually was at Boeing. Even if they tried to follow Welch's approach, blame them for trying to do what they couldn't, or couldn't do there. Welch didn't do that.

Second, GE ran into problems at least a decade after Welch left. But no, it couldn't have been Immelt's fault! It had to be Welch's! Really? Why?

If you're going to say that Immelt tried to continue Welch's approach, fine, but blame Immelt for either not being able to pull it off, or for continuing with it after it no longer worked. When Welch did it, it worked fine. It worked fine for five years after he left, too.

Finally, climate action? That's Welch's fault, too? Really, people?

Get over Jack Welch. He's not to blame for what goes wrong decades later.

That was a rant, that was not structured nor reasoned well. It made no attempts to substaninate its own assertions nor semi facts. but perhaps if you buy the book I will make more sense,.

Did someone publicly predict in the 80s or 90s that Welch would kill GE?

My experience has been the business world has the least amount of tolerance for "heterodox" voices. Granted, that tolerance doesn't come in the form of those people getting shouted down, thrown in jail, or anything like that - they just get ignored and passed-over. You basically need to "win" in the market to get your voice heard. Your company would need to make a big production about how its management practices are completely different than Jack Welch's and then proceeded to become an equal or greater Wallstreet darling (easy, right? /s)

Reply on news.ycombinator.com