The Welch formula was a sharp break from the management style at large corporations through the 1970s, with cadres of middle managers and large planning departments.
By the early 1990s, with G.E.’s profits and stock price rising sharply, G.E. seemed to offer a model for making big companies more nimble and competitive. “It was different way of management and it took hold,” said Joseph L. Bower, a professor emeritus at the Harvard Business School, who wrote a widely taught case study of Mr. Welch and interviewed him over the years.
Mr. Welch was also attacked when he was leading G.E., especially for slashing the G.E. work force, which earned him the nickname “Neutron Jack.” But most of the second thoughts about him and his management legacy have arisen in recent years. The superstar chief executive, laser-focused on enriching shareholders, is often criticized today as a symbol of corporate greed and economic inequity.
The widely diversified corporation that Mr. Welch built is also out of favor, an idea underlined by G.E.’s precipitous decline in the last few years.
The New York Times business columnist James B. Stewart wrote in 2017, “Hardly anyone considers Mr. Welch a management role model anymore, and the conglomerate model he championed at G.E. — that with strict discipline, you could successfully manage any business as long as your market share was first or second — has been thoroughly discredited, at least in the United States.”
The financial crisis of 2008 delivered a blow to G.E.’s fortunes. In the years before the crisis, the company had built sprawling lending operations that helped drive its growth. But the finance businesses became a crippling liability when, during the crisis, credit markets froze and borrowers struggled to pay back their loans.
G.E., like many large banks, tapped emergency government loans to help it get through the upheaval. In the years following the crisis, G.E. sold off most of its lending businesses, but other problems emerged, some of which were in its large power unit.
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