When Jack Welch died on March 1, 2020, tributes poured in for the longtime chief executive of General Electric, whom many revered as the greatest chief executive of all time.
David Zaslav, the C.E.O. of Warner Bros. Discovery and a Welch disciple, remembered him as an almost godlike figure. “Jack set the path. He saw the whole world. He was above the whole world,” Mr. Zaslav said. “What he created at G.E. became the way companies now operate.”
Mr. Zaslav’s words were meant as unequivocal praise. During Mr. Welch’s two decades in power — from 1981 to 2001 — he turned G.E. into the most valuable company in the world, groomed a flock of protégés who went on to run major companies of their own, and set the standard by which other C.E.O.s were measured.
Yet a closer examination of the Welch legacy reveals that he was not simply the “Manager of the Century,” as Fortune magazine crowned him upon his retirement.
broken up for good.
the fateful decision to redesign the 737 — a plane introduced in the 1960s — once more, rather than lose out on a crucial order with American Airlines. That decision set in motion the flawed development of the 737 Max, which crashed twice in five months, killing 346 people. And while a number of factors contributed to those tragedies, they were ultimately the product of a corporate culture that cut corners in pursuit of short-term financial gains.
Even today Boeing is run by a Welch disciple. Dave Calhoun, the current C.E.O., was a dark horse candidate to succeed Mr. Welch in 2001, and he was on the Boeing board during the rollout of the Max and the botched response to the crashes.
When Mr. Calhoun took over the company in 2020, he set up his office not in Seattle (Boeing’s spiritual home) or Chicago (its official headquarters), but outside St. Louis at the Boeing Leadership Center, an internal training center explicitly built in the image of Crotonville. He said he hoped to channel Mr. Welch, whom he called his “forever mentor.”
The “Manager of the Century” was unbowed in retirement, barreling through the twilight of his life with the same bombast that defined his tenure as C.E.O.
He refashioned himself as a management guru and created a $50,000 online M.B.A. in an effort to instill his tough-nosed tactics in a new generation of business leaders. (The school boasts that “more than two out of three students receive a raise or promotion while enrolled.”) He cheered on the political rise of Mr. Trump, then advised him when he won the White House.
In his waning days, Mr. Welch emerged as a trafficker of conspiracy theories. He called climate change “mass neurosis” and “the attack on capitalism that socialism couldn’t bring.” He called for President Trump to appoint Rudy Giuliani attorney general and investigate his political enemies.
The most telling example of Mr. Welch’s foray into political commentary, and the beliefs it revealed, came in 2012. That’s when he took to Twitter and accused the Obama administration of fabricating the monthly jobs report numbers for political gain. The accusation was rich with irony. After decades during which G.E. massaged its own earnings reports, Mr. Welch was effectively accusing the White House of doing the same thing.
While Mr. Welch’s claim was baseless, conservative pundits picked up on the conspiracy theory and amplified it on cable news and Twitter. Even Mr. Trump, then merely a reality television star, joined the chorus, calling Mr. Welch’s bogus accusation “100 percent correct” and accusing the Obama administration of “monkeying around” with the numbers. It was one of the first lies to go viral on social media, and it had come from one of the most revered figures in the history of business.
When Mr. Welch died, few of his eulogists paused to consider the entirety of his legacy. They didn’t dwell on the downsizing, the manipulated earnings, the Twitter antics.
And there was no consideration of the ways in which the economy had been shaped by Mr. Welch over the previous 40 years, creating a world where manufacturing jobs have evaporated as C.E.O. pay soars, where buybacks and dividends are plentiful as corporate tax rates plunge.
By glossing over this reality, his allies helped perpetuate the myth of his sainthood, adding their own spin on one of the most enduring bits of disinformation of all: the notion that Jack Welch was the greatest C.E.O. of all time.
It was the quintessential American company, a corporate behemoth whose ambition matched the country’s.
Formed in 1892, General Electric reached into nearly every home over the next century. It sold light bulbs, televisions and washing machines. Its jet engines opened up long-distance travel, its generators lit houses, and its medical equipment helped diagnose patients.
Now G.E. is making a final break with its storied past, splitting itself into three businesses, a victim of the lingering effects of the 2008 financial crisis and a fast-growing economy less hospitable to global conglomerates.
On Tuesday, the company said it would spin off its health care division in early 2023 and its energy businesses a year later. That would leave its aviation unit as its remaining business.
Mr. Welch also built up a huge finance arm at G.E. The assumption was that G.E.’s managers were the best in the world, and there was easy money to be made on Wall Street.
The buildup backfired when the financial crisis hit in 2008, putting G.E. in a credit crunch. Its chief executive at the time, Jeffrey R. Immelt, moved to drastically pare back the big finance unit, GE Capital.
Other businesses hit hard times because of the financial crisis as well, and some Wall Street firms collapsed. But few outside of Wall Street are still paying a price like G.E. As the company scrambled to shed many of its troubled financial assets, its overextended power-generation business became a drag on the operation.
dropped from the blue-chip index. By the fall of that year, Mr. Flannery had been forced out, replaced by Mr. Culp, a former chief executive of Danaher, a more compact conglomerate that makes scientific, medical and automotive equipment.
Under Mr. Culp, the company has paid hundreds of millions of dollars to settle with the Securities and Exchange Commission over claims that it misled investors before his arrival. He has also accelerated cost-cutting at the company. G.E., which had more than 300,000 employees worldwide in 2014, now has 161,000 workers.
Mr. Culp on Tuesday described the breakup of the company as being in step with the times, as other industry conglomerates have streamlined. In the last few years, G.E.’s big German rival Siemens has spun off its health care and energy businesses. And Honeywell International, another wide-ranging industrial company, has sold off some operations.
Trian, the activist shareholder firm led by Nelson Peltz, have pressured the company to spin out or sell various businesses, and they cheered the move on Tuesday.
“Trian enthusiastically supports this important step in the transformation of G.E.,” a spokeswoman for Trian said.
Shares of G.E. climbed about 3 percent in trading on Tuesday.
The three new stand-alone companies will be sizable. The jet engine business had revenue of $22 billion last year. There are 36,000 G.E. engines on commercial airliners worldwide and 26,000 engines on military aircraft.
Its health care business had $17 billion in revenue last year, with four million of its imaging and other machines in use at hospitals and clinics around the world.
The new energy and power company will include wind turbines and gas-fueled power generators that produce about one-third of the world’s electricity.
Each of those businesses faces challenges — the aviation unit is emerging from the pandemic falloff in air travel, and the power business must adapt to the shift to alternative energy sources.
But each one, Mr. Culp insisted, would be a strong competitor in its respective market, “a simpler, stronger and more focused company,” easier to manage and easier for investors to understand.
It is a message very different from the G.E. of old.
GE Capital was supercharged under Jack Welch, who turned the financing unit into a lending colossus that helped power years of enviable earnings. But GE Capital nearly capsized its parent with its bets on risky home mortgages and its dependence on short-term funding that dried up after the collapse of Lehman Brothers.
Overhauling the business became a costly distraction, leading the conglomerate to begin scaling back the unit under Jeff Immelt six years ago.
GE Capital isn’t quite gone yet. The division will still own an insurance business with $50 billion in assets and a small equipment-leasing operation. But following the close of the aircraft-leasing deal, G.E. will no longer report it as a separate operating unit, putting the focus on G.E.’s remaining manufacturing businesses.
Wall Street is of two minds about the move. Shares in G.E. fell 6 percent yesterday, while S&P downgraded the conglomerate’s credit rating one notch. But Moody’s said the transaction wouldn’t hurt G.E.’s creditworthiness, and some investors praised the deal: “It feels like a smart move strategically,” said Daniel Babkes of Pzena Investment Management.
A new player at Dick’s Sporting Goods
Lauren Hobart took over as C.E.O. of Dick’s last month, becoming only the third leader in the retailer’s 70-plus-year history. Ms. Hobart took over from Ed Stack, the son of its founder, who is now executive chairman. DealBook caught up with Ms. Hobart in her first interview since taking the top job.
“The pandemic changed us radically and I think for the better,” Ms. Hobart said. The company had already moved its digital operations in-house, which allowed it to shift quickly as its stores were forced to close. “The team spun up curbside pickup for the first time in two days,” she said. “It was a project that would have taken 12 to 18 months before.” An uptick in demand for golf equipment and at-home fitness gear has bolstered the company’s earnings, with sales last year up 10 percent.
Women are a focus for the retailer, and a growing part of the sportswear business in general. Dick’s launched a campaign this week featuring women in sports — and in business. As part of the campaign, Dick’s is donating 100,000 sports bras to female athletes in need. Ms. Hobart and other women who serve as managers at the company are featured in the campaign.
“We really wanted to celebrate women,” Ms. Hobart said, “and talk about the fact the leadership team at Dick’s really is passionate about improving sports for girls and women — and that we represent the people that we’re advocating.”
Predicting the path ahead is difficult. “Forecasting for 2021, I think, for all business, is very challenging,” Ms. Hobart said. The company issued somewhat muted sales guidance to investors this week, but Ms. Hobart expects that some pandemic trends, like the rising interest in golf, will stick. “It’s so uncertain to know how the consumer is going to respond,” she said. “We’re just taking one day at a time.”