Boeing’s CEO Departure and GE’s Transformation Highlight Jack Welch’s Complex Legacy

This week marked a pivotal moment in corporate America’s history, as Dave Calhoun, a protégé of the late Jack Welch—General Electric’s (GE) renowned former CEO—announced his resignation as Boeing’s CEO. Calhoun’s departure is symbolic, occurring alongside GE’s significant rebranding, which will see its name removed from the roster of publicly traded US companies. This reorganization involves the split of GE into GE Vernova and GE Aerospace, following the earlier spin-off of GE HealthCare.

The end of GE as we’ve known it, coupled with Calhoun’s exit, casts a reflective light on the seismic shifts in business ideologies since Welch’s era. Welch, once celebrated by Fortune Magazine as the “Manager of the Century” and by the Financial Times as the leader of “The World’s Most Respected Company,” leaves behind a mixed legacy. His influence wanes as GE disappears from the stock market, signifying a departure from the conglomerate model Welch championed.

The unraveling of Welch’s legacy was underscored last year when Larry Culp, GE’s CEO since 2018, announced the company’s division into three entities, moving away from the General Electric brand. This decision highlighted the disillusionment with Welch’s management style, which, beyond its apparent success, involved controversial accounting practices.

Culp’s predecessors, including John Flannery and Jeff Immelt, both Welch disciples, faced significant challenges, underscoring the difficulties in replicating Welch’s success. Immelt, in particular, served as Welch’s handpicked successor, yet his tenure fell short of expectations.

The phenomenon of Welch mentees struggling as CEOs is noteworthy, with Boeing alone having four such leaders. This trend raises questions about the applicability of Welch’s strategies in today’s business environment. Despite the high hopes placed on Welch’s protégés, their collective challenges suggest that Welch’s methods, including aggressive cost-cutting and financial engineering, may not ensure long-term corporate health.

My analysis, enriched by David Gelles’s insights in “The Man Who Broke Capitalism,” paints a nuanced picture of Welch’s impact. While Welch achieved remarkable stock growth during his tenure, subsequent revelations about GE’s financial practices have led to a reevaluation of his legacy. The challenges faced by Welch’s followers further indicate that a rigid adherence to his methods may not be suitable in the contemporary business landscape.

In closing, as GE transitions and Calhoun steps down, we’re reminded of the complexities of Welch’s legacy. It’s a moment to reflect on the evolution of corporate leadership and the importance of adapting management practices to changing times and values.

Disclosure: I hold investments in GE and GE HealthCare, influenced by my successful investment in Danaher Corp. under Larry Culp’s leadership. These reflections are informed by my professional observations and financial interests.

Sources: AirGuide Business airguide.info, bing.com, yahoofinance.com