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Depending on who you ask, Jack Welch is either the greatest CEO to ever exist or the man who single-handedly broke capitalism.
From 1981 to 2001, Welch led General Electric. He’s often thought of as the first celebrity CEO, a businessman who wowed investors and mingled with celebrities. The changes he made turned General Electric from a respected industrial giant into a huge international conglomerate and the most valuable company in the world, but it all came at the expense of workers, consumers, and innovation.
Perhaps the name General Electric doesn’t mean much to you now, but once upon a time, GE was so big it had the swagger now held by big tech giants like Amazon or Microsoft. It was on the cutting edge of technology, spearheading the electrical revolution, the creation of radio, CAT scans, submarine detection, and many more innovations.
Welch was hungry for power and money. His goal was maximizing profits even if that meant cutting jobs, playing fast and loose with accounting rules, or acquiring and selling companies for parts. His three primary principles were downsizing, dealmaking, and financialization.
His short-sighted tactics and obsession with downsizing, outsourcing, dealmaking, and shareholder primacy single-handedly destabilized the middle class. Yet he has influenced generations of CEOs with similar short-sighted ambitions who continue to destroy livelihoods and increase inequality to this day.
When he took over GE, he fired a lot of people, which threw the American working class into chaos. His policy was known as the Vitality Curve.
Managers rated their employees yearly and the bottom 10% were let go. A practice that CEOs still use to this day. in his first few years of leadership, he fired more than 100,000 people in a series of mass layoffs and factory closures.
But Welch’s main weapon for making GE the world’s most valuable company, was dealmaking to consolidate industries and gain market share. During his time in office, he bought almost 1,000 companies, spending over $130 billion to do so.
Welch’s worldview still affects a lot of businesses in the United States, even though his ideas are almost 50 years old. It places the interests of shareholders’ profits above all else.
GE was an early leader in organizational design and training for executives. Eventually, these executives went on to run dozens of other big companies, like Boeing, 3M, Home Depot, and many others where they spread Welch’s views across all of corporate America.
This is how Jack Welch eroded America’s middle class, chipped away at the tax base, exacerbated inequality, and crushed the soul of corporate America.
This Jack Welch documentary is based on the book "The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America―and How to Undo His Legacy" by David Gelles.
00:00 - The Man Who Broke Capitalism
01:05 - We Bring Good Things to Life
05:00 - Tidio
06:33 - Pre-Welch
08:40 - CEO of The Century
09:51 - The Friedman Doctrine
11:10 - Neutron Jack
14:09 - The Pacman Scheme
16:14 - Jack's Cathedral
17:44 - The Fall of An American Icon
19:41 - A Tainted Legacy