The New Rules: Fortune Takes a Shot At Jack Welch

Jack Welch is a CEO superstar. While there are those who question the underlying reasons for his success at GE, there is no doubt that GE stock performed extremely well under his tenure and that attaching his name to something almost guarantees success. Now, Fortune magazine has revisited the rules from Jack's book, Winning, and is questioning whether or not they still hold true.

If applied correctly, Welch contends, his rules can work forever.

Sorry, Jack, but we don't buy it. The practices that brought Welch, Goizueta, and others such success were developed to battle problems specific to a time and place in history. And they worked. No one questions today that bloated bureaucracy can kill a business. No one forgets the shareholder – far from it. Yet those threats have receded. And they have been replaced by new ones. The risk we now face is applying old solutions to new problems.

Personally, I think Jack's rules are mostly bunk. From what little I know about GE, I would say that the key to their success has been the economic diversification of their product and service portfolio, their focus on manager development and training, and their AAA credit rating that allows then to borrow cheaply and make a killing with GE Capital.

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And with all due respect to Fortune, their "new rules" aren't really so new. Still, this is an article worth reading.

  • Rob,

    I agree with you completely on the secrets to GE’s success, and so did most of the people I knew at GE Medical Systems over the years. I knew a venture capital group that did very well drafting GE execs to run their acquisitions; almost never a problem.

  • I find it entertaining that everyone speaks volumes about GE’s ‘Executive Training & Management’ program, so much so, that companies jump leaps and bounds just trying to recruit them.

    However, do we ever hear about the ‘superstars in training’ that turn out to be complete busts at other companies?

  • i think we all are giving an extra volume to GE’s ‘Executive training and Management’program. It depends upon the trainees and the trainer the way that they are comfortable in!

  • This also goes back to your post about business fundamentalism and there being no magic bullets. The Welch way worked for GE at a point and place in time, and its unlikely to work “as is” for any other company at any different point or place in time. We should definitely study what has worked for others in the past, not with the goal of emulation, but with the goal of adaptation. We should be striving to pull together bits from many different models models whose elements together address whatever new situation we’re facing right now.

  • I think you need to see the discusisons at about “If Harry Potter Ran General Electric”

  • Old school, old philosophy management companies hired for skills and knowledge, and then wondered why they had customer service problems! Paradigm Shift in corporate America: Customers Rule Old Rule: Shareholders Rule While Dilbert does a brilliant comedic interpretation of this type of behavior, millions of employees in organizations across America still endure management/leadership emotional abuse