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Jack Welch’s complex legacy

March 3, 2020, 10:53 AM UTC

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Good morning.

Jack Welch, one of the great CEOs of the 20th century, died Sunday at the age of 84. His legacy has been debated since the day he stepped down from the top job at GE in September 2001, and it will continue to be debated for years to come. But the very fact that it is still debated is proof he was a once-in-a-generation, if not once-in-a-century, business leader.

I only got to know Welch after he retired from GE. But he remained as energetic, as candid, and as full of his unique form of Gatling-gun wisdom as ever. In an interview in Radio City Music Hall in 2010, he sprayed news-making soundbites: the Obama administration “is just plain anti-business”; the Hewlett Packard board “has not done one of the primary jobs of a board, which is to prepare the next generation of leadership”; his successor Jeff Immelt was “the best choice I could make at the time.” A couple of years later, I invited him and his wife Suzy to a Wall Street Journal conference on Women in the Economy, where he drove the crowd into a frenzy by bluntly repeating his claims that there is “no such thing as work-life balance,” and that women “don’t want to be in the victims unit.”

But while Fortune rightly dubbed Welch “Manager of the Century” in 1999, it also was directionally right in 2006, when Betsy Morris wrote that Welch’s rules were being displaced by new ones. Subsequent years have only made those changes clearer. A few of them:

– Welch famously and relentlessly focused on delivering steady earnings for shareholders. Today’s CEOs are denouncing quarterly earnings guidance, and advocating a much broader view of “stakeholder” capitalism.
– Welch “went nuts” over Six Sigma, as a tool to reduce cost in his businesses. But Six Sigma is about fixing existing processes. In today’s world of rapid technology change, the best leaders are focusing on how to completely rethink their processes and disrupt their businesses. It’s a very different skill set.
– Welch built a famed management training school, using the company’s facility in Crotonville to hone a generation of corporate leaders. But the top 21st century leaders believe their managers need to look outward to find direction for the future, not focus inward.

I welcome your thoughts on the Welch legacy. More news below.

Alan Murray
@alansmurray

alan.murray@fortune.com

TOP NEWS

Markets up

Today has so far played out well in global markets, with the notable exception of Japan, where the Nikkei 225 was down 1.2%—investors seem not to have been impressed with the Bank of Japan's attempt to inject more liquidity into the market. The Shanghai Composite closed up 0.7%, the Stoxx Europe 600 was up 3% at the time of writing, and futures in the U.S. (where the rally began in earnest yesterday) also look positive. Wall Street Journal

Temporary respite?

This could however only be a temporary pause in the markets' downward trajectory. Barclays analysts: "Our central and worse case scenarios see the stock market falling 20% and 30% respectively from its previous peak." Sanford C. Bernstein & Co. also says many investors have yet to factor in the coronavirus's impact. Bloomberg

Amazon warehouses

Amazon is expanding its same-day delivery program to shoppers in more American cities, via a series of small warehouses it has quietly opened close to the cities (Phoenix, Philadelphia, Dallas and Orlando). The new facilities are around a tenth of the size of Amazon's fulfillment centers. Reuters

Chris Matthews

Hardball host Chris Matthews has abruptly retired following heavy criticism over his comments about women's appearances, his likening of Bernie Sanders' Nevada win to the Nazi takeover of France, and a very uncomfortable interview with Sanders rival Elizabeth Warren. Fortune

AROUND THE WATER COOLER

Apple supply chain

Should Apple finally be altering its supply chain to avoid its current reliance on China? As the Journal notes, CEO Tim Cook is playing down the idea, probably because Apple would struggle to find a comparable workforce elsewhere. But criticism of that reliance is not new, and won't go away. Wall Street Journal

Fed rates

Would rates-cutting by the Federal Reserve help fend off the coronavirus's economic destruction? As Larry Light writes for Fortune, Fed rescue operations in the financial crisis "served as a palliative for a damaged economy, not an elixir that magically restored the old mojo." However, "a Fed rate reduction would give the public the temporary solace, or perhaps the necessary illusion, that someone at the upper levels is getting a handle on this dreadful dilemma of lost money—and lost lives." Fortune

Netanyahu victory

Benjamin Netanyahu has claimed victory in Israel's third general election in the space of a year. According to exit polls, the Likud leader's right-wing bloc will however fall slightly short of a parliamentary majority. BBC

African data

Money is plowing into African data center infrastructure, as the continent starts to catch up with the rest of the world in terms of the scale of data it generates. Interestingly, as the Financial Times notes, the international investment does not seem to include much from China. FT

This edition of CEO Daily was edited by David Meyer.