The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America—and How to Undo His Legacy
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Summary
New York Times
reporter and “Corner Office” columnist David Gelles reveals legendary GE CEO Jack Welch to be the root of all that’s wrong with capitalism today and offers advice on how we might right those wrongs。
In 1981， Jack Welch took over General Electric and quickly rose to fame as the first celebrity CEO。 He golfed with presidents， mingled with movie stars， and was idolized for growing GE into the most valuable company in the world。 But Welch’s achievements didn’t stem from some greater intelligence or business prowess。 Rather， they were the result of a sustained effort to push GE’s stock price ever higher， often at the expense of workers， consumers， and innovation。 In this captivating， revelatory book， David Gelles argues that Welch single-handedly ushered in a new， cutthroat era of American capitalism that continues to this day。
Gelles chronicles Welch’s campaign to vaporize hundreds of thousands of jobs in a bid to boost profits， eviscerating the country’s manufacturing base and destabilizing the middle class。 Welch’s obsession with downsizing—he eliminated 10% of employees every year—fundamentally altered GE and inspired generations of imitators who have employed his strategies at other companies around the globe。 In his day， Welch was corporate America’s leading proponent of mergers and acquisitions， using deals to gobble up competitors and giving rise to an economy that is more concentrated and less dynamic。 And Welch pioneered the dark arts of “financialization，” transforming GE from an admired industrial manufacturer into what was effectively an unregulated bank。 The finance business was hugely profitable in the short term and helped Welch keep GE’s stock price ticking up。 But ultimately， it contributed to the collapse of GE and dozens of other Fortune 500 companies。
Gelles shows how Welch’s celebrated emphasis on increasing shareholder value by any means necessary （layoffs， outsourcing， offshoring， acquisitions， finance， and buybacks， to name but a few tactics） became the norm in American business generally。 He demonstrates how that approach has led to the greatest socioeconomic inequality since the Great Depression and harmed many of the very companies that have embraced it。 And he shows how a generation of Welch acolytes radically transformed companies like Boeing， Home Depot， Kraft Heinz， and more。 Finally， Gelles chronicles the change that is now afoot in corporate America， highlighting companies and leaders who have abandoned Welchism and are proving that it is still possible to excel in the business world without destroying livelihoods， gutting communities， and spurning regulation。
In 1981， Jack Welch took over General Electric and quickly rose to fame as the first celebrity CEO。 He golfed with presidents， mingled with movie stars， and was idolized for growing GE into the most valuable company in the world。 But Welch’s achievements didn’t stem from some greater intelligence or business prowess。 Rather， they were the result of a sustained effort to push GE’s stock price ever higher， often at the expense of workers， consumers， and innovation。 In this captivating， revelatory book， David Gelles argues that Welch single-handedly ushered in a new， cutthroat era of American capitalism that continues to this day。
Gelles chronicles Welch’s campaign to vaporize hundreds of thousands of jobs in a bid to boost profits， eviscerating the country’s manufacturing base and destabilizing the middle class。 Welch’s obsession with downsizing—he eliminated 10% of employees every year—fundamentally altered GE and inspired generations of imitators who have employed his strategies at other companies around the globe。 In his day， Welch was corporate America’s leading proponent of mergers and acquisitions， using deals to gobble up competitors and giving rise to an economy that is more concentrated and less dynamic。 And Welch pioneered the dark arts of “financialization，” transforming GE from an admired industrial manufacturer into what was effectively an unregulated bank。 The finance business was hugely profitable in the short term and helped Welch keep GE’s stock price ticking up。 But ultimately， it contributed to the collapse of GE and dozens of other Fortune 500 companies。
Gelles shows how Welch’s celebrated emphasis on increasing shareholder value by any means necessary （layoffs， outsourcing， offshoring， acquisitions， finance， and buybacks， to name but a few tactics） became the norm in American business generally。 He demonstrates how that approach has led to the greatest socioeconomic inequality since the Great Depression and harmed many of the very companies that have embraced it。 And he shows how a generation of Welch acolytes radically transformed companies like Boeing， Home Depot， Kraft Heinz， and more。 Finally， Gelles chronicles the change that is now afoot in corporate America， highlighting companies and leaders who have abandoned Welchism and are proving that it is still possible to excel in the business world without destroying livelihoods， gutting communities， and spurning regulation。
Reviews
Dennis Hogan
，
Finished 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， a staff writer for the New York Times Sunday Business section。In his twenty years as CEO of GE， Welch unleashed a reign of short term focus， the primacy of shareholder return and Wall St quarterly earnings reports at the expense of the environment， Capital Expenditure budgets， R&D， treating employees as a cost not an asset （mass layoffs Finished 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， a staff writer for the New York Times Sunday Business section。In his twenty years as CEO of GE， Welch unleashed a reign of short term focus， the primacy of shareholder return and Wall St quarterly earnings reports at the expense of the environment， Capital Expenditure budgets， R&D， treating employees as a cost not an asset （mass layoffs and “stack ranking"）， outsourcing American jobs overseas， massive tax avoidance all while pushing executive compensation to stratospheric levels and manipulating accounting rules。 A lot of what is wrong with America today can be traced to the corporate greed Welch and his acolytes， many of whom brought his methods to other American corporations resulting in long term failure。 The GE Welch took over in 1981 no longer exists as a manufacturing company， once the bluest of blue chip companies。 I witnessed first hand the impact of Welchism， having survived twelve mergers & acquisitions in the Food Industry and the devastating cuts to employees and brands。 But， the book ends with a glimmer of hope with some CEO’s embracing many stakeholders， not just shareholders， but suppliers， communities， employees etc。 。。。more
Deeptanshu Shukla
，
Well-researched book with interesting parallels， contrasts and connects。 Maybe a bit late to come out， as I had already read Lights Out about the collapse of GE， which had most of the facts like financialization and accounting hacks using GE Capital to cook up performance metrics。 Good job connecting the fate of GE with the larger economy。
Ronald House
，
I was born in 1959 into the Golden Age of Capitalism。 My parents who retired from General Motors & General Telephone reaped first hand the rich benefits of blue color workers earning a living age。 I'm aware of the great benefits and weaknesses of strong labor unions my parents were gladly a part of。 What David Gelles helps me do is put into perspective what has been lost to non college educated workers since the rise of Welchism。 Looking forward the idea of stakeholder capitalism gives me hope f I was born in 1959 into the Golden Age of Capitalism。 My parents who retired from General Motors & General Telephone reaped first hand the rich benefits of blue color workers earning a living age。 I'm aware of the great benefits and weaknesses of strong labor unions my parents were gladly a part of。 What David Gelles helps me do is put into perspective what has been lost to non college educated workers since the rise of Welchism。 Looking forward the idea of stakeholder capitalism gives me hope for a return to responsible corporate leadership that keeps more than quarterly profits as its singular view。 I highly recommend this informative book。 。。。more
Peter R。 Van Allen
，
My 24 years working for GE （1978 - 2001） covered the Welch years， and this book is a spot-on description of how Welch's actions led to the destruction of the manufacturing giant he inherited and the ruination of many thousands of former GE employees' careers。 The sad part of the story is how he was lauded all the while he was doing it。 My 24 years working for GE （1978 - 2001） covered the Welch years， and this book is a spot-on description of how Welch's actions led to the destruction of the manufacturing giant he inherited and the ruination of many thousands of former GE employees' careers。 The sad part of the story is how he was lauded all the while he was doing it。 。。。more
Ed Morrison
，
Required reading in every business school In 1984， I found myself working as a consultant for General Electric。 My firm， an offshoot of the Boston consulting group， conducted production economic studies for General Electric。 I was the junior consultant on the team， My boss directed me to conduct detailed studies of several GE's production facilities。 In the course of these studies， we conducted detailed interviews with vendors， completed product tear downs， and scoped put competitor plants。 Our Required reading in every business school In 1984， I found myself working as a consultant for General Electric。 My firm， an offshoot of the Boston consulting group， conducted production economic studies for General Electric。 I was the junior consultant on the team， My boss directed me to conduct detailed studies of several GE's production facilities。 In the course of these studies， we conducted detailed interviews with vendors， completed product tear downs， and scoped put competitor plants。 Our team completed these studies in both refrigerators and small motors。 It was clear that by that time that GE was losing its competitive edge。 In refrigerators， other firms had simpler product designs。 In small motors， competitors were more productive and also more innovative。 For example， as I re-read my notes from years ago， vendors told me that in small motors， Emerson， GE's major competitor， had developed a more flexible production system。 Decision-making was decentralized。 "People in the plant call the shots。" Emerson "moves quickly" and has more flexible contracts with vendors。 As one vendor told me， "the secret of Emerson's success has been the development of new production processes。"GE's response， driven by Welch， was to see every competitive challenge as a cost problem。 The focus: reduce labor costs。 Move production to maquiladora plants in Mexico。 He had no understanding of productivity， value-added， systems engineering， or innovation。 Welch's relentless focus on reducing costs over the short term accelerated the destruction of an iconic company。 This book does a wonderful job capturing Welch's ignorance。 I now teach in a business school。 “the Man Who Broke Capitalism” should now be required reading in every business school。 。。。more
Aly Farrow
，
Jack Welch influenced so many harmful practices in our current society。 The book itself was okay。 It was very repetitive and jumbled at times。
barbara stanisz
，
this book was outstanding。 as a people manager of the 80's， 90's， and 2000's there was plenty of hype about jack welch and I am glad to see that hype being definitively rebuted。 this book brings to clear relief just how damaging his management philosophy was to both his employees and the entire country as a whole。 while I never had the misfortune to work for a company that closed factories， I did experience a merger of two airlines and it was one of the worst experiences of my life。 Delta Airlin this book was outstanding。 as a people manager of the 80's， 90's， and 2000's there was plenty of hype about jack welch and I am glad to see that hype being definitively rebuted。 this book brings to clear relief just how damaging his management philosophy was to both his employees and the entire country as a whole。 while I never had the misfortune to work for a company that closed factories， I did experience a merger of two airlines and it was one of the worst experiences of my life。 Delta Airlines bought Northwest Airlines with Northwest's money simply to break the unions。 I saw the worst of the the Teamsters as well as two subsequent unions that were only out for themselves and totally took advantage of the employees that they represented。 I also saw a company that pitted the unions against each other with the employees losing every time。 I am quite surprised that the author would refer to Delta in the book as in my opinion， Delta was a terrible employer。 The suggestions for the future of corporations at the end of the book were heartening and very pertinent。 I left better understanding why employees no longer trust corporations and what we can do to help bring about greater corporate responsibility。 Again， an outstanding read that I highly recommend。 。。。more
Mary Kuykendall
，
Thanks to David Gelles for exposing the real cost of Jack Welch's policy of profits at any cost。 When Welch took over GE， he cancelled Regt Jone4s' huge "Factory of the Future" modernization program。 Kurt Vonnegut， in Player Piano， predicted automation。 But he had not planned on Welch finding even cheaper labor offshore。 Welch also sold many GE consumer， defense， transportation， and industrial businesses and advanced technology and shut down product development labs and basic research。 Over 180， Thanks to David Gelles for exposing the real cost of Jack Welch's policy of profits at any cost。 When Welch took over GE， he cancelled Regt Jone4s' huge "Factory of the Future" modernization program。 Kurt Vonnegut， in Player Piano， predicted automation。 But he had not planned on Welch finding even cheaper labor offshore。 Welch also sold many GE consumer， defense， transportation， and industrial businesses and advanced technology and shut down product development labs and basic research。 Over 180， 000 employees were laid off during his reign。 Welch turned GE -- successful since the days of Edison -- into a bank that ended up causing the company to fail。 Aided by the business press and security analysts gushing over his earnings reports， they even applauded his acquisitions of other companies to harvest。 His CEO pay became hundreds of times more than the average engineer， rather that 20 times more。 When he retired， his golden parachute was over $417 million with a pension of $9 million a year。 Because the Welch playbook described by Gelles was and still is being copied by so many CEOs， the book should be required curriculum for student MBAs to prevent another Robber Baron era in which the top l% has 90% of the country's wealth。 Mary Kuykendall， former GE speechwriter and author， "Rebuilding the GE House Jack Blew Down。" 。。。more
David S。
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Book provides some good examples of how Welch's business strategy led to the collapse of GE and created a model that damaged the country as a whole。 It also mentions how many former GE executives tanked other companies while walking away with small fortunes。 First， if you are well read on business there is nothing here that has not been covered by other books。 There is little insight into Welch other than he likes to yell and scream。 But most significant is while the author lectures on the evils Book provides some good examples of how Welch's business strategy led to the collapse of GE and created a model that damaged the country as a whole。 It also mentions how many former GE executives tanked other companies while walking away with small fortunes。 First， if you are well read on business there is nothing here that has not been covered by other books。 There is little insight into Welch other than he likes to yell and scream。 But most significant is while the author lectures on the evils of issues such as outsourcing and moving jobs out of the country he never addresses whether industries would have survived against low wage competitors by keeping the jobs here in the U。S。 This book is OK but it is thinly researched and doesn't provide anything really new。 。。。more
Sucharita
，
As soon as I heard David Gelles was writing this book， I preordered a copy。 This is an important， often infuriating revisionist history of Jack Welch。 It's an easy read and one that will make you skeptical of all big company CEOs。 Gelles makes a compelling case that the Boeing plane crashes of the 737 Max were a result of Jack Welch's mentees cutting corners， in the manner that Welch himself embraced and taught。 The senselessness of absurd levels of CEO pay also comes through loud and clear espe As soon as I heard David Gelles was writing this book， I preordered a copy。 This is an important， often infuriating revisionist history of Jack Welch。 It's an easy read and one that will make you skeptical of all big company CEOs。 Gelles makes a compelling case that the Boeing plane crashes of the 737 Max were a result of Jack Welch's mentees cutting corners， in the manner that Welch himself embraced and taught。 The senselessness of absurd levels of CEO pay also comes through loud and clear especially when CEOs make often disastrous decisions and face no consequences， rather they get multimillion dollar packages even when they are fired。 The book is especially timely in the face of all the talk of stakeholder capitalism。。。how long it will actually take for that to become commonplace remains to be seen but it can't come soon enough。 。。。more
Ronald Gruner
，
David Gelles makes a good case why much of what is wrong with the American economy – the loss of American jobs， income inequality， extreme corporate tax avoidance -- is attributable to GE’s iconic CEO， Jack Welch。 For twenty years， starting in 1981， Welch fiercely practiced economist Milton Friedman’s mantra that “There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits…” Taken to the extreme， as did Welsh， the inte David Gelles makes a good case why much of what is wrong with the American economy – the loss of American jobs， income inequality， extreme corporate tax avoidance -- is attributable to GE’s iconic CEO， Jack Welch。 For twenty years， starting in 1981， Welch fiercely practiced economist Milton Friedman’s mantra that “There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits…” Taken to the extreme， as did Welsh， the interests of employees， the community， the environment， and even customers fall below the interests of corporate shareholders （and coincidentally， executives）。Also discussed is how Welch helped to enable Donald Trump’s rise to the presidency。 GE’s NBC subsidiary made Trump a household name with its “The Apprentice” reality show。 Welch endorsed conspiracy theories targeting President Obama including those promoted by Trump。 When Trump was elected president “Welch celebrated [Trump] as an exemplar leader。” In return， Trump never blamed Welch for pioneering job offshoring which contributed to the collapse of American manufacturing。The book is roughly composed of four sections: 1） Welch’s role transforming GE from one of the world’s most-respected industrial companies to a financial house-of-cards; 2） Jeff Immelt’s， Welch’s successor， tortured seventeen-year tenure as the company slowly imploded; 3） the spread of “Welchism” as Welch’s acolyte managers populated scores of companies with mixed results， and 4） the changes necessary to “uproot Welchism and create a more just economy” including better pay， more equitable profit distribution， upskilling workers and capping executive compensation。Gelles’ book has the potential to be a watershed book just as Rachel Carson’s Silent Spring was for the environment and Ralph Nader’s Unsafe at Any Speed was for automotive safety。 Let’s hope The Man Who Broke Capitalism does the same for the American economy。 。。。more
Ed Chambliss
，
Personification of business' biggest mistakeBroad societal issues are， by definition， unwieldy。 They're vague， ethereal， and hard to relate to。 Such is the case with shareholder primacy - the belief and practice that the purpose of business is to maximize shareholder value at all costs。 It's a belief so pervasive， most of us don't even realize it wasn't always this way。 Fortunately， David Gelles has made the issue easier to see by showing it to us through the eyes of an individual - Jack Welch - Personification of business' biggest mistakeBroad societal issues are， by definition， unwieldy。 They're vague， ethereal， and hard to relate to。 Such is the case with shareholder primacy - the belief and practice that the purpose of business is to maximize shareholder value at all costs。 It's a belief so pervasive， most of us don't even realize it wasn't always this way。 Fortunately， David Gelles has made the issue easier to see by showing it to us through the eyes of an individual - Jack Welch - a man long deified for his ability to increase GE's stock price no matter what。 But as Gelles shows us， Welch was not a god， but rather a very flawed man， more concerned with extracting value from a company than creating it as his predecessors had done for decades before him。 Gelles shows us how Welch's failure to invest in the long-term set up GE for its ultimate failure and should have all of us questioning why we praise Welch and the belief that shareholders are more important than everyone else。 An excellent， entertaining， and informative read。 。。。more
Kathleen （itpdx）
，
The title tells you exactly what David Gelles thinks about Jack Welch， the legendary CEO of GE。 Welch was the first CEO to adopt Friedman's theory that corporations should only be run for the monetary advantage of shareholders。 Gelles explains how Welch hit the quarterly earnings expectations for GE for years and how his acolytes applied his methods in other corporations。 It is a grim picture。 Fortunately， Gelles also gives us some ideas on how US corporations might find a better path forward。 M The title tells you exactly what David Gelles thinks about Jack Welch， the legendary CEO of GE。 Welch was the first CEO to adopt Friedman's theory that corporations should only be run for the monetary advantage of shareholders。 Gelles explains how Welch hit the quarterly earnings expectations for GE for years and how his acolytes applied his methods in other corporations。 It is a grim picture。 Fortunately， Gelles also gives us some ideas on how US corporations might find a better path forward。 My take away is that corporations make a mistake thinking only in the short term， as do US politicians。 。。。more
Gary Moreau
，
If you want to understand the source of the polarization， the anger， and the paralysis that consumes America today， this is your book。 Thomas Edison created one of the great industrial companies of all time – General Electric。 It stood for everything that those who want to return to the America of old wish for。 And Jack Welch， who ultimately became the CEO of that icon of American strength and might， destroyed it all， although in a classic perversion of Orwell’s doublespeak， he was universally l If you want to understand the source of the polarization， the anger， and the paralysis that consumes America today， this is your book。 Thomas Edison created one of the great industrial companies of all time – General Electric。 It stood for everything that those who want to return to the America of old wish for。 And Jack Welch， who ultimately became the CEO of that icon of American strength and might， destroyed it all， although in a classic perversion of Orwell’s doublespeak， he was universally lauded for his brilliance and his executive prowess。 And still is！Welch was the CEO Milton Friedman， famed economist， dreamed of。 He put profits above all else。 Employees weren’t assets， they were an expense。 Taxes aren’t the price we must pay to support our way of life， they are the poison over-reaching bureaucrats use to crush innovation and investment。 Making things is for fools。 Moving numbers around is where the easy money is。Welch’s trilogy of “downsizing， dealmaking， and financialization” are all simply and adequately explained in the book， so I won’t be redundant here。 To truly understand them， however， you have to accept that words have no meaning， truth is just a perspective， and your self-interests trump those of all others。 In fairness， Welch was a mere figurehead of our current troubles， but he thrust himself into that position by historically unparalleled self-promotion and the narcissism it takes to push to the front of every news cycle。 In the end， however， he was empowered by the forces that he exploited in an endless cycle of reinforcement。 The real failure was that our social， economic， political， regulatory， corporate governance， and capital systems failed to keep pace with the times。 He didn’t do anything， in other words， that the world was not begging to be done。 Here was a man that never invented anything， did not found the company he ran， and destroyed the lives of hundreds of thousands of Americans but was nonetheless rewarded with a personal worth of $1 billion and a retirement package that would make the most greedy among us blush。Perhaps the biggest victim of Welchism， as David Gelles so adroitly defines it， is accountability。 Welch， like so many since him， perfected the ability to take all of the credit for his successes and none of the blame for his failures。 Blame is for losers。Meritocracy is an Orwellian sham used to cover up the self-serving malfeasance with which the institutions we rely on for both our daily bread and our sense of self-worth are managed。 The real problem with Welch’s infamous “rank and yank，” what he referred to in the Orwellian cloak of the “Vitality Curve，” is that it assumes that individual performance in a large organization can be isolated and measured。 It can’t。 Any attempt to do so simply introduces structural prejudice and mediocrity into what is supposed to be an objective process。 I started life in the corporate world in the mid-70s。 And I， like so many corporate executives of the era， stood in awe of what Welch appeared to be accomplishing。 Ultimately， however， as we were taught as children， when something appears too good to be true， it usually is。A must read by a very capable author and researcher。 。。。more
Noah Gift
，
Absolutely nails the issues with American corporations since 1980。 The quality of the life and the standard of living for regular Americans has been made much worse through bad government policies and through companies taking all the profit and pushing all the negative externalities to the rest of the world。 You see this same attitude in Bay Area Venture Capital via essays like "Billionaires Build"。 Any new student about to graduate should read this book to get a better idea of why they should n Absolutely nails the issues with American corporations since 1980。 The quality of the life and the standard of living for regular Americans has been made much worse through bad government policies and through companies taking all the profit and pushing all the negative externalities to the rest of the world。 You see this same attitude in Bay Area Venture Capital via essays like "Billionaires Build"。 Any new student about to graduate should read this book to get a better idea of why they should never trust an American corporation to do the right thing and especially the CEO。 。。。more
Patrick Westöö
，
Brilliant summary of what has gone wrong in America seen through the lense of one man and company。
Ietrio
，
The text is on a par with the title。 What a moronic title！ Capitalism has a definition。 And ”breaking” capitalism is pretty much like breaking ”hot water”。 The text itself is a bit lower in quality， as it weaves the conspiracy of a man who single-handedly did this and that。 And it's the rehash of the Blood Libel of the 19th century Europe， remember The Protocols of the Learned Elders of Zion？ It's in the same spirit， but for the people of the 2000s， and not for the people of the 1880s。 The text is on a par with the title。 What a moronic title！ Capitalism has a definition。 And ”breaking” capitalism is pretty much like breaking ”hot water”。 The text itself is a bit lower in quality， as it weaves the conspiracy of a man who single-handedly did this and that。 And it's the rehash of the Blood Libel of the 19th century Europe， remember The Protocols of the Learned Elders of Zion？ It's in the same spirit， but for the people of the 2000s， and not for the people of the 1880s。 。。。more
Ari Wallach
，
Gelles goes deep into how Welch took GE and through various means turned it into an engine that maximized profits at the expense of the long-term。 In fact， Welch here is the post child for short-termism and in many ways laid the groundwork for decades of financial engineering that took resources （of all kinds） away from future generations in an unsustainable and unjust fashion。 But this is not just a history book！ Gelles takes us deep into stories and the lasting reverberations of Welchian econo Gelles goes deep into how Welch took GE and through various means turned it into an engine that maximized profits at the expense of the long-term。 In fact， Welch here is the post child for short-termism and in many ways laid the groundwork for decades of financial engineering that took resources （of all kinds） away from future generations in an unsustainable and unjust fashion。 But this is not just a history book！ Gelles takes us deep into stories and the lasting reverberations of Welchian economics and how they are with us still to this day。 He interweaves and concludes with suggestions that will help alleviate these impacts and even re-balance the system。 。。。more
Ali
，
The book America needs now: the legacy of toxic leadership， and how to undo itPicture this: I'm a little kid in my living room in West LA， watching an episode of "60 Minutes。" A group of distraught factory workers have their factory closed and their jobs destroyed for no discernible reason。 By who？ "Neutron Jack" Welch， the CEO of General Electric。 Wasn't the factory making useful things？ （It was。） To compete with Japan， didn't we need *more* manufacturing？ （We did。） How would these highly-speci The book America needs now: the legacy of toxic leadership， and how to undo itPicture this: I'm a little kid in my living room in West LA， watching an episode of "60 Minutes。" A group of distraught factory workers have their factory closed and their jobs destroyed for no discernible reason。 By who？ "Neutron Jack" Welch， the CEO of General Electric。 Wasn't the factory making useful things？ （It was。） To compete with Japan， didn't we need *more* manufacturing？ （We did。） How would these highly-specialized workers survive？ （Who cares！） The firings seemed senseless， capricious， and cruel。 Why was Welch being such a dickhead？ That's when I understood the "Neutron Jack" moniker: like a neutron bomb， Jack Welch left buildings standing while annihilating the people inside them。That negative impression of Jack Welch persisted for some time。 But then， over the years， I kept seeing articles and magazine covers praising him for his managerial acumen。 The chorus of commendation was so loud that I had to pause to reconsider。 After all， he met quarterly earnings estimates umpteen times in a row！ He made GE the most valuable company on Earth！ He was Fortune's "Manager of the Century"！ I must have been missing something; clearly these business folks understood what was *really* going on。Except that they did not。 This little kid grew up， got his business degree， and realized that Jack Welch was one of the *worst* CEOs of all time。 He destroyed GE， brainchild of Thomas Edison and *the* iconic American company—the maker of everything from light bulbs and washing machines， to jet engines and giant 10-story hydroelectric turbines。 So I was thrilled to see a new book finally endeavor to dismantle the cult of Jack Welch， exposing his managerially toxic and morally bereft ways。 Comeuppance at last！Turns out I *was* missing something after all。 Welch was far， far more destructive than I had ever imagined。 David Gelles makes the case that Jack Welch's damage reverberated far beyond the confines of GE into the world economy and society at large。 Can one man really do that much damage， though？ If the guy was super smart， blindly ambitious， greedy as hell， sociopathic， unwise， with legions of well-placed protégés， he could。 According to Gelles， "Welch employed three main tools in his crusade: downsizing， dealmaking， and financialization。" • Downsizing: Welch "was the first CEO to take a healthy company and treat it like a turnaround job， preemptively laying off tens of thousands of workers。" He popularized mass firings， moving jobs offshore， and outsourcing。 I didn't realize 250，000 GE workers lost their jobs during Welch's tenure — that's the population of Madison， Wisconsin！ So much for "Generous Electric。"• Dealmaking: When he couldn't sell more toasters and jet engines， Welch artificially boosted the bottom line by making nearly 1000 acquisitions for $130B， most having nothing to do with GE's core business。• Financialization: First， he got rid of GE's manufacturing businesses and instead beefed up GE Capital， its investment and insurance arm， so GE could make money without having to make things。 Second， he used share buybacks and accounting fraud to meet Wall St forecasts quarter after quarter。Welch's protégés then went off to deploy these tactics， making them part of the modern corporate playbook， and wrecking dozens of decent companies in the process: John Trani at Honeywell and Stanley Works; Larry Stonecipher at Boeing; Jim McNerney at 3M and Boeing; Bob Nardelli at Home Depot and Chrysler。 They not only laid off thousands of workers， but also killed innovation。These Welch Weenies and their Welchist tactics are still affecting us today。 You can draw a straight line between the obsessive cost-cutting tactics of GE acolytes and the failures of the Boeing 737MAX。 Turns out when you cut corners and rush production schedules of passenger jets， planes go down and people die。That's what makes Welchism so damning: its disregard for basic human welfare in favor of maximizing share price。 When did people go from being the main show to becoming overhead？ 1981， apparently—when Welch took over GE: "There is capitalism in America before Jack Welch， and after him。 His career serves as a line of demarcation， a split between the past and the present。 Look at the trend lines for any number of key economic indicators—wages， mergers and acquisitions， manufacturing jobs， union representation， executive compensation， corporate tax rates—and it’s clear that right around 1981， the year Welch took over， things started to go off the rails。"One more thing started to go off the rails right around then that's beyond the scope of the book: the well-being of Americans。 That's when the "deaths of despair" from hopelessness， addiction and suicide started ticking up， culminating in a *decline* in US life expectancy starting 2017—the only such decline in rich countries。 Coincidence？ I don't think so。Gelles closes with some sensible ideas for reversing the damages of Welchism: better pay; employee profit- and equity-sharing; putting workers on boards; capping executive compensation。 Principles of "stakeholder capitalism" can mitigate some of the toxic， short-termist effects of Milton Friedman's frankly sociopathic doctrine of maximizing shareholder value， while bringing us closer to the "Golden Age of Capitalism" when the thriving of employers and employees were intertwined。 Capitalism isn't the enemy。 Greedy， short-sighted assholes with bad ideas are。Gelles's fluent prose and seamless storytelling turn what could be a somber subject into a fast， stimulating read。 Mainly， though， we all need to read this because Welchism and greed have arguably become the operating system of American society。 That ain't sustainable。 "The Man Who Broke Capitalism" depicts a gigantic train wreck unfolding in slow motion—but we have the pause button。 We're here on Earth to take care of one another。 We can move towards that today by giving less power to rich jerks， and electing wiser， kinder people with our long-term interest in mind。 Jack Welch is dead。 Let's make sure his toxic ideas die， too。-- Ali Binazir， M。D。， M。Phil。， Happiness Engineer and startup coach， author of The Tao of Dating: The Smart Woman's Guide to Being Absolutely Irresistible， the highest-rated dating book on Amazon， and Should I Go to Medical School？: An Irreverent Guide to the Pros and Cons of a Career in MedicinePS: For further reading on capitalism going off the rails and sensible ways to fix it， I highly recommend Kate Raworth's Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist and Douglas Rushkoff's Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity。 。。。more
AnnieM
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I feel like I have been waiting for this book my whole career！ Finally someone has the courage to say not only does the Emperor have no clothes， Gelles effectively and successfully unmasks the great fraud perpetuated by Jack Welch and his acolytes。 Gelles lays out the evidence of how Welch rose to power and how he decimated profitable businesses in order to chase short-term earnings （laying off people and closing factories does wonders for your stock price short-term）。 But ultimately this quarte I feel like I have been waiting for this book my whole career！ Finally someone has the courage to say not only does the Emperor have no clothes， Gelles effectively and successfully unmasks the great fraud perpetuated by Jack Welch and his acolytes。 Gelles lays out the evidence of how Welch rose to power and how he decimated profitable businesses in order to chase short-term earnings （laying off people and closing factories does wonders for your stock price short-term）。 But ultimately this quarter-to-quarter mindset covers up all times of financial manipulations and fraud。。 Not only can this impact the long-term viability of a company （just look at GE now as it is being sold off for parts）， but it also devastates the employees， retirees， families and whole communities。 Gelles describes Welch as a virus and his "lauded" approach to leadership （by Fortune Magazine， and others）， has spread to other corporations。 I have worked in many organizations where executives wanted to adapt many of Welch's leadership development processes such as "stack ranking" etc。 and had to point out the potential downsides on the culture and morale buy adopting this type of performance management。 What is fascinating as Gelles points out， is that when GE leaders went to become CEOs at other corporations， the GE playbook failed miserably but typically the damage was already done before they would exit with a huge severance package。 They would focus on such severe cost-cutting that it would completely hollow out the business and leave many employees out of a job。 One of the most costly examples is the rise of the CEO at Boeing （former GE） who applied the GE Playbook and cut costs， cut engineering talent and outsourced the building of and safety of planes。 We know now the terrible history of the Boeing Max 737 and crashes which Gelles has reported on brilliantly for the New York Times。 Today， business people are scratching their heads on why there is a rise in unionization and union campaigns - yet GE， Bezos， Musk， Zaslav， have created workplaces that hates labor and workers and is dehumanizing。 Corporate greed has decimated the middle and working classes and entire communities particularly outside urban centers。 If this all sounds dire and pessimistic， Gelles does end with examples of corporations that are doing right and getting out of the quarterly earnings report pressure and mindset - such as Unilever。 Gelles outlines specific actions Executives can take as well as legislation。 He provides a new framework for how to measure success of corporations。 This book is a must-read and is one I will refer back to。 I highly recommend it！ 。。。more
Reena R。 Nawani
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Everyone who has ever taken a business course knows the name， Jack Welch。 When I was studying for my business degrees， his book "Straight from the Gut" was one of my required readings。 He was one of the first celebrity CEOs as he radically changed the way not only GE， a household name in manufacturing， but business was conducted。 Jack's legacy and techniques are still used today in corporate America。What this book explores that is unique is to talk about the long term effects of Jack's strategy。 Everyone who has ever taken a business course knows the name， Jack Welch。 When I was studying for my business degrees， his book "Straight from the Gut" was one of my required readings。 He was one of the first celebrity CEOs as he radically changed the way not only GE， a household name in manufacturing， but business was conducted。 Jack's legacy and techniques are still used today in corporate America。What this book explores that is unique is to talk about the long term effects of Jack's strategy。 He bought small companies and either transformed them or destroyed them。 This made way for the destruction of main street to be bought by major corporations to basically put them to rest。 It created the big push in the "Too Big To Fail" movement amongst corporations。 It brought about the loss of a true free market， which capitalism as an economic concept is based on。Before reading this book， I hadn't really seen the correlation behind Jack Welch's strategy and the long term effects it has had on our current American economy and how it pushed us into a late stage of Capitalism。I do wish this book would have given more insight into the numbers versus the strategy theories。 They are well documented， even from studies on GE and Jack Welch， but to look at the way it affected short term and long term economy and the damage it did to a true free market would have helped drive these points further。What this book did well is provide a critical eye to how revering a single strategy can provide short term benefits to a single company but following that strategy has very negative long term effects on the economy as a whole。 I do also enjoy that the author added his own commentary on how he feels we can potentially start to think about fixing this， but I fear that it may be a little too late。 You'd have to continue to showcase the damage of buying and breaking apart Main street by Wall Street really damages the economy as a whole in order to combat the effects。 You'd have to teach across every school the ethical nature， not just the one that provides the most profit in a short term。 I wouldn't blame only Jack Welch either， but his widely public strategy and promotion of how he changed GE should be reviewed as not a success story， but a short term success for a few and a long term failure on the ethics of business。 。。。more
Alison M。
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An incisive and damning indictment of Welch， the legendary CEO of GE， who's legacy is still shaping corporate America for the worse。 An incisive and damning indictment of Welch， the legendary CEO of GE， who's legacy is still shaping corporate America for the worse。 。。。more
Andréa
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