America’s cultish CEO worship
From USA Today:
The fall of General Electric has been nothing short of spectacular. The world’s most valuable company in 2000, it has been in a state of accelerating decline ever since. It has sold off key units. Just last month it announced plans to spin off its health care division and unload its 62.5% stake in an oil field services company. It has also shed value through its declining stock price — more than $150 billion since January 2017. And last month it suffered the indignity of being tossed out of the famed Dow Jones Industrial Average.
Naturally, much of the blame has fallen on Jeff Immelt, CEO of the company from 2001 until last year, and on the GE board of directors that kept him on for so long.
Immelt has an impressive record for bone-headed and ill-timed acquisitions. He took his storied company into the subprime mortgage business in 2004, just as a credit bubble was getting ready to pop. In 2015 he bought the power generation division of French multinational named Alstom. In so doing he expanded GE’s position in coal-fired turbines just as utilities were moving to natural gas and renewables. He also ensnared the company in France’s notoriously rigid regulatory climate.
But there is more to the story than villainizing a corporate villain. The fall of GE is at least in part a story of excess adulation of its erstwhile super CEO, Jack Welch. One of the reasons GE’s valuation has dropped so much is that it was vastly inflated in the 1990s as gullible Wall Street analysts bought into the myth of Welch.