Jack Welch's CEO Succession Process Was Once The Gold Standard – Here’s Why Wisdom Needs To Age

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Wisdom is a bit like wine;?while it often?gets?better?with age,?it sometimes turns?unusable?in the long run.?Where we can get into trouble is when we?declare?something or someone brilliant before this aging process has?fully?played out.??

A strong case of this?is the famous Jack Welch succession story at?General Electric?(GE).??

Welch?was?an iconic?CEO,?responsible for?growing GE from?$12 billion in market value to $410 billion?in 20 years?at the helm.?I was taking business classes in college?as Welch was in the process of selecting his replacement as CEO.?His?succession planning?was?held up?as?a?gold standard?case study at?every?business?school?before he even?made a?decision.?

Over?a six-year search for his successor,?Welch?narrowed the race down to?three?handpicked?finalists:?Jeff Immelt, James?McNerney?and Robert Nardelli.?As?Welch considered himself a master talent evaluator?and?developer,?he did not even consider an?outside candidate.??

When Welch selected Immelt for the CEO job, the succession process was heralded as a success?and the?details?were?shared widely?for every company to emulate. But, through?the lens?of?hindsight,?the results were disastrous.??

Immelt’s?16-year run?as CEO was,?at best,?“controversial,”?in?his?own words.?When he left?GE in?August 2017, the company was?drowning in debt, and its?market cap?had?plummeted from $410 billion?to?$200 billion?over his tenure.?

It would appear?Welch might have chosen?the wrong finalist. However, his other two contenders?don’t look any better than Immelt 20 years later.?

McNerney left GE to become CEO of 3M.?While?3M?grew under his leadership,?he?left?the company?quite abruptly,?disappointing the firm with his quick exit. He?then served as?CEO?of?Boeing from?2005 to 2015, where?one of his most important priorities?was the development of the?737-MAX?airplane.??

You?may?already know?what?happened?next.?Boeing was fixated on getting the?737-MAX?to market?as?quickly and?cheaply as possible,?while?avoiding?costly federal?oversight. The?result of this was?two fatal crashes?that?killed 346 people and?resulted in the plane being grounded for over a year.?That?disastrous aircraft?cost?Boeing $55 billion in value?and was a?PR disaster?the company is still?digging out of today.??

For his part,?Nardelli left GE to serve as CEO of Home Depot, where he replaced the firm’s culture of innovative product design with one of intense cost-cutting.?Nardelli?was?known for having?an?outsized compensation contract and a?habit of?alienating?both?employees and shareholders.?The?company’s?price and market cap stagnated under his leadership, and?Home Depot?was surpassed by its top competitor, Lowe’s,?during his tenure. He was?pushed out of the company in 2007.??

While these are cautionary tales of putting too much stock in untested wisdom, the opposite can be true as well. Sometimes the process is reversed: an idea or person is?dismissed in the moment but is proven?right?in the long run.?

In that same year that Nardelli?departed?Home Depot, an unknown first-time author?named?Tim Ferriss?published a book called?The Four-Hour Workweek.??

The book was?dismissed by many as a get-rich-quick?book on marketing and outsourcing?that was unrealistic for most people.?However, for many people,?including?myself,?the book?announced?a philosophical shift?on?how to live a more intentional and?fulfilling life,?and?escape the nine-to-five.?A core premise of the book challenged the notion of?working hard and?deferring enjoyment until retirement.?

The Four-Hour Workweek?has?gone on to sell over 1.3?million?copies in?thirty-five languages,?as I?shared?in the opening chapter of my book?Elevate.?Looking at?the developments of?2021, Tim could not have been more?prescient about the?numerous changes we are seeing?in the workplace today.??

In the moment, it might seem easy to?judge someone’s ideas as brilliant or?foolish.?But?the truth is it might take years?for?either narrative?to be?proven?true.?While Jack Welch was a great CEO,?he?ultimately failed to?develop?a?successful?successor?and?it’s?probably?time?we started?teaching?why and?how?his once revered process?created three leaders who?underperformed?in their roles?as CEO.???

Quote of the Week:?“Wisdom is like wine,?it’s often hard to know the quality until it ages?a few years.”

If you enjoyed this article, I would encourage you to check out

1. ?Friday Forward,?my short weekly leadership note?read by 200,000+ leaders in over sixty countries each Friday morning.
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Robert Glazer?is the founder and CEO of?Acceleration Partners,?an award-winning partner marketing agency with over twenty-five best place to work awards. He is also a bestselling author and keynote speaker and was twice named to Glassdoor’s list of Top CEO of Small and Medium Companies in the US, ranking #2.?

Full bio and speaking inquires at?www.robertglazer.com