Do we really need to imitate superstar CEOs?

In our business world today, we honor many of our most financially successful business leaders with intense fervor. Think of all the makeshift memorials in Apple stores to Steve Jobs when he died. Look at the attention and respect that Elon Musk, Jeff Bezos and Richard Branson demand. But is this deserved, and should small business owners try to imitate them? Or are they ultimately bad for capitalism?

On The Small Business Radio Show this week, New York Times columnist David Gelles interviewed many CEOs. His new book is “The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America – and How to Undo His Legacy”

When David started out as a corporate reporter, he explains that this isn’t the kind of book he ever imagined he would write since he “started at Forbes magazine, one of whose publications played a “booster” role for these CEOs. “David wanted to write this book because things haven’t been going well in this country in recent years.”

David explains that we put these business leaders on a pedestal because it’s a big part of the American story; “We don’t have a monarchy. We are in a melting pot of many different religions, so we don’t have a standard unifying culture. Our common culture has become our business people. This is because America has become our great economic engine… but we must remember that these business leaders are only adept at making a profit. But should this really be our highest ambition?”

David argues that Jack Welch was idolized for making GE the most valuable company in the world. He pushed GE’s stock price ever higher, often at the expense of employees, consumers and innovation. But he approached it “with a certain ruthlessness – he fired hundreds of thousands of people, he outsourced it to make higher profits and turn it into a financial company. Welch’s obsession with downsizing — he cut 10% of workers every year — fundamentally changed GE’s drive for short-term profit.”

How did this happen? David explains that if you look back at the founders of Johnson and Johnson and even GE in the 1950s, they focused on their employees, their communities and the environment. But when Welch (and Milton Friedman) came on the scene, everything changed. Stagflation had begun in the 1970s, with Japan and Germany once again competing. David knows changes had to be made, but Welch put profit before the people who worked at the company. This inspired generations of imitators who have applied his strategies to other companies around the world.

Later in life, in 2012, David says Welch was an early user of Twitter, embracing conspiracy theories with disinformation about President Obama and the Clinton Foundation.

Stakeholder capitalism is now about rebalancing this approach. David wants CEOs to think about the long-term ramifications of their actions, not just the next financial quarter. He adds: “We need to move beyond the share price. Instead, we should expect business leaders to understand the consequences of their actions. It is time to share the wealth with the employees within the company.”

If you admire superstar CEOs, this is one interview you don’t want to miss.

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Image: davidgelles

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