Some years ago, business cases were largely examples of near super-human business giants, the inheritors of the great man theory of history. And of course it was mainly the great man, the builders of industrial empires. The great entrepreneurs who magicked wealth from growth, and growth from risk and daring.
But now, the stories are more often cautionary tales. The gods have feet of clay. The emperor has no clothes.
The Masters of the Universe, was a title of a typical book in the 1960s about great business leaders. When I checked with more recent titles, I discovered Masters of the Universe refers now to a computer game of fantasy figures. Although, perhaps that’s not so different from those earlier aspirational books.
I see a shift around the time of the last economic depression, in late naughties. The hero-executives were being brought low. We learned about the Enron case. The major banking crashes that wrecked Iceland’s economy (the country not the supermarket, which had struggled earlier).
In the U.K. the high rolling financiers toppled like ninepins. Fred Goodwin of Royal Bank of Scotland was hauled before a Government committee to accept blame for excessive style and actions.
Hollywood followed up with graphic, and not totally fanciful accounts of the Wall Street carnivores, a modern kind of Greek tragedy.
In time, the world’s financial system recovered from the recession.
Flash forward to the present day. A book arrives for review. It’s called Pulling the Plug. It relates ‘thespectacular collapse of General Electric’. Once upon a time, GE Made stuff America wanted: fridges, televisions, light bulbs, then wind turbines and submarine detection systems.
Its credit rating was on a par with government bonds for its $600bn assets.
The company began with the efforts of Thomas Edison, whose achievements remain unsullied, for his business acumen as much as his most famous invention the Edison light bulb, ushering in an industrial revolution, and the age of electric power.
Enter Jack Welch
The next significant change in GE was a shift from making stuff to financing the purchase of stuff. The shift was driven by Jack Welch, an engineer by training, but who succeeded by political and financial skills.
Success involved a shift followed with from a manufacturing basis to one relying on financial arrangements. The buy now pay later schemes created a finance powerhouse. Welch became hailed as a super-leader, a process not unassisted by his own image-building skills.
In his glory days he revelled in the tough approach which earned him the soubriquet Neutron Jack, the explosive power which killed off people leaving buildings intact. The style included his beliefs in the benefits of firing the 10% lowest-performing staff each year, to encourage the others.
He left with a multi-million payoff, and a reputation of a super manager, hailed by Fortune magazine as the manager of the century.
Later, the consequences of his action were seen as a short-term efforts to maximise shareholder value. His financialization approach collapsed as the 2008 slump took hold.
The meltdown with Immelt
His successor Jeff Immelt was unable to pull off a rescue, and the company fell into the clutches of an asset management investor still chasing shareholder value. Its future is unclear.
Business Giants of 2022
Our new generation of business giants has not been doing too well. Let’s take some recent examples:
Elizabeth Holmes jailed for a rather old possible fraud in modern guise. Her company created a business with a non-existent medical diagnostic process. Discovery of its status, turned the presumed unicorn (rare beast in the commercial jungle) into a Dodo.
Stock in Meta, the future vision of the creator of Facebook, Mark Zukerberg is dropping like a stone.
Then there is the cryptocurrency implosion. In a single week, another billionaire, Sam Bankman-Friend sees his financial empire and his reputation shattered.
And how about the eccentricities exhibited by Elon Musk, currently engaged in the latest bizarre news story over whether Trump should be allowed to join Musk’s new plaything Twitter.
Blame the financial crisis?
It is no coincidence that stories of rock and roll leaders and their companies crashing and burning, are more frequent during financial crises. Some might think the business titans might have contributed to the crisis…
The wisdom of hindsight suggests that the stock market stars turn out to be have rocketed up based on risky gambles which make them vulnerable in difficult times.
From heroes to zeroes?
Im not suggesting our business leaders are mostly inadequates hanging on the celebrity status. But what is surely the case is that hero-worship is for fantasy heroes. And sometimes fantasies are exposed for being just that.