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For a manager who is often consulted by his CEO peers, whose company has its own management school and whose published maxims include "Integrity is clearly the most important value," GE's problems have stung Welch deeply. Nonetheless, he considers the rash of troubles to be isolated blemishes on one of the world's proudest and most profitable corporations. As America's fifth largest industrial giant (1993 revenues: $60.5 billion), GE makes everything from light bulbs to locomotives in 22 business divisions -- each of which, if it stood alone, would warrant a place among the ranks of FORTUNE 500 companies. And while other blue-chip firms such as Sears, IBM and General Motors floundered in the 1980s, most GE units surged ahead and consistently hit Welch's target of being No. 1 or No. 2 in every market.
"If we didn't buy Kidder Peabody or NBC, we wouldn't be having this conversation," Welch told TIME in an interview last week. "No one else would be writing about it, and we'd be having great numbers." Concurs Bruce Atwater, the chairman of General Mills and a GE director: "Jack has been so successful that the least pimple seems to have a microscope turned on it. But it's still a pimple."
Yet management experts have begun to question the man whose record has inspired such books as Get Better or Get Beaten! 31 Leadership Secrets from GE's Jack Welch. Richard Ellsworth, a 20-year GE watcher who teaches at the Claremont Graduate School in California, credits Welch with transforming GE from a lethargic and bureaucratic company into the very model of an innovative powerhouse that is quick to seize opportunities. Yet Ellsworth discerns "a certain hollowness of purpose" beneath Welch's relentlessly demanding management style.
"He talks a lot about being No. 1 or 2 in their markets," Ellsworth says. "But what he hasn't articulated is the reason why they are competing, a more meaningful set of values. He has not given GE a morally uplifting tone. And that is one reason why you may have problems like the Kidder situation.
"Welch has created a cadre of professionals and has given them a focus on serving their self-interest," Ellsworth goes on. "He has told them that GE will make them better professionals, more marketable professionals, and has subjected them to intense pressures to perform. But he has not given them a sense of loyalty to the organization, to some higher goal of the organization. He is still hammering away at being No. 1, competing and winning, but what he may not realize is that the message to managers is 'Look out for yourself, win at any cost, do whatever you have to do.' "
For his part, Welch argues that GE's ethical standards and performance are among the highest in American industry. "We're proud of our record," he says. "We work our tails off to try and do it right, and for the most part, for the vast part, we do do it right."