Elon Musk's DOGE: A Jack Welch Tactic That Could Break America

Forbes

30-05-2025

Musk's efficiency-fueled crusade mirrors Jack Welch's approach to managing GE—and that didn't go well.
Elon Musk stepped into the Trump administration wielding a metaphorical chainsaw, promising to slash $2 trillion from federal spending through his Department of Government Efficiency (DOGE). After 130 days, DOGE claimed $160 billion in savings—far short of his $2 trillion goal.
But the real story isn't about disappointing arithmetic. It's about how Musk took a page from Jack Welch's playbook—a management philosophy that initially dazzled Wall Street but ultimately destroyed one of America's most iconic companies.
Jack Welch, GE's legendary CEO from 1981 to 2001, pioneered what became known as "rank-and-yank"—forcing managers to fire the bottom 10% of employees annually, regardless of the often-immeasurable ways they contributed to their teams and the organization. His approach was seductively simple: systematically eliminate the weakest performers, and the organization automatically becomes stronger.
Musk has applied this same logic to the federal government, orchestrating layoffs affecting more than 280,000 federal workers and contractors in over 30 agencies—potentially the largest mass layoff in U.S. history.
Both leaders shared an obsession with dramatic, visible cuts. Welch earned the nickname "Neutron Jack" for eliminating over 100,000 people while leaving buildings intact. Musk's Musk literally brandished a chainsaw at the Conservative Political Action Conference, declaring it his tool for cutting bureaucracy. That's where 'Chainsaw Elon' channelled 'Neutron Jack.'
Both Musk and Welch were trained as technicians: Musk in physics, engineering and economics, Welch in engineering. Both applied their technical skills to complex challenges, treating them as simple mathematical problems: subtract the "inefficient" parts, and performance automatically improves.
Initially, both approaches appeared brilliant. Under Welch, GE's revenues grew five-fold from $26.8 billion to $130 billion, earning him Fortune magazine's "Manager of the Century" title in 1999. Business school professors were teaching GE as the gold standard. Companies like Microsoft, IBM, and Goldman Sachs were adopting similar forced-ranking systems, believing they too could mirror similar results.
Musk's early DOGE victories were similarly lauded. The promise of streamlined government resonated with efficiency-minded executives and frustrated taxpayers alike.
But Welch's approach contained a fundamental error that Musk is now repeating at a national scale. They assumed that by optimizing the individual components of an organization, they would optimize the whole system—what academics call an "atomistic fallacy. They treated organizations like machines where one can simply remove "inefficient" parts without considering the complex web of relationships, institutional knowledge, and collaborative dynamics that actually drive performance.
At Microsoft, the forced-ranking system created internal warfare. One engineer reflected: "One of the most valuable things I learned was to give the appearance of being courteous while withholding just enough information from colleagues to ensure they didn't get ahead of me on the rankings." It was during this time that Microsoft lost ground to Apple and Google as employees focused on competing with their internal colleagues, rather than innovating with colleagues to beat the external competition.
Musk's cuts reveal similar systemic blindness. After Musk fired about 1,000 park rangers, educators, and maintenance staff, he undermined the National Parks Service's ability to admit visitors, manage their safety, and prepare for and put out wildfires. All of these raise risks, add costs, and diminish revenues. Ed Welch, the 27-year ranger at Independence National Historical Park and President of AFGE Local 2058, put it starkly 'we aren't cogs, we're human beings.'
Elon Musk, like Jack Welch, failed to understand how complex organizations work and the engines to their success.
Both leaders fell into a measurement trap—believing that complex human contributions can be captured through simple metrics. Welch's forced rankings couldn't measure mentorship, collaboration, or innovation—the very capabilities that drive long-term organizational success.
As well, it's easy to make mistake with numbers. There's the fact that the numbers are highly disputed. DOGE's claimed $160 billion in savings, but the Partnership for Public Service estimate that the cuts will actually cost taxpayers $135 billion this fiscal year due to productivity losses, rehiring mistakes, and operational disruptions.
Further, DOGE's "wall of receipts" reveals the measurement problem in stark detail: while claiming $115 billion in savings, only $35 billion could actually be itemized. This was partly attributable to simple errors, including a contract erroneously listed at $8 billion that was actually worth $8 million. This isn't just sloppy accounting—it shows how easily numbers can be manipulated, made up, or simply mistaken.
The real test of Welch's philosophy came after his departure. Despite GE's apparent success under his leadership, the company that emerged was fragile and over-leveraged. His successor, Jeffrey Immelt, inherited what looked like a powerhouse but was actually a hollowed-out shell optimized for short-term financial performance. During Immelt's 16-year tenure, GE's stock fell over 30%, representing roughly $150 billion in lost shareholder value. By 2021, GE announced it would split up the conglomerate into three separate companies—essentially dismantling Welch's empire entirely.
The pattern is unmistakable: Welch's efficiency-first approach created the illusion of organizational health while systematically destroying the institutional knowledge, collaborative networks, and adaptive capacity that enable long-term resilience.
The real impact of his work will only be known in the future. Musk could experience the same catastrophic outcome as Welch's GE strategy—short-term "efficiency" that destroys long-term capability. Culling IRS auditors, dismissing cancer researchers at the VA, and gutting cybersecurity staff might look efficient on a spreadsheet, but it dismantles decades of accumulated expertise and institutional memory.
Unlike a private company, government failure has consequences that extend far beyond shareholders. Researchers estimate that without U.S. global health programs, an additional 1 million children will be infected with HIV over the next five years, with 500,000 dying from AIDS and 2.8 million becoming orphaned. These are expressed as numbers that appeal to technicians, like Musk, but they mask the costs to people. Pain can't be expressed by spreadsheets and balance sheets. Each person's pain is just one spark that can smoulder into a wildfire that erodes the very foundations of society.
Efficiency-based cuts for a government are so much more costly for a government than a corporation. Whereas Welch could sell his lighting plant to another firm, the government does not sell the service to another firm. The government simply shutters the activity. When the National Park Service and Veteran Affairs are gutted, they will be gone for good.
Musk is familiar with deep cuts in organization. His DOGE chainsaw simply mirrored the the theatrics of the kitchen sink he carried after he bought Twitter.
The similarities do not end there. He applied his efficiency-first philosophy to Twitter, firing more than 6,000 Twitter employees--constituting around 80% of its workforce. Several departments were critically understaffed and staff morale critically damaged.
Fidelity, which helped finance Musk's Twitter acquisition, now values X at 72% of the $44 million Musk paid. U.S. advertising revenue continues to remain at about 50% of pre-Musk days. Even Musk recognizes the challenges ahead. In a leaked email to The Wall Street Journal, Musk told X staff that 'Our user growth is stagnant, revenue is unimpressive, and we're barely breaking even.'
Musk officially stepped down from DOGE on May 28, 2025, as his 130-day limit as a special government employee expired. But the damage may already be done. He had optimized for short-term metrics while systematically dismantling the government's long-term capabilities. It might take years to see the effects of these cuts, but by then, it will be hard to know on whom to pin the blame.
There is one important lesson from Musk and Welch's strategies: complex systems—whether corporations or governments—cannot be optimized like machines. They require understanding of relationships, context, and emergent properties that simple efficiency metrics miss entirely.
Musk may not be around to suffer the long-term costs of his cuts, but Americans most certainly will be.