Jack Welch, the former GE chief executive widely regarded as the most effective corporate leader in decades, now dismisses stock price as an indicator of performance.

“On the face of it, shareholder value is the dumbest idea in the world,” Welch told the Financial Times in an interview.

“Shareholder value is a result, not a strategy...Your main constituencies are your employees, your customers and your products.”

That flies in the face of his image over years of running General Electric, where his 24-year tenure took the company from a market cap of $14 billion to $410 billion. GE’s market cap under his successor, Jeffrey Immelt, stands today at just over $99 billion.

Welch told the newspaper that the emphasis on shareholder value, which gained currency after he made a speech about in 1981, was misplaced.

In that speech, Welch explained how cutting costs and jettisoning losing business units was key to fast growth. He later became known as “Neutron Jack” for massive layoff programs, since his policies wiped out people in the business but left the buildings standing.

Now Welch says the extreme focus on share price, part of the Wall Street bible on corporate execution, has been a huge mistake.

Much of the blame for the debacle on Wall Street can be placed on CEOs making leveraged investments designed to pump up quick profits despite misunderstanding, or hiding, the risk of doing so.

“It is a dumb idea,” Welch said. “The idea that shareholder value is a strategy is insane. It is the product of your combined efforts — from the management to the employees.”

Standard & Poor’s this week cut GE’s credit rating, citing the risk of its financing arm, GE Capital Corp.

"We believe that GECC is under increasing earnings pressure, due to recent sharp deterioration in general economic conditions around the globe," the ratings agency said in a statement.