The Decline of General Electric...What Happened?

General Electric has helped shape the society we have today. 126 years of invention and innovation that all started with Thomas Edison, yet today they're struggling. This video takes a look their decline and attempts to convey why it's significant. It also explains a popular belief concerning the for this decline. It's been a sad story, but it's not over yet.

Other Company Declines:
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[Chompchompyerded]

Q: Why did the soldier salute the refrigerator?
A: It was General Electric.


well it was funny 68 years ago when I was 5 years old...

[sj]

It’s 2021, three years after General Electric was removed from the Dow. Now they recently (like yesterday) announced they’re splitting into 3 separate companies. Each company focuses on one of GE’s most profitable segments. This is big news in the business world. Can you make another video covering GE about this situation (like you did with Toys R Us)?

[madManMickey]

In it's day, GE, invested in emerging technologies. They were leader in development of new technologies and product. In the late 20 century GE was a leading innovator. They would hire and fund people and projects that may not pay off with 20% return within a year but may build a new industry.
With the advent of Jack Welch, who expected every unit to be high return and first and second in the industry. If not in that category that year, the unit was sold. Many are now doing fine, (example: sonar radar divisions) which means he gutted GE of their unit that are long term investments.
This is akin to eating your seed corn, you have nothing for the future. Aerospace was down in the early 90’s and is doing well today.
An example of a CEO who does not understand the business unit under their control.

[redburtley]

Considering that GE put up with a CEO that failed to deliver for 16 years, I don't have much hope for the company.

[cdsnider]

I knew a guy that worked for GE and he said the only thing they make that doesn't suck is their vacuum. Lol

[mattyduncan]

I worked at GE power & water division for years as a tool & die maker. They cut their workforce. Forced people into early retirement. I took my buyout and started my own business. Glad to be out of there. The amount of bureaucracy in that company is unbelievable. There was so much red tape and rules on every single thing you did that just doing your job is difficult. Corporate insanity.

[SergeantExtreme]

Makes sense. My dad worked as an Engineer for GE for over 35 years. He used to tell me that the managers would require him to send them laboratory reports that showed that the products would fail shortly after their warranty expired.

[billl]

I worked for Westinghouse in the 1980s. We were always admiring GE's size and reputation. Westinghouse is another historic company mismanaged out of business.

[daroachdoggjr]

General Electric will go away...and come back as “General Atomic”, selling nuclear powered household appliances and potentially automobiles.

[gyip]

Ex-CEO was running a stock, not a company for his bonus. Divested assets (that could have been future cash cows) for cash to do buybacks at above the book value of the company.

[ted]

I saw a guy with a GE tattoo in a supermarket.

[AllieRX]

Can you do a video on Sony? Their PlayStation brand is doing well, but they're bleeding money on virtually everything else.

[clydecessna]

It was Jack Welch that destroyed the company favoring deals rather than innovation and US based technology production of the existing product lines. He, like many US manufacturing CEOs stopped the process of innovation, design, produce and the sale of useful products that Japan does do well. He went for short term stock market gains and lost the DNA.

[adriatic]

The GE factory where I live is being turned into apartments

[Vienticus]

I used to work for GE. The company was asinine to work for. Aside from the typical idiocy of the first thing that they always made sure they did when something went wrong was to have a pow wow to figure out who to blame. But it ended there. Solutions to problems were something never discussed. Beyond that, their actual company policy was to have all of their different branches competing with each other in any way possible. And competition wasn't the only thing that different branches did to each other, they tried to screw each other over as well. On top of that, their products in most of the industries I've interacted with were often considered some of the lowest quality. On top of that, one thing I used to do for GE was install the CT scanners. If you followed the instructions on how to install the machine, it wouldn't work. One of my co-workers told me that this was done on purpose in order to prevent external companies from installing them. The only expectation I have for GE is that they'll go completely under considering that people don't even call anything made by GE "Good Enough" anymore.

[ping]

they started trading businesses instead of building them. if you add no value, how can you expect your company to increase in value?

[johnreese]

Jack Welch hated the middle class too.
He developed a lot way to make things overseas with the GE symbol on it.
My uncle was an electrical engineer for GE.
He had to go over to Singapore in the early 80’s to help get the TV plant up and running that they were moving from Virginia. It’s hard to believe they use to make TVs in the United States. I think Jack Welch laid the foundation for some of the problems today.

[khunopie]

I guess you could say that GE...

_blew a fuse_

[carolineyau]

It is OK for GE to apply the top 10% system to the employees but the great oversight was for the Board of Directors not applying the same system to the CEO like this: If the CEO does not perform at the top 10% among S&P 500 companies, he would be shown the door. In addition, if he was proven to have cooked the books, then all his pass bonuses would be forfeited.

[jamesrobinson]

Jack Welch gets a lot of acclaim for being a guiding "light" for GE management. He's even held up as the standard too in the area of management. As you have shown in this video Jeff Immelt has been given a lot of blame for its recent fall. I would submit that Jack Welch's forced ranking system of employees and managers is a big part of it. As a former manager for a major bank that used his theories it was held up as "the Way" to go. In fact, they pushed Jack Welch's books as a must read when I was there. The forced ranking system basically goes like this: if you have a team 10% get great marks and praise, another 10% are labelled a "Needs Improvement" with a mandatory development plan designed to lead them out the door. And then, 80% get rated as OK and a speech at raise time basically claiming times are hard and you'll only get a 2% raise; but really, you're lucky to have a job. Lol. Of course, the top 10% are given the keys to the kingdom, fast tracked for promotion, large raises and hefty bonuses where applicable.

Here's the problem. Not every unit has an even distribution of talent. Some have quite a bit of high achievers. Others are solid 80 percenters. And some suck so bad you need to start over and build a new team. When I tried to explain this to my director his eyes glazed over. I said what if you had a team of 10 top performers and you use this forced ranking system? Half would leave after the first evaluation. You'd be lucky to keep 40% if 30% had poor self esteem. But top performers know they are top performers and they would not put up with this bullshit. Therefore, over time there would be a gradual brain drain of great performers. And some units would promote less talented individuals because they were lucky enough to be grouped with mediocre performers.

As for our implementation at the bank, sure it worked for about 3 years. In fact, with all the wheeling and dealing at GE it works great with acquisitions and mergers. You have to get the synergies of putting two organizations together. But after 3 years it starts to tear at the very fabric of the organization. Eventually, we cut too deep. Letting great talent out the door. This led to a shortfall in staffing requiring us to hire in more expensive "consultants". If they got lucky enough to be brought on fulltime? Eventually, they would be snared into the forced ranking system. Which as the FNG (F'ing New Guy) often led to a needs improvement review. And the vicious cycle continued. Elevating the good ole boys and crushing the people they didn't like. In my banking scenario, eventually my boss cut so deep he was demoted. Before finally being shown the door himself. As for me, I saw the writing on the wall. Raised my hand for a generous reduction in force package. Allowing me to take an interesting assignment with a bank overseas.

GE can come back. And I hope they do under CEO Flannery. However, he is a big disciple of Jack Welch too. So, we'll see what the future holds? I would submit good managers build good teams which leads to solid continuity and improvement. Don't let a tactic used in limited situations be your guiding principle forever. Good managers have many tools in their arsenal. Not every problem is a Nail. Lol. Nice food for thought video.