What Happened to GE? (2021)
General Electric’s long decline is traced to aggressive financial engineering, short‑termism, and a Welch-era management culture that prized “success theater,” stack-ranked layoffs, and Six Sigma bureaucracy over long-term product and R&D investment. Commenters link GE’s fate to a broader U.S. shift from manufacturing to finance-driven conglomerates, arguing that shareholder-value maximization, cooked-but-legal accounting, and Wall Street pressures hollowed out industrial strength. The thread also touches on GE’s post-breakup remnants, brand licensing quirks like GE Appliances now being owned by Haier, and what GE’s story implies for today’s giants that pursue similar strategies.
Perceived causes of GE’s decline
- Many commenters blame a long-term shift from engineering and R&D toward short-term profit optimization, services, and finance.
- GE Capital is seen as turning GE into “a financial firm that happens to make things,” amplifying risk and masking underlying weakness.
- Conglomerate complexity made it hard for leadership and boards to understand risks and operations across units.
Jack Welch, culture, and incentives
- Welch’s era is portrayed as pivotal: stack-ranked firings, intense internal competition, and “success theater” around quarterly numbers.
- Several argue this culture rewarded book-cooking, information hoarding, and optics over substance, damaging long-term innovation.
- Some see him as emblematic of a broader 1980s–1990s MBA/Wall Street ideology focused on shareholder value above all else.
- Others note he was technically not an MBA and had deep internal experience, suggesting the story is more nuanced.
Accounting practices and “financial engineering”
- Discussion centers on asset sales/leasebacks and similar structures used to smooth or boost quarterly earnings.
- Some call this effectively fraud if used to pad earnings without clear disclosure; others note such transactions can be legitimate risk or capital management.
- Commenters highlight how widespread such financial engineering is in large public companies and how incentives drive it.
GE Appliances and brand perception
- Several are surprised that innovative new appliances under the GE brand are now made by a different owner, not the original company.
- The brand sale to a foreign manufacturer leads to confusion: some think quality improved after the sale, others share negative reliability anecdotes across brands (GE, Samsung, LG, Maytag).
Six Sigma and exported management fads
- GE’s Six Sigma push is widely criticized as “quality theater”: elaborate programs, certifications, and storyboards with limited real impact.
- Former employees describe it as distracting talent into process rituals rather than meaningful engineering or product work.
- Some see GE as having “exported” these fads to other corporations via ex-employees and consultants.
Broader commentary on US industry and markets
- Multiple comments generalize GE’s story to US deindustrialization and a “financialized” economy where companies primarily serve capital markets.
- Debate over whether conglomerates can work long-term: some say they inevitably fail; others point to Japanese groups, industrial giants, and holding companies as counterexamples (often with lower returns or different shareholder structures).
- Public markets are portrayed as pressuring firms toward short-term metrics, recurring-revenue models, and financial tricks at the expense of product quality and manufacturing excellence.
Stock behavior and technical points
- Some confusion over GE’s apparent recent share-price recovery is clarified as largely an artifact of an 8:1 reverse split.
- Adjusted for splits and inflation, commenters note the long-run destruction of shareholder value since GE’s 2000 peak.
Reactions to the article’s framing
- Several think the article underplays leadership culpability, especially in downplaying Welch’s role.
- Others appreciate that it highlights systemic issues: complexity, bad incentive design, optimism bias toward “good news,” and mismanaged diversification.
- There is disagreement over how much weight to put on a single leader versus broader structural and macroeconomic forces.