How GE Went from American Icon to Astonishing Mess | Hacker News Reader

How GE Went from American Icon to Astonishing Mess

bloomberg.com

47 pointscepth21 comments

Welch replaced innovation with cost-cutting and financial trickery, yet he is hailed as a business hero even today

I suspect the culture that led to cutting 10% of low performers was part of why manufacturing went to the Japanese. It is known for example that part of why DRAM was beaten by the Japanese in the 1980s was cooperation instead of competition.

The base assumption of measureable performance is wrong. What if somebody sat all day in the office doing nothing, just talking with one of the best performers once in a while.

S/he is nothing but a drag on the team, on the papers, but in reality s/he might be the brains of the operations, with a "high-performer" as company front.

Abstract that away and you can see HR gunning out everyone but sales. Sales can do nothing without a good product, except sell themselves extremely well.

My personal base assumption is that HR, with the 10 % rule without external oversight destroys more valua then it creates. The powerplays alone are enough to wreak havoc.

Yea, that is why I dislike anti-discrimination laws for anything other than manual labor. It is often difficult to objectively determine why someone was fired.

Can you explain this a little more? How do you think cutting bottom 10% performers affected GE as a company?

There is by now a large literature on the destructive effects of Welch-style "rank and yank" management (see https://en.wikipedia.org/wiki/Vitality_curve#Consequences).

Since whoever comes out on the bottom of the evaluation list will be fired, for instance, employees are incentivized to sabotage each others' work to make sure that it's someone else left without a chair when the music stops; and managers are incentivized to deliberately hire underqualified people to fill open positions, so they can protect their good workers by having a designated loser to throw to the wolves when evaluation time comes.

I am not even talking about the problem with the practice itself. I am talking about the culture that caused the practice in the first place.

Many of the American tech titans of past years are fading (see IBM, Kodak, Xerox).

I wonder how much of this is due to the "cult of the MBA", which focuses on short-term optimization of shareholder benefit, rather than long-term thinking, true innovation, etc.

I think it has more to do with the difficulty of responding to market changes. If you are running a successful company that dominates a particular market, it is HARD to make big changes, even if you foresee that the market is going to change under you.

DEC was a great minicomputer company. But it just couldn't make the change to the microcomputer era, despite formidable management and technical expertise.

Kodak was making all kinds of crazy money from film and photo paper, which made them really slow on the draw when the market shifted under them and moved to digital photography.

It's both. Kodak was slow on the draw because making the big investments early on to move to digital photography would have pissed off shareholders who would percieve the move as a drain on the coffers and hurting 'Kodak's bottom line'.

You can see this with other companies today (IBM, Intel, Microsoft, etc) that are struggling to stay relevant in areas where they have not traditionally been, they don't have the stomach to make the long term investments early enough, and if they do, they don't stick with them long enough.

> Immelt talked about making GE a “top 10 software company”

I thought this was interesting in particular. After years of cutting back on R&D, Immelt makes a top-down push in a direction that GE had allowed to lie fallow for decades, into a market already dominated by strong competitors. Why not play your strengths? GE's days as a computing pioneer are so long gone, they're practically lost to memory.

I still don't understand the spin-out/carve-out of GE Appliances. The most consumer-facing strength of the company and one of the few profit centers that remained profitable across centuries of industry. (GE Appliances is now just the US arm of Chinese conglomerate Haier. Similar to IBM carving out so much of their hardware and selling it to Lenovo for short-term gains and what may prove to be long-term mistakes.)

I interviewed for a big position at GE Security about a decade ago. The nice but uninformed Director of Engineering starts quizzing me, asks if I've heard of "Object-Oriented Programming," as if it was some new thing.

I asked him the last album he bought; he said, "Free Bird." (which isn't even an album).

This forever shaped my opinion of GE.

As an Australian I'd always associated GE with light bulbs.

It was a culture shock to visit the USA and notice the saturation advertising for GE finance. It smelled of desperation.

Companies rise and companies fall. Nothing is permanent. The story itself may be interesting, but the concept is far from new.

GE is dying and Tesla is rising. How ironic!

Yeah except Tesla wasn’t started by Tesla, it just uses his name. Using the name “Tesla” unconnected to the man himself to promote your own business and personal success is totally something Edison would’ve done.

Looks like GE wants to go the way of Motorola.

How America went from icon to astonishing mess.

The DOW grew by 40% in the past one year.

Just curious how you got that figure.

https://finance.yahoo.com/quote/^DJI/chart?p=^DJI

(25800 - 19800)/19800 = 30.3%

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