5 ms·

When did GE fuck up so royally? They seemed to be cutting edge in all their sub-parts, and now they are subpar everywhere. Did the MBAs take over?

by sveme 4y ago

gvb 4y ago
"[The fall of GE] arguably begins with the arrival of the legendary Jack Welch as CEO in 1981." Ref: "The fall of GE" https://theweek.com/articles/761357/fall-ge https://theweek.com/articles/761357/fall-ge (2018)
- twoodfin 4y ago
  What's a comparable example of an already huge, industry-spanning conglomerate American corporation of 1981 that's done better than GE over the past 40 years? IBM is probably the best "successful" comparison, but they were never as diverse as '80's GE.
  - dragontamer 4y ago
    Berkshire Hathaway
    - twoodfin 4y ago
      That's a good one, but Berkshire had earnings of $40M in 1981[1]. I couldn't do better than the 1980 numbers for IBM ($3.5B)[2] and GE ($1.5B)[3] but safe to say in that era they dwarfed BH. My point is that it would have been extremely difficult for any giant conglomerate adapted to the business environment of 1981 to transition successfully to the business environment of 2021 without changing nigh unrecognizably. [1] https://www.berkshirehathaway.com/letters/1981.html https://www.berkshirehathaway.com/letters/1981.html [2] https://www.upi.com/Archives/1981/01/16/IBM-reports-sharply-higher-4th-quarter-earnings/5135348469200/ https://www.upi.com/Archives/1981/01/16/IBM-reports-sharply-... [3] https://www.nytimes.com/1981/01/23/business/ge-had-small-gain-in-quarter.html https://www.nytimes.com/1981/01/23/business/ge-had-small-gai...
  - ncmncm 4y ago
    General Motors became a finance company that sold cars on the side.
    - W-Stool 4y ago
      It is amazing how vertically integrated GM used to be - for a vehicle they made just about everything except the windshields, the paint, and the tires. They also made city buses, diesel locomotives, fractional HP electric motors, earth moving equipment, consumer kitchen products, and sold insurance. They even had their own university that awarded bachelors and masters degrees. All of that is long gone now.
      - downut 4y ago
        Also nuclear reactors and the uranium fuel rod assemblies those required.
    - Gibbon1 4y ago
      My distilled belief is the finance guys managed to regain control of things from labor and manufacturing in the early 70's. After 1980 came the complete financialization of the American economy. Instead producing goods, services and jobs companies were pushed to create 'paper'. That's why GE and GM both let the finance part of the business wag the dog.
  - sidewndr46 4y ago
    Rockwell peaked at a similar time frame & then exploded into a 1000 tiny pieces: https://en.wikipedia.org/wiki/Rockwell_International#Apex_and_break-up https://en.wikipedia.org/wiki/Rockwell_International#Apex_an... Some are in fact successful companies to this day.
buscoquadnary 4y ago
Yes that is exactly what happened Welch came in started pushing the MBA way of doing things, pushed it throughout the entire industry, talked a big game. Tons of MBA programs were focused around the "GE Way" etc. It was when the Peter Principle, people are promoted to their level of incompetence, to the Dilbert Principle, idiots are promoted directly to keep them out of the productive flow. The MBA ruined many things, it was scientific management brought back with a catchy name. Not creative enough to be in the artists? Lacking the intellectual discipline to become a real process engineer? It's okay you can become an MBA, learn no real skills, no real information and feel superior because then you can lord yourself over the serfs that decided to go into the silly practice of actually providing goods and services, when you can "manage" the people that actually contribute. Note this shouldn't be taken as a tirade against management, there are good leaders out there that do make things better for those they lead, but my point is that an MBA is totally independent variable to whether or not someone will be a good manager. The problem is that an MBA basically trains people to see their work/world as a video game where they play with spreadsheets, choose the right dialogue options in the tree, and assign your workers to specific tasks, and then when the reality doesn't conform everything hits the fan.
- JumpCrisscross 4y ago
  > pushing the MBA way of doing things This is a bad, if commonly-made, attribution [1]. [1] https://news.ycombinator.com/item?id=33111247 https://news.ycombinator.com/item?id=33111247
  - randomdata 4y ago
    I'll leave you to decide on the veracity of the claim, but he is suggesting that Welch invented the "MBA way of doing things", something that eventually made its way into MBA programs thanks to Welch pioneering it. So him being a chemical engineer by training isn't at odds with what is being suggested. After all, you can't go to school to learn about what you created yourself.
    - benzin 4y ago
N19PEDL2 4y ago
In other areas GE is not doing so badly: for example, it will be the engine supplier for the joint European UAV Eurodrone. [0] [0] https://www.defensenews.com/global/europe/2022/03/25/us-owned-avio-aero-wins-race-to-make-eurodrone-engines/ https://www.defensenews.com/global/europe/2022/03/25/us-owne...
- prpl 4y ago
  GE is so big and diverse that the laws of thermodynamics apply. Some parts have local minima and others maxima, the entire company trending towards entropy, and no Maxwells demon in sight.
pipeline_peak 4y ago
When foreign electronic companies came in, same goes for RCA.
ortusdux 4y ago
I know several companies that flat-out refuse to sell components to them. Last I heard, their standard payment terms were net 90, and the word was that they would often overshoot this by another 90 days with smaller businesses. Not getting paid for half a year could easily bankrupt a small company.
- a2tech 4y ago
  I also work with companies that won't sell to GE (since the late 80s/early 90s) because of 1) ridiculous JIT bs with parts 2) extreme hoops to go through to get paid 3) just endless rigamarole at every step with them. It got so bad they switched to selling to Rolls Royce instead because it was easier (and if you know about working with Rolls..this should tell you how bad GE was)
  - SoftTalker 4y ago
    Turbine engine parts, I assume?
    - a2tech 4y ago
      Yup, and aircraft engine parts
- W-Stool 4y ago
  IBM operated the same way back in the day (late 90's). I had a very modest ISV that sold a $5K custom device driver to IBM and it took me nearly a year to get paid. Everything was outsourced - even the accounts payable department. 20 years later in another life I did business with IBM as an enterprise customer. Same complete shitshow. Never again ...
- bunabhucan 4y ago
  I negotiated GE from net-75 to net-30 (what our other clients paid us) and got so much hate for it.
neilpanchal 4y ago
I interned at the GE Wind division in Greenville, South Carolina. It's under GE Energy, and it was a complete and utter disaster. This was around 2005 and the entire GE Wind division was recently acquired from the Enron meltdown. Part of my job was to sort through a bunch of Enron manuals that had water damage sitting in the Tehachapi desert for 3 years in a warehouse. Surprisingly, the work done at Enron was quite good and bluebooks were really well done. They had already worked on a 5MW version of the turbine and had plans for 8MW. I'd say a third of it was water damaged and impossible to read. But, GE's management was a trainwreck happenning in slow motion beyond that. I worked a little bit with their Bangalore team that was working on wind turbine conceptual design framework. Essentially, GE's internal simulation tool for determining a whole bunch of design envelopes. There was little coordination between the US and Bangalore software team, often stepping on each other's toes. This program ended six months later after my internship. Basically, GE's wind turbine division at the time was Enron's zombie dressed up with nice clothes and trying to stand straight. Idk if things improved after that. I hated that internship so much, part of which was sifting through nasty boxes of molded design docs and then scanning them on a xerox machine.

When did GE fuck up so royally? They seemed to be cutting edge in all their sub-parts, and now they are subpar everywhere. Did the MBAs take over?

by sveme 4y ago

When did GE fuck up so royally? They seemed to be cutting edge in all their sub-parts, and now they are subpar everywhere. Did the MBAs take over?

gvb 4y ago

"[The fall of GE] arguably begins with the arrival of the legendary Jack Welch as CEO in 1981." Ref: "The fall of GE" https://theweek.com/articles/761357/fall-ge https://theweek.com/articles/761357/fall-ge (2018)

twoodfin 4y ago
What's a comparable example of an already huge, industry-spanning conglomerate American corporation of 1981 that's done better than GE over the past 40 years? IBM is probably the best "successful" comparison, but they were never as diverse as '80's GE.
- dragontamer 4y ago
  Berkshire Hathaway
  - twoodfin 4y ago
    That's a good one, but Berkshire had earnings of $40M in 1981[1]. I couldn't do better than the 1980 numbers for IBM ($3.5B)[2] and GE ($1.5B)[3] but safe to say in that era they dwarfed BH. My point is that it would have been extremely difficult for any giant conglomerate adapted to the business environment of 1981 to transition successfully to the business environment of 2021 without changing nigh unrecognizably. [1] https://www.berkshirehathaway.com/letters/1981.html https://www.berkshirehathaway.com/letters/1981.html [2] https://www.upi.com/Archives/1981/01/16/IBM-reports-sharply-higher-4th-quarter-earnings/5135348469200/ https://www.upi.com/Archives/1981/01/16/IBM-reports-sharply-... [3] https://www.nytimes.com/1981/01/23/business/ge-had-small-gain-in-quarter.html https://www.nytimes.com/1981/01/23/business/ge-had-small-gai...
- ncmncm 4y ago
  General Motors became a finance company that sold cars on the side.
  - W-Stool 4y ago
    It is amazing how vertically integrated GM used to be - for a vehicle they made just about everything except the windshields, the paint, and the tires. They also made city buses, diesel locomotives, fractional HP electric motors, earth moving equipment, consumer kitchen products, and sold insurance. They even had their own university that awarded bachelors and masters degrees. All of that is long gone now.
    - downut 4y ago
      Also nuclear reactors and the uranium fuel rod assemblies those required.
  - Gibbon1 4y ago
    My distilled belief is the finance guys managed to regain control of things from labor and manufacturing in the early 70's. After 1980 came the complete financialization of the American economy. Instead producing goods, services and jobs companies were pushed to create 'paper'. That's why GE and GM both let the finance part of the business wag the dog.
- sidewndr46 4y ago
  Rockwell peaked at a similar time frame & then exploded into a 1000 tiny pieces: https://en.wikipedia.org/wiki/Rockwell_International#Apex_and_break-up https://en.wikipedia.org/wiki/Rockwell_International#Apex_an... Some are in fact successful companies to this day.

buscoquadnary 4y ago

Yes that is exactly what happened Welch came in started pushing the MBA way of doing things, pushed it throughout the entire industry, talked a big game. Tons of MBA programs were focused around the "GE Way" etc. It was when the Peter Principle, people are promoted to their level of incompetence, to the Dilbert Principle, idiots are promoted directly to keep them out of the productive flow. The MBA ruined many things, it was scientific management brought back with a catchy name. Not creative enough to be in the artists? Lacking the intellectual discipline to become a real process engineer? It's okay you can become an MBA, learn no real skills, no real information and feel superior because then you can lord yourself over the serfs that decided to go into the silly practice of actually providing goods and services, when you can "manage" the people that actually contribute. Note this shouldn't be taken as a tirade against management, there are good leaders out there that do make things better for those they lead, but my point is that an MBA is totally independent variable to whether or not someone will be a good manager. The problem is that an MBA basically trains people to see their work/world as a video game where they play with spreadsheets, choose the right dialogue options in the tree, and assign your workers to specific tasks, and then when the reality doesn't conform everything hits the fan.

JumpCrisscross 4y ago
> pushing the MBA way of doing things This is a bad, if commonly-made, attribution [1]. [1] https://news.ycombinator.com/item?id=33111247 https://news.ycombinator.com/item?id=33111247
- randomdata 4y ago
  I'll leave you to decide on the veracity of the claim, but he is suggesting that Welch invented the "MBA way of doing things", something that eventually made its way into MBA programs thanks to Welch pioneering it. So him being a chemical engineer by training isn't at odds with what is being suggested. After all, you can't go to school to learn about what you created yourself.
  - benzin 4y ago

N19PEDL2 4y ago

In other areas GE is not doing so badly: for example, it will be the engine supplier for the joint European UAV Eurodrone. [0] [0] https://www.defensenews.com/global/europe/2022/03/25/us-owned-avio-aero-wins-race-to-make-eurodrone-engines/ https://www.defensenews.com/global/europe/2022/03/25/us-owne...

prpl 4y ago
GE is so big and diverse that the laws of thermodynamics apply. Some parts have local minima and others maxima, the entire company trending towards entropy, and no Maxwells demon in sight.

pipeline_peak 4y ago

When foreign electronic companies came in, same goes for RCA.

ortusdux 4y ago

I know several companies that flat-out refuse to sell components to them. Last I heard, their standard payment terms were net 90, and the word was that they would often overshoot this by another 90 days with smaller businesses. Not getting paid for half a year could easily bankrupt a small company.

a2tech 4y ago
I also work with companies that won't sell to GE (since the late 80s/early 90s) because of 1) ridiculous JIT bs with parts 2) extreme hoops to go through to get paid 3) just endless rigamarole at every step with them. It got so bad they switched to selling to Rolls Royce instead because it was easier (and if you know about working with Rolls..this should tell you how bad GE was)
- SoftTalker 4y ago
  Turbine engine parts, I assume?
  - a2tech 4y ago
    Yup, and aircraft engine parts
W-Stool 4y ago
IBM operated the same way back in the day (late 90's). I had a very modest ISV that sold a $5K custom device driver to IBM and it took me nearly a year to get paid. Everything was outsourced - even the accounts payable department. 20 years later in another life I did business with IBM as an enterprise customer. Same complete shitshow. Never again ...
bunabhucan 4y ago
I negotiated GE from net-75 to net-30 (what our other clients paid us) and got so much hate for it.

neilpanchal 4y ago

I interned at the GE Wind division in Greenville, South Carolina. It's under GE Energy, and it was a complete and utter disaster. This was around 2005 and the entire GE Wind division was recently acquired from the Enron meltdown. Part of my job was to sort through a bunch of Enron manuals that had water damage sitting in the Tehachapi desert for 3 years in a warehouse. Surprisingly, the work done at Enron was quite good and bluebooks were really well done. They had already worked on a 5MW version of the turbine and had plans for 8MW. I'd say a third of it was water damaged and impossible to read. But, GE's management was a trainwreck happenning in slow motion beyond that. I worked a little bit with their Bangalore team that was working on wind turbine conceptual design framework. Essentially, GE's internal simulation tool for determining a whole bunch of design envelopes. There was little coordination between the US and Bangalore software team, often stepping on each other's toes. This program ended six months later after my internship. Basically, GE's wind turbine division at the time was Enron's zombie dressed up with nice clothes and trying to stand straight. Idk if things improved after that. I hated that internship so much, part of which was sifting through nasty boxes of molded design docs and then scanning them on a xerox machine.