Lights Out: Pride, Delusion, and the Fall of General Electric

by Thomas Gryta

Under Immelt, there had been a buzzy, vague, optimistic spin that not only often failed to hold up under scrutiny but had eroded GE’s credibility with Wall Street and its workers alike.

And no one made more turbines—the massive machines at the center of power plants—than General Electric, whose equipment still generates about one-third of the world’s electrical power.

The pressure to perform inside GE is omnipresent, and missed goals can be fatal, a tradition true at all levels of the company.

Power had sold service guarantees to many of its customers that extended out for decades. By tweaking its estimate of the future cost of fulfilling those contracts, it could report boosts to its profit as needed.

At its height, GE Capital produced more than half of GE’s total profits. The most famous industrial company in America had essentially become one of its largest and most inscrutable banks.

Bob Nardelli left the GE he’d once dreamed of running one day and signed up to serve as the CEO of Home Depot. McNerney left as well, to lead another industrial conglomerate, 3M. In Jack Welch’s GE, a business wasn’t worth being in at all unless you could be the best or the second-best.

of owners of the most famous American industrial company. It was only with the implosion of Enron—its suddenness and the shock of the fakery revealed—that

The company had overstated its earnings by hundreds of millions of dollars and stretched the accounting rules to their breaking point. For its sins, GE agreed to pay a $50 million fine and essentially promised not to misbehave again.

The SEC’s charges included multiple counts of fraud, filing misleading documents, and failure to maintain accurate records and internal controls.

the managers groomed in Crotonville who believed that they could enter any industry, anywhere, and dominate it.

Imagine It Forward

He powered ahead with GE’s “lean transformation” using tools like Kaizen, a focus on continuous improvement, and Hoshin Kanri, a planning method that ends with all workers understanding the company’s strategy and how their role can contribute to it.