I have this incredible urge to reply to this post. I grew up in Connecticut and worked at GE for 6 years. All of them in GE Capital. For a long, long time it was a point of pride to work there. Where you cite data and interviews, I can remember where I was or what was going on in the company. The Angola deal in particular...

Even as a junior analyst, you could feel the inertia and laziness permeate like a miasma in the company. So many internal meetings or all hands focused on what one part of GE thought of the other.

GE had two training programs that carried tremendous weight internally but I always questioned. The Financial Management Program (FMP) for recent graduates and Corporate Audit Staff (CAS) 2-3 years later. These programs epitomized the intellectual laziness you identified. Graduating from CAS assured you a leadership position within the company, often in a prominent division. Having it on your resume was one of the most sought after credentials in the company.

In my opinion these alumni worked tirelessly, but lacked the rigor and discipline to make difficult choices. They enabled the bureaucracy that Rahul mentions or the success theater you write about. Making the correct internal decision rather than the correct business decision became the norm.

Even before the 2017 nose-dive in price, you could feel that we were living off our reputation rather than enhancing it.

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Thoroughly enjoyed this one!

"Cote preaches that managers should instead strive for intellectual rigor, to probe deeply to identify and confront root problems and think creatively and rigorously to find solutions."

While a simple piece of advice, it really is eye-opening to see what it's like when this principle is deeply embedded into an organization. When managers avoid "cheap calories" to drive growth, and instead ask tough questions centered on the key drivers of the products and customer experience, it also benefits employees, who are able to deepen their own understanding of the business and learn how to ask similar questions (something I've experienced firsthand).

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Jul 4, 2023Liked by Philo

An epic piece. I personally lay a lot of the blame of GE’s failure at Immelt’s feet. He did not understand the businesses, kept adding to bureaucracy to get around the growing bureaucracy (did not understand that a large organization needs to constantly fight this), did horrible acquisitions and worst of all, didn’t understand that GE capital provided the cash necessary to fund the dividend and M&A because the industrial businesses are very lumpy.

Losing Cote might have been the biggest failure of Welch. He gave him the worst business and then was shocked when he didn’t perform as well as the other leading guys…

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It's interesting because Welch kind of plucked Cote from obscurity and put him on the fast track at GE, and then Cote hit it out of the park on his first assignment running a small division (Silicones). He clearly recognized that Cote had unusual talent relative to his peers, but maybe that was obvious, who knows.

The sense I got from the book was that Welch didn't know how to identify a good manager because he wasn't a good manager himself. He didn't see his own flaws, so he promoted people with the same flaws. Even in the book, all Welch can say about Cote is "I didn't know he was so smart" - he doesn't realize what made Cote different.

Welch had his strengths but ironically it's probably his strengths that did him in, because they enabled him to keep going despite his fatal flaws. He was known as "Teflon Jack", someone who could dodge accountability for anything, so he never learned from his mistakes. He also legitimately made some good decisions, which offset some of his missteps.

It's implied in the book that everything could have gone sideways for Welch in the early 90s recession, with some of the bad loans they made, but the economy bounced back quickly before GE could get into real trouble. Ironically, if conditions hadn't been so perfect, it would have been a small failure early on rather than a disaster of historical proportions later.

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The word is not "intellectual laziness"... it's Fraud.

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