Even An Industrial Powerhouse Can Sour When It Stops Doing The Nuts & Bolts Work

Soured Success
Leaving a path of working with others and satisfying others
to focus on satisfying your desire to feel special

General Electric (GE) was formed in 1892, a merger between Edison General Electric Company and Thomson-Houston Company. Over the years GE’s research lab would give the world:

x-ray machines
(including portable ones)

electric locomotive

technology for voice radio broadcast

electric kitchen appliances
(including the first air-tight refrigerator,
making microwave oven technology possible)

trans-oceanic radio

LED lights

solid-state lasers

self-cleaning ovens

magnets that were precursors to MRI machines

fluorescent lights

GE also contributed to:

industrial plastics

early electronics

power generation

aviation
(including trips to the moon)

From consumer goods to industrial machinery to commercial airliners and nuclear submarines to radar altimeters to romantic comedies to Nobel Prizes, GE was the elite of corporate capitalism. In the beginning, GE did the nuts and bolts work that made it an industrial powerhouse.

With success came expansion, and with expansion came the need for more leaders. In 1956, GE President Ralph Cordiner opened a management training center in Crotonville, New York. The training instilled “consistent values across its management echelon.”

End of the 20th century CEO Jack Welch kept the focus on leadership training, but cut research and development. One part of Welch’s leadership training was moving young executives to different areas of the corporation for different perspectives and experiences. That focus was part of GE’s success. But Welch’s cuts to research and development stopped the nuts and bolts work crucial for remaining a powerhouse. GE’s success began to sour.

Jack Welch thought his leadership training could create flawlessness. That belief was part of GE’s souring. Flawlessness is impossible, especially when perspective and experience are limited by cuts to research and development. High quality products and manufacturing took a back stage to low quality financial maneuvers. GE wanted to continue the special industrial powerhouse feeling without doing the nuts and bolts work crucial for remaining a powerhouse.

Under CEO Jeff Immelt, GE turned to acquiring financial businesses, assuming GE managers could fix anything. It turns out that GE managers couldn’t fix the multi-billion dollar pension shortfall that was bigger than any other corporation’s pension shortfall.

The 2008 financial crash exposed the souring. The company survived only through emergency stock sales and government loan guarantees. GE did poorly even after much of the rest of the world began recovering. After becoming CEO in August 2017, John Flannery decided to start selling off pieces of GE to reduce its size, debt, and pension deficit.

In 1896, GE became an original member of the Dow Jones Industrial Average. It was a continuous member from 1097 until 2018 when it lost its membership. In 2017, GE was the Dow’s worst performing stock.

None of GE’s leaders at least through Jeffrey Immelt saw the opportunities for near flawlessness that Wisconsin billionaire Ken Hendricks saw. Hendricks saw opportunities in focusing on the perspectives of people most CEOs ignore — workers at the bottom. When Hendricks considered buying a business, he listened to what the people at the top claimed about the business. Then Hendricks visited the people at the bottom. Hendricks would ask,

“If you were running this business, what would you do
differently?”

Hendricks told Inc Magazine the results of his conversations with people at the bottom:

“I guarantee if you fixed what they tell you, 95 percent of
the time that would be a successful business. These guys
hit it on the head all the time. But management never
asks them.”

A 95 percent success rate is nearly flawless success.

If an industrial powerhouse can sour, any business can sour. Ken Hendricks demonstrates how to protect your business — small, medium, or large — from souring. He looked for the nuts and bolts work crucial for creating success, then did the nuts and bolts work crucial for maintaining success. For your business, find and do the nuts and bolts work crucial for making your business a success. Keep looking for the nuts and bolts and keep doing the crucial work. You may even create a powerhouse in your industry.

General Electric left its path of working with others and satisfying others
to focus on satisfying feelings of flawlessness in its leaders.

“From Light Bulb to Industrial Powerhouse: A Brief History of General Electric Company”
Steve Heller
The Motley Fool
July 12, 2015

“General Electric gets booted from the Dow”
Matt Egan
CNN Money
June 19, 2018

“How Do You Make Better Managers?”
Seth Stevenson
Slate
June 9, 2014

“How To Buy A Business”
Inc Magazine
December 1, 2006

“Inside the dismantling of GE”
Matt Egan
CNN Money
June 2018, no specific date on article
http://money.cnn.com/interactive/news/GE-dismantling-interactive/index.html

Paula M. Kramer
Copyright 2019
All rights reserved.

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