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Comment by lbsnake7 | Hacker News Reader

Is the clusterfuck that GE went through the last 10 years purely because they over extended their financing arm? I genuinely ask because their products are still in demand and they have huge market shares in the divisions they are in. On paper this conglomerate should’ve stayed together but it seems their financing division fucked them up?

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The problem started in the 80s when Jack welsh was CEO. He thought it would be fun to invest in all sorts of specialized debt. At the time it made GE‘s balance sheets look great. Then the debt obligations started to show up, that’s when things got bad. But not before Jack Welch retired with one of the biggest golden parachutes of all time.

https://moneyinc.com/largest-golden-parachutes-ever/

(skip to number 10)

Wow that's insane, and sad for GE.

A lot of people praised Welch back in the day. I don't understand all these but maybe he was not that shiny after all. So the trick to be a successful and loved CEO (or anything) is to take ownership of something, beautify the balance sheet and get out before it explodes.

This also applies for software engineering. Try to start a new project in some company, and you get the privilege of:

1. No need to maintain other shit mountain;

2. Get to start your own shit mountain;

3. Can come back as consult and win big bucks

4. Can speak at conferences about "How X is implemented in company Y"

This is an almost universal problem in any endeavor. Everyone loves heros and visionaries, few give any respect to diligent maintainers, so we have a world of shiny, fragile new things on top of crumbling older ones that haven't kept up. Whether its software, infrastructure, equipment or corporate structure or whatever, incentives make it always like this.

Yeah I believe it's just human nature. Can't do much with it except that in my career I'll pay more respect to the maintenance people and others who are sweating for someone else's glory. The glorious guys already get glory and big buck so they don't need anything else.

It’s really amazing that these companies can afford these kinds of compensation commitments and still make payroll and remain competitive in the marketplace. Wild how much of a competitive moat that size is.

Immelt shares quite a lot of the blame, too.

Maybe it’s 15+ years of cluster? Combination of overextended finance arm, too much diversification and complexity, and a history of doing any accounting tricks needed to meet the next quarterly number. None of those involved meeting customer needs. You can only go so far on financial engineering. That’s better for dismantling the company rather than growing it.

One of the problems I observed working with GE was they had pockets of a few smart folks who knew what they were doing and armies of people managing outsourcing without really having retained the industry specialization knowledge. It seemed like they barely knew their own business at times, they didn't understand the technology and they were highly specialized in dealing with external vendors. This would lay blame on execs like Gary Reiner who pushed outsourcing everywhere. They did try to turn that around and it is probably worthy of a book to review what they tried to bounce back from over-outsourcing, what worked, and what didn't.

I don't think that's specific to GE.

I am coming around to thinking that all good things are driven by small teams of less than 10 people maybe even less than 5, who all have a shared vision and drive to accomplish something. Everyone else is just along for the ride.

They made some strategic errors beyond that like how they lost $8 billion on their merger/investment with Baker Hughes in the oil and gas sector.

The $15 billion merge with Alstom Power for turbines was also likely a net loss as well.

Maybe not, EdF wants to buy Alstom back

My impression is that there was a drive for 'growth' that lead to a bunch of 'creative accounting' aka juicing and in some cases lying. This worked for a while, but came crashing down as it always will... eventually. You can hide the rot for a season.

The basically forgot how to do business. Keeping cost low. Sell more than your competitors and make profit. What they did was get as big market as possible in that sector by all means even if it is bad niche or higher cost than their selling price. Then to cover their incompetencies in doing business they play their books to look good.

There is a book titled "lights out" about the downfall of GE. It's an interesting read.

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