For more than a quarter of a century, GE was an icon for US managers. By a series of breathtaking acquisitions and selloffs, this historic company – rich in tradition, was radically transformed into a huge conglomerate. It became famous for its reports of continuous growth of both sales and profits. As a consequence, GE was highly praised by financial analysts and soon became a stockholder favorite.
Business schools proclaimed GE the reference standard for portfolio and performance management and for shareholder value – and so GE became the role model for general managers and management consultants, due to its seemingly superior expertise in outsourcing, offshoring, asset management, and more besides. In the USA, as well as in Germany and elsewhere, corporate managers of two whole generations, more often than not, believed GE was the worldwide benchmark for business management.
Now GE managers have belatedly recognized that short-term profits do not guarantee lasting business success: that other factors like innovation are indispensable for organic growth and that software and digitalisation are essential ingredients for smart products and smart systems. For many years, GE managers concealed the downside of their high-powered and manipulative management-style by creatively preparing business results, underestimating risks, depending on financing deals, an overly complex organization, ruthless job cuts, careless environmental degradation and, last but not least, excessive tax avoidance.
During that era, GE was headed by two authoritarian CEOs, the legendary Jack Welch and his follower and appointed successor Jeffrey Immelt. These men took investor capitalism to new extremes and have turned GE into a notorious underperformer – frantically attempting to survive by tearing itself apart.
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