By Tom Gryta and Ted Mann
Reader response to The Wall Street Journal's article about
General Electric Co. zeroed in on one painful truth: There is
plenty of blame to go around for the unraveling of the last great
American conglomerate.
We received hundreds of emails and messages from employees,
retirees and investors and others who have followed the company for
decades and been pained by its recent troubles. They are divided
about whether GE can regain its lost glory, but they agree that its
leaders, including former CEOs Jack Welch and Jeff Immelt, share
the blame for what has become of it.
"There was far too much emphasis on the cult of leadership at
GE," wrote John Sutton of Boston. "Jack Welch retired with a
far-too-generous severance package, which set the stage for the
coronation of Jeff Immelt. Immelt began to believe his own press
releases and GE suffered."
Larry Marion of Newton, Mass., wrote: "Neutron Jack Welch
opining that his strategy of only being one, two or three in any of
its markets was a smart idea but led to abuse and failure. Cult of
the CEO hurt the company."
Others blamed the company's board of directors.
"Board complacency is a clear causative factor. Directors did
not challenge the GE CEOs adequately, Immelt in particular," wrote
Ken Dredge of Coolum Beach in Australia.
"GE's board during Immelt's tenure was abysmal," wrote Henry D.
Wolfe of Chicago. "Ed Garden, from Trian, who only joined in 2017,
and Jonathan Tisch were the only two directors with capital
allocation skills and track records, which is a must in any company
but especially at a conglomerate."
"In the extreme, the GE board is the poster child for the
current public company governance model which is not designed to
optimize the allocation of capital," Mr. Wolfe added. "This
governance model failure is the real story underpinning the GE
devolution."
Many readers pointed to GE's expansion into financial services
for its current problems.
"GE Capital shifted the company's focus away from being an
industrial company built on strength of operations and strategy.
That killed them," said James F. Prevost of Lake Bluff, Ill. "They
should be able to reconstitute as a smaller, leaner company."
Ed Fitzgerald of Pottstown, Pa., agreed. "Great company in the
70's and 80's when they were focused on manufacturing and using GE
credit to finance vendors that supported their business," he wrote.
"Downfall started in the 90's when GE Capital was used to trade
businesses but not develop them. 2000 to 2015 was getting into
businesses that never made sense for GE."
John Briggs, an engineer in Vancouver, Wash., said he was a
longtime customer of GE's industrial power distribution equipment.
"They invested large amounts of effort into engineering and selling
their products. Things changed sometime in the late 80s or early
90s when they lost interest in this business and became more of a
financial company," he said. "Since that time most of our business
went elsewhere, much of it overseas."
Many GE alumni recalled with pride their work at different parts
of a company that made everything from electric toasters to nuclear
reactors.
Harold Paustian, a retired GE nuclear engineer who worked in San
Jose, Calif., and now lives in Big Lake, Minn., said, "Although GE
didn't always have the best performing stock or pay the best, the
employees were highly motivated with high integrity. I hope GE can
fully recover!"
"I started my career there and stayed 15 years when Jack Welch
was in charge. He was an incredible leader who drove communication
from the top to every employee," said Wendy Peters of Bluffton,
S.C. "I took many of my learning and experiences around leadership
development with me when I changed companies. It is so incredibly
sad to me to see what has happened at GE recently."
WSJ readers aren't giving up on GE. Of the 1,383 people who
responded to an online survey before the article was published
online Friday, more than half said they believed GE can make a
comeback.
"I have full confidence that the GE brand, culture, and
leadership will guide the ship back on course in the long-term,"
wrote Andrew Draper of New York City. "But no doubt they will need
to go through this period of pain before the outlook starts to
improve."
"As much as anyone outside the company claims to have a view on
our future story, or influence over it, it can only be written by
those of us still here," wrote Jason Forget, a third-generation GE
employee in Schenectady, N.Y. "This story is far from over, and I'm
excited by the opportunity to see how the chapter that I write
impacts the next revolution of our company."
Many individual shareholders expressed shock that a company they
considered so important to the U.S. economy and so safe could be in
such dire condition.
"As a benchmark blue chip for so many decades, I never could
have imagined the rapid demise of GE in such a short timeframe,"
said Craig Brodbeck of Lancaster, Pa. "With a similar situation
with Westinghouse, what would two titans of the 19th century --
Thomas Edison and George Westinghouse -- have to say about their
business legacies? It makes me wonder which stalwart will falter
next."
Mitch Morrison of Passaic, N.J., said a relative gave GE shares
as a present when his son was born 19 years ago. The gift included
a note describing GE as a very sound company that would be around
even longer than his grandchildren.
"The note made sense at the time. GE has been around seemingly
since the formation of the industrial revolution," Mr. Morrison
wrote. "It's become increasingly clear the company that brought
good things to life has sadly brought some good things to their
demise. Hope we're not seeing their epitaph but perhaps we
are."
Join WSJ journalists in a live subscriber-only call on what
happened at GE, how they got the inside story, and what it all
means, Tuesday Dec. 18 at 1:00 p.m. ET. Register at wsj.com/gecall,
and send your questions on GE to subscribercall@wsj.com.
Write to Ted Mann at ted.mann@wsj.com
(END) Dow Jones Newswires
December 17, 2018 08:14 ET (13:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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