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By Nick Wakeman

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Nick Wakeman

GE's dramatic fall offers cautionary tale

Unless you follow them regularly -- and I don’t -- the news that General Electric fired its CEO and wrote down $23 billion in value for its energy business was a shock.

Yes, I knew just from following the news that GE has struggled. Over the last decade it has shed businesses, most notably GE Credit. And it has done some acquisitions. But nothing seemed to re-energize the company.

CEO John Flannery was put in place about 13 months ago to lead a turnaround. But he’s gone now and is being replaced by Lawrence Culp. He is the first non-GE person to be elevated to CEO in the history of the company.

GE was once-viewed as one of the best run corporations in America. It practically gave birth to the celebrity CEO with longtime leader Jack Welch, who graced magazine covers and was a regular on the talk show circuit.

But now GE is seen as too slow and sluggish.

I can’t do a deep dive analysis of what has gone wrong at GE. The initial positive reaction on Wall Street indicates that new blood was needed. So that’s one lesson perhaps.

Unlike most government contractors, GE was a conglomerate with holdings in multiple and seemingly unrelated markets from home appliances to jet engines to health care equipment, and even television with NBC.

But I’m not sure if the diversity of its portfolio was to blame.

I’ve read some analysis that the company made some bad decisions on the timing of some of its acquisitions and divestitures. Buying when the market was high and selling when it was low.

The lessons from this chapter of GE’s history likely won’t be written until the company has completed a turnaround, whatever that will mean, and more of the decisions good and bad are laid bare.

Right now, GE is a cautionary tale that no one, no matter how successful, is invincible. What that means to you depends on your own company history and how it handles change in the market.

The questions always to ask are: what is next and what does it mean? Finding the right answers is the tricky part.

Posted by Nick Wakeman on Oct 02, 2018 at 10:04 AM

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