Wall Street Journal reporters Ted Mann and Thomas Gryta described in a Hill.TV interview how a series of missteps at General Electric in the years following the departure of former chairman Jack Welch led to GE’s downfall.
The two reporters, who co-authored “Lights Out: Pride, Delusion, and the Fall of General Electric,” said the company failed to adapt to a changing industry in the new century.
Gryta said that under Welch, GE’s chairman from 1981-2001, it was profitable to focus on financial services. But continuing that strategy under Jeff Immelt, Welch’s successor, proved unsustainable when the 2008 financial crisis hit, Gryta said.
Immelt attempted to fight the tough battle of sustaining the high expectations the public had under Welch while guiding the company to a safer position, the reporter noted. However, buying failing industrial rival, Alstom, and spending more than $70 million in share buybacks drove the conglomerate off the edge, he added.
Mann said that under Immelt’s leadership, GE suffered from the “cultural inability to deal with bad news.”
“The result was ruinous to thousands of employees and shareholders and to the company itself,” Mann said, referring to the Alstom deal.
GE’s market capital has decreased nearly $545 billion since 1999.