Long read on GE and their fall

Behind WSJ payroll and google trick won't work.

But... without having read it... GE is having the same two problems other companies and trouble have.

1) Their spirit of innovation went away when their innovative leader went away

2) They aren't really known for anything anymore. They do a bunch of different things decently well, but they aren't good enough at any one thing to really make a mark.

There is a way to get around the paywall for all articles with no limits. WSJ considers links to articles from Facebook to be advertising, and allows full access. Next time you find a WSJ article you want to read, simply paste the following address BEFORE the address of the paywalled article in your URL bar:

https://facebook.com/l.php?u=

OR

use outline.com

LINK without Paywall

LINKEDIn link

Going through this link works. Also issue with WSJ paywall is noted for future topics

No, substation design. My last manager was laid off 3 months before they made him manager. The guy was an IT guy was laid off and then 3 months later he’s my manager and had no idea on my day to day activities. I knew then I needed to leave.

How do you fix that?

I was there 6 years and had 5 different managers during my time. It was ridiculous

I think that has a lot to do with their reliance on six sigma or whatever iteration of it they are using now.

I just got around to reading that, and it was a very interesting case study.

My take-aways from it, in case anyone cares:

#1. Historically, GE’s core competency was bringing harsh, engineering efficiencies to industrial and consumer corporations at a particular stage of maturity in the corporate life cycle; but they did not stay true to their past fierce discipline in only acquiring growing winners and ruthlessly getting rid of underperforming losers.

#2. Related to #1, to have 2/3 of its business revenue in 2018 be in power, O&G, and aviation, was not a good strategy for GE, and it’s unclear why GE was so bad at the 1/6 of its business in healthcare. A GE focused on the future would have been more focused on young, tech companies, and more able to enter into and compete for the same kinds of businesses that Amazon, Google, and Tesla were interested in.

#3. The ruthless 10% weed-out strategy of Jack Welch can be a very good and profitable strategy toward the long-maturity end of the corporate life cycle, but to practice it within GE headquarters itself was mistaken, and seems to have bred a sort of inflexible, non-strategic, non-growth oriented culture and non-imaginative brand of groupthink.

#4. The public CEO-succession competition that selected Immelt, highly praised at the time, was not a sign of a healthy business culture--the arse-kissing, sunshine-pumping optimist won.

#5. The use of a aligned bank, GE Capital, was crucial to GE’s competitive advantage over the past century. With the loss of that advantage, the clever accounting tricks pushed the company further and further on the edge. It was probably right to let GE Capital go, but the remaining GE leadership was totally ill-equipped to operate without using it as a crutch. They didn't have the discipline to pay more attention to what Wall Street was trying to tell them.

#6. The corporate culture that selected Flannery as the replacement for Immelt in 2017 picked an overly cautious auditor of outside opinions, rather than the swift executive-style decision-maker that was necessary to quickly right the ship.

quote:

---

Someone else mentioned Toyota... They do not follow Six Sigma from what I can see, they follow Demings 14 Points which actually make room for valuing employees.

The major companies who announce they are shifts to Six Sigma end up trailing their peers in the S&P 500 after making the change... Coincidence?

---

No, as I pointed out, Toyota doesn't call its system Six Sigma and it doesn't employ "belts" to drive the system. But the Toyota Production System is the basis for Lean Six Sigma.

That last statement is probably based on an old Fortune article (2005 or so?) and a Dilbert cartoon, which made that claim. The so called "analysis" came from Charles Holland of consulting firm Qualpro (which coincidentally sells a competing quality system known as MVT). Interestingly enough, Holland didn't mention what relative S&P rank the 58 companies he studied held prior to Six Sigma implementation, nor did he (AFAIK) provide any evidence that his company's MVT system provided better results. By being critical of Six Sigma, he would also have been criticizing Lean, which would be a criticism of the Toyota Production System. Knowing who did the analysis, I was, shall we say, a bit suspicious. He was light on data, in that he didn't provide time lines or mention how he selected his "sample".

What one has to be wary of is the reliability of claims and data, as well as any biases that may be present.

Coincidence? Possibly. It could also be correlation, while not being cause and effect. I don't know. When I read the article in Fortune a long time ago, it struck me more as a Ford guy trying to talk down Chevys so that he can sell more Fords - and not much more.

But to make a long post longer (sorry ), I don't think that Six Sigma, TPS or MVT could have saved GE. None of them are programs designed to fix the one thing that can't be fixed: stupid (management). But companies that have a clear vision and good management can use Six Sigma (or something else) to drive down defects and waste, and streamline the process... all while treating employees like humans (nothing about Six Sigma or TPS suggests otherwise). Seems to be working pretty well for Apple, Mercedes, Toyota and Bank of America.

Cheers. And a Happy New Year to all.

quote:

---

As a limited tool applied only to manufacturing or straightforward processes, it has value... I will grant that. The way it was applied at GE and many other firms and applied to creative endeavors has produced success stories like GE, Motorola, 3M and others.

And Toyotas production system is based on Deming which was pre Six Sigma (1960s). They take a systematic and statistical approach to improvement, but it's not Six Sigma.

---

Yes, it's a tool (or set of tools) that can be applied correctly, or it can be misapplied. The misapplication of capitalism doesn't make capitalism a bad economic system, right? And trying to use a screwdriver to pound in a nail doesn't make it a worthless tool. But to your point, the analog cellphones that Motorola produced were some of the highest quality cellphones on the market at the time. Unfortunately, the market had shifted to digital phones. That was the point that I made in my initial post when I mentioned buggy whips.

Yes, I'm well aware of the basis for the Toyota Production System, having studied W.E. Demming's work and my first Sensei worked with the Toyoda family. No one said that TPS was Six Sigma (Lean or otherwise). What I stated was that Lean Six Sigma has its basis in TPS (not the other way around). We periodically sent our Black Belts and some Green Belts to Kentucky to learn TPS. And TPS actually doesn't rely on heavy math or statistics as much as it does on rather simple and easy to use principles like visual management, Kanban, Kaizen, etc.

But in any event, TPS isn't a tool set that would guide entrenched, bad management in the right direction either. Only the hand of God, or maybe a brain transplant could accomplish that.