General Incompetence
June 25, 2018 9:38 PM   Subscribe

 
That's all a nice history board; the missing part is when the huge depreciation in value begins to affect quality control and talent retention, and a lot of people will be reluctant to buy a brand with the fading vibe about it.
GE is not Montgomery Ward Oldsmobile Radio Shack Schwinn; but a lot of it is heading that way.
posted by Afghan Stan at 11:43 PM on June 25, 2018


As GE goes, so goes the nation.
posted by chavenet at 1:26 AM on June 26, 2018 [2 favorites]


That was interesting. Thanks for posting!
posted by heatvision at 3:08 AM on June 26, 2018 [1 favorite]


My organization had a joint project with GE to develop a software/hardware product and I heard zero good things about dealing with them. Their bureaucratic enertia made even the simplest decisions take weeks and their heavyweight process slowed everything down.
posted by octothorpe at 3:19 AM on June 26, 2018


I worked as a co-op at Aviation back in 2005 and I remember the questions even then about the outsize impact of Capital. The feeling in the trenches was that Capital was being promoted to the detriment of the other business units.

Working there actually almost made me quit engineering altogether. When I arrived, the team I was on was working on solving an oil leak issue on a military jet engine. Every night the test cell would run the engine and collect vibration data, and then we would analyze it the next day. In practice that meant the lab would print out (!) night's data and it would be sitting in a box on my desk when I arrived at work.

I would spend all day looking at these charts, trying to pick points off of them. Eventually I was allowed to go pick up the data myself, so I'd walk across campus to pick up this bankers box full of paper. I finally asked the test guys if they could just email me the data (they were shocked no one had asked before) and I wrote up a little script to pick the data I wanted and put it in a spreadsheet.

I showed the task lead what I had done - I had just saved us (well, me) something like six hours of work a day! His response? He didn't trust the digital data and wanted me to continue eyeballing the print outs.

So every day I'd get the box of paper, push it in front of my monitor, and run my script while I faffed off for six hours. Eventually my manager heard about my "innovation" and made me do his Black Belt project for him showing the incredible process improvement I had created.

So, progress ignored by supposedly technical leaders which was later coopted by management for their own gain. I still had to copy numbers off the paper charts even after my manager used my work for his certification.
posted by backseatpilot at 4:14 AM on June 26, 2018 [64 favorites]


his Black Belt project

I'm surprised they haven't taken to calling themselves "Grandmasters"
posted by thelonius at 4:28 AM on June 26, 2018 [5 favorites]


They definitely didn't get better after being acquired by the Sheinhart Wig Company.
posted by entropone at 4:45 AM on June 26, 2018 [18 favorites]


his Black Belt project
I'm surprised they haven't taken to calling themselves "Grandmasters"


That use of words came via Unisys from Motorola and Jack Welsh made is a GE thing.

If you have Six Sigma in you life or know someone who does there is a decade+ old comment here to consider as one bows and scrapes to the idols of capitalism.

(Unisys, Motorola, GE - all firms people look up to today don'tya know)
posted by rough ashlar at 4:52 AM on June 26, 2018 [10 favorites]


(Unisys, Motorola, GE - all firms people look up to today don'tya know)

Bank of America was into 6-sigma 5 years back... Frankly, ITIL filled all my model/workflow needs, and I paid lip-service to it, did an occasional training module to keep my hand in.

GE... GE... Yeah, I have some experience there to. IT Support for Corporate Benefits and Delivery. I made sure the PC's used to execute executive trades worked. They made sure THAT worked. At the same time, demolishing buildings in Schenectady to reduce their tax burden.
posted by mikelieman at 5:00 AM on June 26, 2018


(context of governement spending on military deleted but not ignored)....Letting things get really not normal for 600,000 pensioners is likely to fuck the economy up but good.

There are 2 levels to deconstruct here.

The 1st is the military and its influance. Back on Sept 10th 2001 there was a news cycle starting about how the pentigon could not account for 2 or so trillion Dollars. 6-8 months ago someone noticed the pentigon could not account for 21 trillion Dollars. Back when Ron Paul's wanting to gut military spending as part of his run for the job Trump now holds was in the news the almost dead Chalmers Johnson (of the 4 book triliogy about empire fame) pointed out the shutdown of the military would collapse 35% of the economy. And Dan Bricklin has a fine podcast about history and in the one about the atomic bomb he points out the push to the bomb was done as a way to lower defense costs.

So ya, there is a cronenberg level elephant in the room no one wants to talk about.

As for the effect of 600,000 pensioners being outta luck:
1) This months news cycle has the costs of locking up kids of the detained. From a cash POV - its covered. Or could be covered. But the next point is why it won't be.
2) The gutting of pension plans has a legal basis that goes back a few years and could be its own FPP for someone to deconstruct. Either a Bush/Clinton administration signed the rules which allowed for it. But most Americans don't have pentions and it's a US issue on a worldwide forum so I'm not sure how many would care to place a Melania-style framing on the issue.
posted by rough ashlar at 5:19 AM on June 26, 2018 [2 favorites]


Before I read the article, I'm guessing, "Jack Welch's single minded approach to metrics built to maximize quarterly growth without regard to long term health."
posted by DigDoug at 5:28 AM on June 26, 2018 [13 favorites]


Former oilfield technology guy here. Just wanted to mention that in the oilfield GE was well-known for paying way too much for their acquisitions, then turning them to shit.
posted by ZenMasterThis at 5:30 AM on June 26, 2018 [3 favorites]


Thought to myself before I read the piece, "I bet Six Sigma is part of the problem. And probably GE Capital."
Read the piece.
Yup.
Yup.
posted by Thorzdad at 5:39 AM on June 26, 2018 [10 favorites]


cronenberg level elephant in the room no one wants to talk about.

Forget six sigma, there's a bunch of silicon valley startups working on automating all these problems in the cloud.

agile, man, agile
posted by sammyo at 5:39 AM on June 26, 2018 [4 favorites]


"I bet Six Sigma is part of the problem. And probably GE Capital."

And the new CEO who's going to fix everything came up through....GE Capital!
posted by thecjm at 5:43 AM on June 26, 2018 [3 favorites]


When I was at Citi (2000 and a couple years more), the CEO was huge on six sigma.

My department got in trouble for having too high an efficiency rating - making everything else under that upper-manager look bad.

That says a lot about the system, where we can get shit on for being too good.
posted by mephron at 5:54 AM on June 26, 2018 [4 favorites]


Former oilfield technology guy here. Just wanted to mention that in the oilfield GE was well-known for paying way too much for their acquisitions, then turning them to shit.

Recently did some work for Baker Hughes both pre and post-acquisition and the number of GE "managers" that they shipped in without any additional engineering hires says all you need to know. They seem to be operating under the idea that they can manage the fuck out of any problem. This particular problem is that they don't have enough engineers to actually run their manufacturing facility and their solution is to buy more expensive tech for their currently over-worked engineers to figure out how to integrate into the production process.
posted by dudemanlives at 5:58 AM on June 26, 2018 [2 favorites]


I believe that GE was also big into "Stack Ranking", which was basically a requirement that managers fire their bottom 10% of staff each year. Microsoft also notoriously bought into that paradigm, much to both company's detriment. Pathological behaviours included things like deliberately hiring sacrificial lambs, managers horse trading who got fired each year to protect acolytes, and people refusing to take on challenging projects so they wouldn't get fired.

There were a lot of articles at the time trying to explain why it worked at GE, but not Microsoft- the obvious answer in retrospect is that "lord of the flies"-style management only works if you're a financial services company in a bull market.
posted by jenkinsEar at 6:05 AM on June 26, 2018 [27 favorites]


After I read the article, yep. Shortmindedness is the root of the problem. And an over-relience on 'Capital' and not focusing on labor or consumers in far too many markets to make a useful conglomerate.
posted by DigDoug at 6:09 AM on June 26, 2018


As a person who owns a few shares of GE, this pisses me off. Maximizing my value comes over the lifetime of my ownership, not just one quarter.

God, how I hate finance people.
posted by wenestvedt at 6:12 AM on June 26, 2018 [5 favorites]


your GE shares were overvalued for decades tho 0 at least since the early 90's.

Figure 80% of the current share price decline is related to people finally seeing the wizard, and 20% is reflective of value destruction from a quarterly earning focus.

GE capital was always just a big Cost of Capital Arb off the back of the cashflows from the core business. And once that was done, it was done.
posted by JPD at 6:29 AM on June 26, 2018 [2 favorites]


Excuse my language but fuck Jack Welch.
posted by Damienmce at 6:32 AM on June 26, 2018 [4 favorites]


GE spinning off GE Healthcare and selling its stake in Baker Hughes.

GE also mentions planning "a smaller headquarters" which sure sounds like a big round of layoffs.
posted by JoeZydeco at 6:40 AM on June 26, 2018


Remember this article, and the many occurrences like it, next time a Republican says they want to run government like a business.
posted by Gelatin at 6:42 AM on June 26, 2018 [19 favorites]


I put the blame on Welch as well. He used accounting tricks to produce never ending revenue growth and increased the market capitalization of GE from less than $100 billion in 1994 to about $450 billion in 2001. Now it's back to ~$100 billion. He didn't improve GE at all, he just made it look like he had. Looking at the numbers even back then, the constant increase in revenues was absurd. It started to fall apart immediately after his exit, though GE tried to continue papering it over.

>To avoid reporting swings in the value of those swaps in quarterly earnings, GE opted for "cash flow" accounting that required it closely match the swaps to its borrowings. The relationship between the two started to fall apart in 2001 and 2002, however, and GE executives scrambled to fix the problem. In a December 2002 e-mail, an unnamed executive asked "isn't this an extraordinarily big deal?" Forbes story from 2009


Welch himself said that he should be judged on GE for an amount of time equal to the time he was CEO. He was CEO for twenty years, and has been out of office for less than twenty years. When Fortune called him out in 2012 for his comments on Obama's unemployment numbers, he quit writing for Fortune. Welch can't take the heat--I Quit

The criticism section on Welch's Wikipedia page has a lot of good information.

It is just so strange and frustrating that fairly obvious bad actors like Welch have been given such fortunes and places of prominence in our society. In some ways I'm glad he's still alive to see his creation fall apart, though I'm sorry for all the people he has hurt. I wonder if he has any regret and was a true believer in what he was doing, and if this fall has chastened him at all. Looking at this article from 1997, it seems that GE Capital wasn't really run by him. Did the wool get pulled over his eyes? And how can we stop the short sighted destruction of our society by the lure of the increasing quarterly profit and short term gains?

Especially because this short sighted vision is approved by so many people, and we are pretty much all complicit. We don't want to pay the real cost for gasoline, or houses in the suburbs, or our food.

Who is going to be standing when the music stops?
posted by GregorWill at 6:55 AM on June 26, 2018 [16 favorites]


If Welch were the sort of person who had regrets or felt chastened about the negative effects his actions had on people lower on the ladder than he is, he wouldn’t have risen to his position in life.
posted by The Card Cheat at 7:14 AM on June 26, 2018 [4 favorites]


We're hiring for a entry-level tech support position, and all the resumes that come through with something about Six Sigma certification and/or lines identifying how many hundreds of thousands of dollars one of their "initiatives" saved their previous employer, I know they're not going to fit in at our small, family-owned tech sales company.

("Scrum Master" is also proving to be another title meaning "able to do a job well on paper, but not in practice")
posted by AzraelBrown at 7:16 AM on June 26, 2018 [5 favorites]


sammyo: Forget six sigma, there's a bunch of silicon valley startups working on automating all these problems in the cloud.

Don't you mean solutions to these problems?

…you don't, do you.

jesus wept
posted by Anticipation Of A New Lover's Arrival, The at 7:18 AM on June 26, 2018 [12 favorites]


Jack Welch got rich by shutting down manufacturing of quality goods so he and major shareholders could get rich on the ensuing arbitrage.
I get *very* nervous whenever I hear any managers saying that they admire Jack Welch. To me, he is the symbol of all that can (and does) go wrong with capitalism.
posted by dbmcd at 7:24 AM on June 26, 2018 [2 favorites]


I reported to a guy who was super into Six Sigma for a while. He was an intelligent and experienced manager, so perhaps I was insulated from the full disaster. I could see some value in the point of view, but it's a methodology that was developed to reduce defects in manufacturing, and, since not everything is just like manufacturing, it doesn't have the universal applicability that the kool-aid drinkers seem to think.
posted by thelonius at 7:38 AM on June 26, 2018 [3 favorites]


As GE goes, so goes the nation.

Spending the 90s and 2000s ignoring/frantically abandoning the making of actual, physical goods in favor of FIRE businesses and then spending the last 10 years staggering into foreseeable, solvable problem after foreseeable, solvable problem without foreseeing or solving anything is definitely some "so goes the nation" shit.
posted by Copronymus at 7:57 AM on June 26, 2018 [9 favorites]


Yeah, so I've worked for GE or GE-related businesses since 2011. AMA I guess? At various times I was part of a GE Capital business, GE Capital corporate, and the GE corporate team. I now work for a financial services company that spun off from GE Capital back in 2014, before it really cratered. The part of my career spent at GE was relatively successful, but I got out at the right time. Some of my former colleagues are not faring so well.

Without getting into anything confidential, there are a few criticisms I've read in this thread and in the press that ring true: cargo cult management, turf wars between corporate and business teams, size and complexity making it impossible to understand and effectively manage, and an arrogant belief that the GE way was the best way. Combined with some bad luck and bad timing, and you've got a recipe for corporate disaster.
posted by monju_bosatsu at 8:05 AM on June 26, 2018 [6 favorites]


I've a sibling who made a career out of working at GE, and he's concerned about possibly losing his pension, too. Plus, the stories he has to tell. They're mainly to do with the classic GE management strategy that is basically cutting off one's nose to spite one's face. Originated with Jack Welch, and this is one example:

GE manufactures and sells a lot of stuff for the industrial/manufacturing/medical/military/nuclear sectors. IOW a lot of this stuff is either very delicate or very heavy. Plus, handling the shipping details to get it to destinations where access is restricted (nuke plants, military bases) adds another layer of complexity, because not just any shipping firm/semi driver can access the facilities and deliver those shipments. Thus, GE, like most manufacturers and jobbers, had an extensive warehouse network staffed by experienced warehouse workers. It was their job to handle this stuff.

But the warehouse workers were unionized, and they wanted a raise. So they threatened to go out on strike. This enraged Jack Welch. His solution: he eliminated all of the warehouse jobs, thus getting rid of the union, and used temp agencies to find temp/casual replacement workers. After all, any idiot can move merchandise on/off trucks, right?

After a year or two of racking up massive losses to damage and theft, delayed shipments and furious corporate customers, they abandoned the temp idea. New idea: inside sales staff were ordered to take on the warehouse duties as an additional part of their jobs. Inside sales staff had already been severely cut back as a result of layoffs ordered by Welch because ... god, who knows what justification.

End result: now not only were the deliveries delayed, so were the orders, as the sales staff fell further and further behind, since now they had two jobs where previously they had one. They were punished with further layoffs, and so the death spiral continued.

Yeah, that Welch. He was some smart fella, you betcha.

But Wall Street loved him, and really, that's all that counts, amirite?
posted by Lunaloon at 8:16 AM on June 26, 2018 [32 favorites]


GE was way ahead of its time in consumer products -- their stuff turned to crap long before anybody else's did.
posted by jamjam at 8:55 AM on June 26, 2018 [4 favorites]


Can anyone square this dismal performance with what all those managers were learning? One of the central tenants of the Welch management style was "Face reality and change." The idea being that it was always better to recognize and accept a difficult situation, and make changes while there was still some maneuvering room, rather than waiting until you are forced to by events. Easier said than done, to be sure, but GE has been doing the opposite, right? Obviously the focus on "lean" can get you in trouble, because one person's "overhead" is another's "seed corn", but if you read the book a big part of it is talking to the people who do the work, because they need to be empowered enough to change what's wrong. Again, easier said than done. Still, you'd think that GE would be making these early course corrections, rather than coasting until things are truly screwed up.
posted by wnissen at 10:34 AM on June 26, 2018


Wnissen - it's almost as if everything in Jack's book, and even things in this article like the idea that because GE CEOs last for a long time they don't have to worry about losing their job over things like quarterly earnings reports, are just a facade and in the end it was and is all about making stock holders happy right now and ignoring the future or your own self-created rules of management.
posted by thecjm at 10:58 AM on June 26, 2018 [1 favorite]


I grew up in Pittsfield Ma, which was a GE town. It had its transformer department, a military division, and the plastics division where Jack started. Long before he became famous, he was known as Neutron Jack ( as in neutron bomb) for the way buildings would empty out when he managed them.

(Dan Fox, co-inventor of Lexan, lived up the street )
posted by ThreeCatsBob at 11:06 AM on June 26, 2018 [2 favorites]


What Jack Welch hit upon was the idea of using the Balance Sheet from his large finance sub (which there was a very real economic argument for having - the CoC arb) as a means to reduce volatility on his P&L. They basically pulled this trick from the early 90's until the GFC hit and GE lost its AAA rating. Once that was gone it was just a slow run down in the ability to use GE Capital to make the company look better than it was. Then to avoid facing the music they started using Service contract accounting to game things which also unwound as accounting rules changed and the turbine business ran into some unrelated issues.

GEs operating businesses are actually still pretty good, but they are also pretty volatile and not capable of reporting a steady stream of constantly rising profits, and part of facing up to this pain is facing up to that reality. The Jack Welch lie wasn't about how he ran his businesses, it was mostly about how he could consistently deliver Wall Street's desire for consistent, predictable, earnings.
posted by JPD at 11:35 AM on June 26, 2018 [3 favorites]


The Jack Welch lie wasn't about how he ran his businesses, it was mostly about how he could consistently deliver Wall Street's desire for consistent, predictable, earnings.

Sounds a bit like Bernie Madoff. People love those steady, consistent earnings.
posted by panama joe at 4:01 PM on June 26, 2018


Instead of being lauded as a management guru, Jack Welch should have done jail time for stock fraud. He used phony earnings manipulation to defraud stockholders. Here's a pretty picture by Barry Ritholtz that illustrates the issue. Given the randomness of economic events, such smooth earnings have a less than one in a trillion chance of occurring naturally. It's the equivalent of Bernie Madoff's precise 12% returns year after year -- all smoke and mirrors.

Incidentally, you couldn't get away with this post-Sarbanes Oxley, which Republicans are doing their best to reverse.
posted by JackFlash at 4:02 PM on June 26, 2018 [1 favorite]


JINX!
posted by panama joe at 4:03 PM on June 26, 2018


GE anecdata:

Ordered a new GE stove.
GE stove was delivered, found to be defective and was returned.

Ordered same GE stove as a replacement for defective unit.
GE stove was delivered, found to have the same defect and was returned.

Ordered same GE stove as a replacement for the defective unit (I really wanted it.)
GE stove was delivered, found to be in perfect condition, and was accepted.

On the way out of the condo's parking lot, the delivery guys did $1500 damage to the fence.
posted by A. Davey at 5:20 PM on June 26, 2018 [3 favorites]


For what it's worth, GE Appliances is owned by the Chinese manufacturer Haier.
posted by peeedro at 5:49 PM on June 26, 2018 [2 favorites]


Nothing's been the same since Jack Doneghy left his role as GE Vice President of East Coast Television and Microwave Oven Programming. His idea of creating transparent dishwashers -- so you can watch the dishes being cleaned -- was genius.
posted by BlahLaLa at 8:26 PM on June 26, 2018 [2 favorites]


A few years ago management had the GE CsomethingO over to tell us about how they were improving their business by leaps and bounds. We were supposed to learn from this important transmission of knowledge and apply it to our own business. Well, I haven't heard much on this topic in the years since, wonder why...
posted by Standard Orange at 8:26 PM on June 26, 2018


Just wanted to mention that in the oilfield GE was well-known for paying way too much for their acquisitions, then turning them to shit.

So, the Yahoo! of their time?
posted by Halloween Jack at 9:32 PM on June 26, 2018


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