The rapid fall of America's most valuable company: a prime example of corporate mismanagement
Founded in 1892 by Thomas Edison, JP Morgan, and other partners, General Electric was one of the original companies included in the Dow Jones Industrial Average stock market index, and is the only company to have been included since its creation, for a period which spanned an impressive 110 years.
GE was the first power and electrical equipment company in the US, and almost solely responsible for bringing electricity to the country, powering everything from light bulbs to turbines, and consolidating itself in the minds of Americans in a way that very few companies did before them. For generations, GE has been synonymous with job security, solid investments, and elite business education for managers. From its humble beginnings, it grew to become a real-world colossus.
In 2000, after two decades of leadership under the legendary CEO Jack Welch, GE entered the 21st century as America's most valuable and credible company, valued at $600 billion. The company was involved in a wide range of areas, including media, plastics, aerospace, energy, digital, financial services, and more. In the eyes of many, GE was the best-managed company in the world, and Jack Welch was considered to be the greatest CEO of the 20th century.
Yet, less than two decades later, the GE of times past is no more. After Jack Welch left the company in September 2001, and was replaced by his hand-picked successor, Jeff Immelt, the company began to show a dramatic decline. The precipitous decline in GE's market capitalisation saw the value of the company reduce by 90% in two decades, from its peak in 2000, to approximately $55 billion. The fall of GE has proved to be a prime example of what happens when an overly complex business is poorly managed.
The key ideas of "Lights Out"
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