I just finished reading a horror story.
There weren’t any monsters in it -- at least, not in the traditional sense. No vampires, ghosts or flesh-eating zombies.
The horror came from seeing one of the most storied companies in U.S. history make one bad decision after another, culminating in the shocking fall from grace that haunts the company today.
As I neared the end of “Lights Out: Pride, Delusion and The Fall of General Electric,” the riveting new book that chronicles the fatal flaws and poorly conceived strategies that brought GE to its knees, I wanted to shout advice at the executives steering the company toward disaster.
When I watch horror movies, I’m often overcome with the urge to yell advice at the screen -- to warn them away from the basement where evil lurks, or the dark alleyway where a depraved madman awaits.
While reading “Lights Out,” I was overcome by a similar impulse, but instead of warning a doomed teenager about the killer in the shadows, I wanted to tell then-General Electric CEO Jeffrey Immelt not to go through with the company’s disastrous 2015 acquisition of the French-based power company Alstom.
I have the benefit of hindsight, of course.
I know that the Alstom deal, which at the time made GE Power in Schenectady the company's largest industrial unit, was a crushing disappointment -- something that wasn’t apparent to Immelt at the time.
Although perhaps it should have been.
“Lights Out” makes the case that there were people within GE who understood the massive risks of acquiring Alstom -- but that Immelt refused to listen, shooting himself and the company he loved in the foot in the most spectacular of fashions.
That’s the question at the heart of “Lights Out,” and the search for answers makes the book something of a page-turner.
For Capital Region residents intent on understanding just what the heck happened to one of the world’s most iconic companies, “Lights Out” is a must-read, an Icarus-like tale of a conglomerate that flew too close to the sun.
The authors, Wall Street Journal reporters Thomas Gryta and Ted Mann, are unsparing in their dissection of General Electric’s internal culture, painting a vivid picture of a company that too often presented an illusion of success rather than the real thing.
According to "Lights Out," GE never fully recovered from the Great Recession, which exposed some of its weaknesses and caused investors to look at it with newly skeptical eyes. The company often pursued deals despite red flags, overpaying for businesses that weren’t all they were cracked up to be.
But what ultimately brought GE to the brink of ruin was an almost pathological addiction to deal-making, accounting chicanery and a refusal to listen to criticism or dissent.
Immelt, in particular, had no patience for skepticism among his staff, preferring executives with sunnier outlooks. In the end, this led the company to set goals and make projections that were simply unattainable, imagining, for instance, that the Alstom deal would be hugely profitable even though most of the available evidence suggested otherwise.
The absence of “robust opposition” to the Alstom deal “pointed to the broader problem, long cultivated and growing into a quiet crisis within the company, of real candor and self-awareness,” Mann and Gryta write. “For all its vaunted levels of management and procedures of accountability, when it had come time for lower levels of management to stand up to the ultimate boss, Immelt, and tell him that his legacy play wasn’t going to work -- and in fact, had been a clumsy mistake all along -- no one was willing to do so.”
“Lights Out” is mostly focused on GE’s leadership, but it occasionally offers bracing reminders of the devastating human toll of the company’s mismanagement -- the GE retirees and shareholders who have seen the value of their stock plummet, the communities forced to regroup and rebuild when GE laid off workers and closed factories.
For the everyday people who believed GE would always take care of them, the company’s fall to Earth has been a bitter pill to swallow.
It’s made even more bitter by the huge payouts to the executives who ran GE into the ground. Immelt, the book notes, received an estimated $168 million between 2006 and 2017 alone, “despite the dismal performance of the stock over his tenure.”
That's not just appalling.
It's completely divorced from the reality of Immelt's time at the helm
GE’s fall was sudden and fast, but “Lights Out” suggests that it was a long time coming, and that the seeds were probably planted during the freewheeling tenure of Immelt’s predecessor, Jack Welch.
The authors leave open the question of whether GE can come back from its doldrums, noting that the road ahead of current CEO Larry Culp is long and hard, and that time has passed the company by.
Indeed, the company recently reported another tough quarter as a result of the pandemic and economic downtown, and its stock was trading for a mere $6.40 on Wednesday afternoon.
I’d like to see GE recapture some of its old glory.
But will it?
“Lights Out” doesn’t provide an answer.
If anything, it offers plenty of reasons for wariness.
GE might be determined to stick around, but it still faces an uncertain future.
Since reading "Lights Out," I've been monitoring GE's stock closely.
But I'm not seeing or hearing anything that makes me want to buy.
Reach Sara Foss at [email protected] Opinions expressed here are her own and not necessarily the newspaper's.