** 8th book of 2021: GE- Not the Company we Want, but the Company We Deserve **

GE was born not of Edison’s invention, but from JP Morgan’s financial acumen. Jack Welch took a sleepy industrial giant and turned it into a financial superpower by combining American Investor credulity, ruthless management, and a healthy dose of testosterone. Under his reign GE shares returned 5200%, and this is where Lights Out begins.

Like the rest of the American economy, GE and its capitalist muse Welch discovered that financialization was the easiest way to make money. But when Welch left, the internet bubble collapsed, and Enron’s similar but just-too-shady dealings came to light, GE’s luster faded. A black box conglomerate blessed with the magic of Jack became a byzantine assemblage of parts with unknown risks under Immelt. Between 2001 and 2008, Immelt was able to rehabilitate the image if not the core of GE’s profit making abilities, but like the rest of the financial sector was thoroughly drubbed through the financial crisis. Even the financial crisis wasn’t the end of the bleeding with a multibillion dollar insurance liability coming due years after GE tried to exit the boom-and-bust financial industry.

Most interesting to me was how GE was undone both by * internal * fraud and complexity – the pressure to hit numbers led to gaming numbers in a way that top executives were not equipped to investigate or verify. Worse, things like the $6.2 billion dollar write-down emerged from parts of the business that nearly nobody knew enough about to accurately measure. In sum, GE serves as an example of the complexity upper bound of an effective business, and a reason why conglomerates usually trade at a discount.

With such an interesting story, the authors drop the ball. Certain facts are repeated near verbatim in different sections (such as the cars that 900 GE executives had provided) making me wonder if the authors even read the book all the way through. Key changes, such as the transition from Flannery to Culp come suddenly and with little narrative. Yet this is still a story worth telling, and I’mm not sure anybody has yet told it better.