Lights Out: Pride, Delusion, and the Fall of General Electric

by Thomas Gryta, Ted Mann

Overview

A WALL STREET JOURNAL BESTSELLER
"If you’re in any kind of leadership role—whether at a company, a non-profit, or somewhere else—there’s a lot you can learn here."—Bill Gates, Gates Notes

How could General Electric—perhaps America’s most iconic corporation—suffer such a swift and sudden fall from grace?

This is the definitive history of General Electric’s epic decline, as told by the two Wall Street Journal reporters who covered its fall.

Since its founding in 1892, GE has been more than just a corporation. For generations, it was job security, a solidly safe investment, and an elite business education for top managers.

GE electrified America, powering everything from lightbulbs to turbines, and became fully integrated into the American societal mindset as few companies ever had. And after two decades of leadership under legendary CEO Jack Welch, GE entered the twenty-first century as America’s most valuable corporation. Yet, fewer than two decades later, the GE of old was gone.

​Lights Out examines how Welch’s handpicked successor, Jeff Immelt, tried to fix flaws in Welch’s profit machine, while stumbling headlong into mistakes of his own. In the end, GE’s traditional win-at-all-costs driven culture seemed to lose its direction, which ultimately caused the company’s decline on both a personal and organizational scale. Lights Out details how one of America’s all-time great companies has been reduced to a cautionary tale for our times.
 

Product Details

ISBN-13:	9780358567059
Publisher:	HarperCollins
Publication date:	05/04/2021
Pages:	384
Sales rank:	197,923
Product dimensions:	7.80(w) x 5.20(h) x 0.90(d)

About the Author

THOMAS GRYTA writes about General Electric for the Wall Street Journal. Previously he covered the telecommunications industry for the Journal and was a Knight-Bagehot fellow at Columbia University. In prior work around the newsroom he covered the biotechnology industry and did general assignment reporting and copyediting. Gryta studied history at the University of Massachusetts, including a year in Germany. He lives in New Jersey with his wife and three children.  

TED MANN is a reporter in the Wall Street Journal's Washington Bureau, where he is part of a team covering business and government. He was the beat reporter covering General Electric and other industrial conglomerates for the Journal's corporate bureau in New York from 2014 to 2017, and previously covered transportation for the Greater New York section, where he broke the George Washington Bridge scandal that ensnared former governor Chris Christie and his aides. He is a graduate of New York University. 

Table of Contents

1 Off a Cliff 1

2 The Meatball 9

3 Neutron Jack 14

4 Big Jeff 24

5 The Race 32

6 Make Some Noise 40

7 The Edison Conduit 48

8 Senioritis 55

9 Last Call 61

10 Buying and Selling 66

11 Imagination at Work 71

12 Time to Go Big 80

13 Higher Returns 87

14 Applied Mathematics 90

15 Size Doesn't Matter 98

16 The Screwup 105

17 Enter the Bear 110

18 Paper Jam 114

19 Suspenders on Suspenders 121

20 Circle the Wagons 127

21 Kabletown 132

22 No Other Way 136

23 Green Is Green 141

24 Palate Cleanser 151

25 The Quarry 155

26 New Lieutenant 162

27 Playing Startup 167

28 Cowboys into Farmers 172

29 Project Hubble 177

30 The Chop Shop 181

31 Big Bets 186

32 Dinner in Paris 192

33 One Day in Chicago 197

34 A Modest Proposal 201

35 "We Know What We're Doing" 205

36 Buy High 209

37 The Problem with Owens Hammer 215

38 "I Don't Even Know What Were Selling" 219

39 Jeff's Deal 225

40 Closing Costs 231

41 An Unexpected Guest 234

42 The Candy Factory 238

43 Your People Don't Want It Bad Enough 243

44 Making Adjustments 247

45 Back Bay Deal 251

46 Managing Power 254

47 Unmovable Target 259

48 The New Guy 262

49 Behind the Curtain 267

50 Triage 274

51 Cleaning House 278

52 Conservatively Calculated 284

53 A Reset Year 288

54 A Bill Comes Due 291

55 Asleep at the Switch 297

56 "Managing in a Broader Sense" 301

57 A Midstream Change 304

Epilogue: "Jeff Is a Friend" 313

Acknowledgments 323

Notes 327

Bibliography 341

Index 343

About the Authors 354

Editorial Reviews

"How could a company as big and successful as GE fail? I’ve been thinking about that question for several years, and Lights Out finally gave me many of the answers I was seeking. The authors give you an unflinching look at the mistakes and missteps made by GE’s leadership. If you’re in any kind of leadership role—whether at a company, a non-profit, or somewhere else—there’s a lot you can learn here."—Bill Gates, Gates Notes "5 Ideas for Summer Reading" “A gripping and deeply reported account of the devastating disintegration of one of the most iconic firms ever to exist. To all of us shocked by GE’s seemingly abrupt fall from grace, this book lays out in painful detail how such a thing could have happened.” —Rita McGrath, Columbia Business School, author of Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen “Gryta and Mann tell a bracing tale of corporate venality, incompetence, and shortsighted deal-making. It’s a parable with no heroes but many lessons for anyone who wants to know how twenty-first century corporate management, which venerates stock price above all other measures of value, has gone so disastrously awry.” —Andrew Rice, New York Magazine “Lights Out is the definitive story of an American business powerhouse losing its way. Gryta and Mann’s meticulous reporting puts us in the rooms—and on the private jets—where GE’s leaders struggled over the company’s fate, with billions of dollars in the balance. More than just an intimate profile of one company, this book is a captivating tale of human complexity, greed, and hubris.” —Evan Ratliff, author of The Mastermind: Drugs. Murder. Empire. Betrayal “This vital history of an American institution warns us of what happens when a company pursues growth for growth’s sake, and its leaders struggle to understand what they can and cannot control.”  —David Gura, anchor and correspondent, MSNBC “Possessing all the suspense of a true-crime account, Gryta and Mann’s riveting look at GE’s previous two decades underlines the harsh facts of survival in twenty-first-century business.” —Publishers Weekly “Gryta and Mann expand on their Wall Street Journal reporting to create a compelling narrative of a giant’s spectacular fall in this powerful and fascinating read.” —Booklist “This revealing and accessible postmortem of GE’s downward spiral will be important reading for a wide audience, including customers, employees, former employees, and investors, as well as anyone interested in twenty-first-century corporate management.” —Library Journal —

From the Publisher

02/17/2020

A venerable American company struggles for survival and eventually crashes, in this exciting offering from Wall Street Journal reporters Gryta and Mann. Formed in the late 19th century, General Electric enjoyed a long, genteel reign as America’s dominant producer of electrical goods. The book centers on the company’s dramatic decline, starting with longtime CEO Jack Welch’s exit in September 2001, and his replacement by his handpicked successor, Jeff Immelt. Inheriting a company typified by rigid procedures and a boys’ club culture, Gryta and Mann note, Immelt was determined to drag GE into the modern day. The authors track these attempts at reinvention, such as by adopting a “lean manufacturing” model antithetical to GE’s traditionally meticulous product-development approach. They also cover the hard-fought battles with the Environmental Protection Agency, ill-conceived business dealings, and falling stock prices that marred Immelt’s reign. After Immelt retired in 2017, GE veteran John Flannery took over, only to discover a chaotic, money-losing mess, with “reported profits were aspirational, if not fraudulent.” Possessing all the suspense of a true-crime account, Gryta and Mann’s riveting look at GE’s previous two decades underlines the harsh facts of survival in 21st-century business. Agent: Eric Lupfer, Fletcher & Co. (Apr.)

Publishers Weekly

03/20/2020

What went wrong with General Electric? That's the question Wall Street Journal reporters Gryta and Mann attempt to answer. They start with a brief history of the company from its founding through its expansion under Jack Welch (1981–2001) into financial services (GE Capital) and broadcasting (NBC). Welch's successor, Jeff Immelt (2001–17), explain the authors, faced a difficult economic climate and tougher accounting rules, making it hard to grow and manage earnings. After the 2008 financial crisis, with GE Capital in trouble, Immelt was forced to cut the dividend, sell off pieces such as NBC, and watch investor confidence wane. The authors detail his unfailing optimism, the company's awkward structure as a conglomerate, and its use of "creative accounting" to meet fiscal goals. They also chronicle Immelt's feverish attempts to shrink the company's dependence on GE Capital, his failed bet on energy markets, and the discovery of a $15 billion long-term care insurance liability VERDICT This revealing and accessible postmortem of GE's downward spiral will be important reading for a wide audience, including customers, employees, former employees, and investors, as well as anyone interested in 21st-century corporate management.—Lawrence Maxted, Gannon Univ. Lib., Erie, PA

Library Journal

2020-02-09
Two Wall Street Journal reporters expand years of their newspaper coverage into a detailed book about the decline of General Electric due in large part to management incompetence, greed, and dishonesty.

Founded in Schenectady, New York, in 1892, General Electric eventually grew into one of the world’s largest corporations, selling products and services with sterling reputations, developing a loyal workforce, training managers who earned renown (especially Jack Welch), and providing reliable investments for stockholders. Examining what went wrong during the past two decades, Gryta and Mann focus mostly on CEO Jeff Immelt and his successor, John Flannery. During their stewardships, GE stock prices and number of employees dropped significantly. At times, financial disaster seemed imminent, as the corporation sold many of its electricity-related assets to raise cash. When Flannery arrived in 2017, the company was fighting “dysfunction tending toward chaos and a confrontation with the past that was mere weeks from spilling into public view. Beneath the placid surface, GE was in total disarray.” The authors attempt to place the demise in a larger context by noting that for many decades, GE served as a model of excellent management for countless other corporations. This leads the authors to wonder about the viability of many other seemingly healthy corporations. Often, the authors’ exploration of the bigger picture falls victim to the excruciatingly detailed saga of GE. Readers without a direct connection to the corporation—e.g., current or former employees, outside corporate analysts, and investors—will be tempted to skim the parts of the narrative about the dizzying maneuvering inside the corporate suites. The authors’ knowledgeable reporting is mostly top-down, as they rarely focus on lower-level employees. They analyze Immelt from a variety of angles, and while he certainly emerges as a complex figure, the authors struggle to make him compelling as a protagonist. The book would have been more engaging if shortened by nearly 100 pages.

An overlong survey that may interest business students as a case study.

Kirkus Reviews