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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
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Lessons from the Titans summary
Scott Davis
What Companies in the New Economy Can Learn from the Great Industrial Giants to Drive Sustainable Success
27 mins
What is Lessons from the Titans about?
Lessons from the Titans (2020) tells the stories of ten industrial companies in the United States. From General Electric to Boeing, Honeywell to United Rentals, it looks at which strategic decisions led to success and which disastrous missteps created new obstacles. By analyzing the past performance of such legendary businesses, it offers greater insight into which companies today will stick around – and which won’t.
Table of Contents
Lessons from the Titans
summarized in 7 key ideas
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Key idea 1 of 7
Jack Welch’s RCA deal helped propel GE to industry dominance.
In 1986, Jack Welch announced General Electric’s purchase of electronics company Radio Corporation of America – known as RCA – to the tune of $6.3 billion. But GE already had a consumer electronics branch, and the deal left Wall Street analysts scratching their heads.
When Welch had taken over as CEO of GE in 1981, he’d inherited the century-old company’s bloated management structure. He spent the next few years cutting costs, and that strategy had worked wonderfully. Headcount was down 25 percent, while annual revenues were up 30 percent, to $37 billion.
But still – the RCA deal just didn’t make sense. But what analysts didn’t foresee was how Welch would use the deal to grow GE like never before.
The key message here is: Jack Welch’s RCA deal helped propel GE to industry dominance.
It was just one part of RCA that Jack Welch had eyes for: the TV network NBC. So he sold RCA’s other assets, as well as GE’s consumer electronics branches, for more than the cost of the deal. GE made a profit, keeping NBC basically for free. Then Welch used this extra cash to bet on growth projects.
The first of these concerned air travel. Noticing the rise in globalization, Welch predicted an uptick in demand for frequent flights between cities. Airplane manufacturer Boeing perceived this trend too, and upgraded its 737 plane accordingly.
Sensing opportunity, Welch outbid competitors and took over the contract to build the 737’s engine, the CFM56. Together, GE and Boeing improved the 737’s fuel efficiency and reduced engine noise, and by 2020, GE had sold over 32,000 CFM56 engines, making it one of the top-performing products in American history – and GE’s chief money-maker.
Jack Welch’s second big bet involved boosting the efficiency of the F series power turbine. Demand for electricity varies according to the season, so they designed the F series turbines to handle these seasonal spikes – to keep up with demand for air conditioners on hot days, for example. On days with lower demand, the surplus energy is used to power steam turbines.
Since these turbines last for decades, GE’s service costs turned it from a low-margin sale into a high-margin product. It was a clean alternative to coal power, and had investors scrambling to get a piece of its long-term profitability.
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Who should read Lessons from the Titans?
- Business gurus fascinated by economic shifts
- Entrepreneurs looking to future-proof their companies
- Economists curious about market shifts
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