Name: Power Failure
Rating: 4.4 (226 reviews)
Author: William D. Cohan

What’s in it for me? Learn from success – and failure

If anyone had come to GE CEO Ralph Cordiner in the 1950s and raised concerns about whether the company could survive, he probably would have just laughed. To even question the future success of what was one of the most successful companies in American history would have seemed ludicrous.

General Electric once had the swagger now held by big tech giants like Amazon or Microsoft. It was on the cutting edge of technology, spearheading the electrical revolution, the creation of radio, and landmarks in aviation. We even owe CAT scans to GE scientists. You get the feeling that if you looked closely enough, that “idea” lightbulb in cartoons would probably have a GE logo on it.

And then it came crashing down, with blows like the 2007-08 financial crisis exposing deep flaws in what had become an unwieldy giant corporation.

It’s a riveting story of talent, luck, ambition, and hubris, and with lessons for anyone launching a venture of their own or taking on a leadership role. Its sprawling story offers both inspiration and warning.

Power Failure is more than 700 pages long, so in this Blink we won’t cover all the inside details of that history. But we can look at some of the important highlights and the valuable lessons they reveal for those who want to be leaders, or anyone looking to learn wisdom for living from the successes and mistakes of others.

Stay flexible

Although General Electric eventually came to resemble a complicated, symbiotic organism that took on a life of its own, a staggering sci-fi monster of finance, it was not always that way. The company evolved many times over the years as circumstances changed.

It grew quickly from its origins in a battle for supremacy in the early electrical industry. Light bulb inventor Thomas Edison’s company merged with a rival and the company began shifting and expanding to deal with ever changing markets.

During World War I, GE expanded to meet military needs like submarine detection, with inventions that were repurposed after the war and formed the roots of its later industrial core. Then, one of the company’s scientists developed a better radio transmitter, launching GE into that sector, where it built RCA and successfully marketed the new product it wanted to sell.

The lax oversight that would allow GE to become a sprawling conglomerate was not in evidence in the 1930s, as GE had to spin off RCA because of monopoly concerns. (The company later bought it again when the government calmed down about monopolies).

By the 1940s, GE had transformed into a corporate juggernaut. The core of the company had already begun to change – Fortune magazine called it an investment trust that also built things.

If there was a place to make money, GE found it. Yet even as a huge company, it put an emphasis on strategic thinking for the future, though executives sometimes took sharply differing tacks on how to do that.

Over time, though, the conglomerate went from a nimble market leader to a bit of a lumbering dinosaur, overly dependent on its capital business.

Huge pressure came fast in the early 2000s, starting with the terrorist attacks of 9/11, which hammered GE. It held reinsurance on not only the towers, but also the planes. It continued in the shaky market afterward.

A changing corporate environment meant GE and other companies were no longer permitted to run amok with little oversight. Public sentiment shifted against the company for its lack of transparency, and accounting practices that had long propped up the company’s image began to raise eyebrows.

Although many factors contributed to GE’s fall, entrepreneurs and others would do well to heed the rather vivid object lesson: If making a huge profit requires you to give up too much flexibility, and depend on risky ventures, you might want to consider other ways of making a profit.

Don’t underestimate the importance of a good leader

Like managers of sports teams, CEOs can unfairly get the credit when things are going great, and also earn unfair blame when things go wrong. So it doesn’t make sense to attribute all the ups and downs of a company, or even its long term success, to the actions of one person.

But despite that caveat, given the power of the modern CEO their decisions and people skills can play huge roles in the fates of large corporations.

Don’t forget incentives and human nature

Chances are those old enough to remember General Electric as a success story will think of refrigerators and stoves when they think of the company.

GE emerged as an appliance giant in the middle of the 20th century, as CEO Ralph Cordiner reorganized the company into a much more decentralized structure. He got results, as the company made big profits.

Final Summary

In their elegant offices, top GE executives lived in a culture of invulnerability. They were the mighty GE. What could touch them?

One prominent critic of the company pointed to this hubris as part of the company’s failure: It didn’t follow appropriate safeguards because of its name, history, size and past success.

Key ideas in Power Failure

What is Power Failure about?

Power Failure (2022) details the rise and fall of General Electric – once a great success story of international business. But its legacy went badly awry, as even casual consumers of business news will remember. Power Failure: The Rise and Fall of an American Icon (2022) gives a startlingly detailed account inside the behemoth corporation, examining what went right – and then wrong.

About the Author

William D. Cohan is a veteran of the financial industry and a former GE employee. His other New York Times bestselling books include The Last Tycoons: The Secret History of Lazard Frères and Co. (2007), House of Cards: A Tale of Hubris and Wretched Excess on Wall Street (2009); Money and Power: How Goldman Sachs Came to Rule the World (2011); and The Price of Silence: The Duke Lacrosse Scandal, the Power of the Elite, and the Corruption of Our Great Universities (2014).