The common thread running through all this --- an excessive focus on accounting.
It's not possible to develop a really thorough, realistic assessment of most businesses by simply focusing on the numbers. Those who manage by the numbers now have a significant history of falter and Boeing is just the latest.
Did Dave Calhoun earn his "golden parachute"? Did he leave behind a company that is significantly better off?
Accounting is a record of how you've done more so than an indicator of how to proceed.
Welch was not an industrialist who created value, instead he was a financial manipulator who extracted value.
It's always been possible for financial statements to obscure this type of situation, and it's always been a matter of integrity that a true leader can be counted on to do the right thing rather than be guided by pure greed & avarice, the ever-present temptation.
And GE had a lot of value to extract, both built up from previous decades of reinvestment, and future revenue from manufacturing that was legendarily solid enough to be able to borrow more than it was worth whenever that might be a prudent strategy.
The forward momentum was so inevitable, that complete imprudence could be tolerated for the foreseeable future by the time Welch took over. And that momentum can naturally conceal almost any incompetent non-leader's lack of ability, regardless of which leadership position they have finagled themselves into.
At the time it was plain to see his approach would devastate everything that was touched in the long run.
No surprises ever since, from his cohort who tend to be incapable of building new net manufacturing excellence. When you inherit productive, mature factories and can't run them as well as skin-in-the-game predecessors who had to pay for them as they were built, you know the unsuitability is strong in this one.
It may take a while to realize, but it's kinda, sorta, completely undeniable when a manufacturer ends up with fewer productive factories than they would have otherwise had, as a direct result of your business "acumen".
I agree with your statement that just focusing on the numbers will not allow us to do a realistic assessment of most businesses. However, and unfortunately, that is the yardstick used the most often. In fact, one of the criticisms about Welch is his strategy to use legal but questionable accounting techniques to make GE look better than it was.
Based on the publicly available information about Boeing, Dave definitely didn't leave the company that is significantly better off. The stock price is much lower than when he took over and there have been major write-offs on the 777x program.
To be fair to the man, some of these issues can also be attributed to the COVID pandemic, the Ukraine war, etc.
I wonder if & by how much did Jack Welch's strategy of "rank & yank", coupled with heavy outsourcing contributed to the decline of manufacturing sector in the US?
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[ 2.1 ms ] story [ 25.4 ms ] threadIt's not possible to develop a really thorough, realistic assessment of most businesses by simply focusing on the numbers. Those who manage by the numbers now have a significant history of falter and Boeing is just the latest.
Did Dave Calhoun earn his "golden parachute"? Did he leave behind a company that is significantly better off?
Accounting is a record of how you've done more so than an indicator of how to proceed.
It's always been possible for financial statements to obscure this type of situation, and it's always been a matter of integrity that a true leader can be counted on to do the right thing rather than be guided by pure greed & avarice, the ever-present temptation.
And GE had a lot of value to extract, both built up from previous decades of reinvestment, and future revenue from manufacturing that was legendarily solid enough to be able to borrow more than it was worth whenever that might be a prudent strategy.
The forward momentum was so inevitable, that complete imprudence could be tolerated for the foreseeable future by the time Welch took over. And that momentum can naturally conceal almost any incompetent non-leader's lack of ability, regardless of which leadership position they have finagled themselves into.
At the time it was plain to see his approach would devastate everything that was touched in the long run.
No surprises ever since, from his cohort who tend to be incapable of building new net manufacturing excellence. When you inherit productive, mature factories and can't run them as well as skin-in-the-game predecessors who had to pay for them as they were built, you know the unsuitability is strong in this one.
It may take a while to realize, but it's kinda, sorta, completely undeniable when a manufacturer ends up with fewer productive factories than they would have otherwise had, as a direct result of your business "acumen".
Based on the publicly available information about Boeing, Dave definitely didn't leave the company that is significantly better off. The stock price is much lower than when he took over and there have been major write-offs on the 777x program.
To be fair to the man, some of these issues can also be attributed to the COVID pandemic, the Ukraine war, etc.