Power Failure: The Rise and Fall of an American Icon
By William D. Cohan
Recommended on: 2nd February 2023
Power Failure: The Rise and Fall of an American Icon by William D. Cohan. This book has earned pride of place on The New Yorker Best Books of 2022, The Financial Times Best Books of 2022, and The Economist Best Books of 2022. Great leadership in business matters in providing for people’s needs, as Southwest Airline’s recent catastrophic meltdown attests. Power Failure is the magnificent telling of the rise and fall of one of America’s formerly greatest companies, and a cautionary tale of how eminence can lead managers to hubris—and disaster.
General Electric Company grew in the late 1800s from Thomas Edison’s brilliant innovations. By 1896, the company was so important that it was one of the original 12 companies listed on the newly formed Dow Jones Industrial Average. Ultimately, the company’s story revolves around two men. Jack Welch, who is sometimes called “the CEO of the Century,” took GE to greatness during his reign as Chairman & CEO from 1981–2001. Many people working for GE revered Welch, whose rapid-fire and flexible brilliance (he also sported a doctorate in chemical engineering) meant that he relished well-reasoned dissent. Welch’s successor was Jeff Immelt, a Harvard MBA whose slick ability to present and glad-hand were enough to get him to the top—but not make great decisions. It turned out that Immelt, unlike Welch, didn’t tolerate dissent and rarely took advice from others. Under Immelt’s leadership GE lost over $150 billion in market value—the company was not only ultimately dropped from the Dow Jones Industrial Average, but dismembered. (Cohan points out how Immelt’s self-serving biography often seems at variance with the facts.)
Cohan’s book provides a perceptive perspective on capitalism itself—the motivational aspects for workers and fulfillment of people’s needs that great companies can provide. But also, the cutthroat death spirals that companies can fall into. As Cohan pointedly observes, General Electric’s current CEO is the one who seems to be making all the money—not share holders. A lengthy read, but worth every page.
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