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What Happened to GE? (2021)

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Re: What Happened to GE? (2021)

#151

Post by bobthepanda »

Borealid wrote: post #128
xattt wrote: post #123

Earlier quoted context omitted.

> perpetually underperforming businesses Is this a bad or good thing for sustainability?

You're suggesting the answer by asking the question, but yes, companies that consistently deliver moderate performance (are less extractive and don't maximize gains) would generally be better for the world as a whole than highly optimized, fragile corporations that deliver maximal returns by chewing up everything in their path. They'd even, in the longer run, be better for their own shareholders and their descendants…

The question then becomes, are they moderately performant?

Japan’s bubble resulted in deflation because a bunch of zombie firms spent decades paying down balance sheet debts rather than resolving things quickly through bankruptcy. And the Japanese keiretsu structure mostly disadvantages businesses outside of the massive conglomerates, particularly small and medium enterprises.

Re: What Happened to GE? (2021)

#152

Post by nickaflip »

Swizec wrote: post #76
rswail wrote: post #70

Lesson from GE: Financial engineering is not engineering. Further lessons from GE: * Gaming the system internally or externally is something a CEO needs to actively manage and defeat, not reward. * Trying to turn businesses based on contracts for delivery (with lumpy revenue/risks) into contracts for service and recurring revenue is a dangerous game, because you take your eye off the ball that is delivering the produ…

> Conglomerates of disparate businesses never work in the long term Tell that to Yamaha, Mitsubishi, Siemens, 3M, etc

3M is spinning off their healthcare BU, selling off stake in Combi, etc.

Re: What Happened to GE? (2021)

#153

Post by hakfoo »

paganel wrote: post #115
coliveira wrote: post #83

Earlier quoted context omitted.

Industry was already lost when solar panels started to become a thing. That was never going to be a possibility for the USA, unless it changed its course.

Exactly, you weren't going to get talented, committed smart young persons into the solar industry in the late 2000s - early 2010s, all the money was in internet tech. No solar company could have competed with the 600k yearly comps provided by companies like Google to middle-rank engineers. Tesla and everything Musk-associated bucked the trend for a while because of the literal personality cult surrounding him back th…

We have other knobs we could turn.

Not every talented engineer is eager for the cut-throat hustle to chase a 600k comp package (which ends up at 70k when the stock implodes). I'd think it might even be slightly less common when you get into research and greenfield stuff-- you've got people motivated by a vision and the opportunity to deliver it.

Messaging like "We have the financial and structural backing to keep the project alive indefinitely" and "This is a job for life-- if it takes you 20 years to make the breakthrough, we're willing to wait" might appeal to those people, even if the compensation is a bit lower.

Re: What Happened to GE? (2021)

#155

Post by smsm42 »

fyrn_ wrote: post #119
adventured wrote: post #44

Earlier quoted context omitted.

Starbucks is a terrible example. That's like claiming the Costco membership makes the Costco retail business the auxillary. Or that Kroger/CVS/Walgreens membership/rewards cards do the same for those retail businesses (when in fact all they do is drive higher rates of return visits and higher sales). The Starbucks business remains almost entirely their retail service business.

Costco is a terrible example for the point you are trying to make. Costco (rather famously) makes most of it's money from the membership. https://www.fool.com/investing/2019/02/13/how-costco-actuall... In a way, the cheap bulk goods are just a way to convince people to get the membership.

That sounds like "cars are just a way to make people come to the car dealership". Technically, this is true, but "just" here is not playing a good role. The whole point of the thing is the cheap bulk goods, so "just" is not really applicable there. You can't remove it without making all the rest utterly pointless.

Re: What Happened to GE? (2021)

#156

Post by piva00 »

htrp wrote: post #135
piva00 wrote: post #110

Earlier quoted context omitted.

Aren't all of them quantitative instead of qualitative? Every trader I know in Big Finance is basically creating/using statistical models based on books' numbers vs other books, not analysing a company's products and labour potential on a human level.

You know all of the quant traders (they work at very obscure places like jump, sig, rentech, shaw, and 2 sig) There are still fundamental investors out there

I know traders working in big banks like HSBC, BBA, former Credit Suisse and UBS.

None from the quant traders train like Jump, etc.

Re: What Happened to GE? (2021)

#157

Post by charlysl »

hakfoo wrote: post #75
roenxi wrote: post #26

Earlier quoted context omitted.

Wasn't Welch the one who was using "sack 10% of the managers each year" as a strategy? That one was obviously long-term stupid; I can see it being healthy for maybe a cycle or 2, but after that it would just kill off all the intangibles of management. At some level, every company relies on a culture of people doing the right thing to thrive over the long term. Although I do think that it is a mistake to just pin blam…

The reason US manufacturing excellence doesn't make sense is because we let it rot. We don't have cities like Shenzhen, where everything you need to get a product to market is within same-day courier range. I understand this was a feature of the old "hardware-centric" Silicon Valley, and it made fast iterations on new products a lot more viable. I wonder if we could even build a hub like that today, with property spe…

scares over LGBTQ+ content

Indeed, but also aggressively pushing that kind of content in the first place

Re: What Happened to GE? (2021)

#158

Post by paganel »

hakfoo wrote: post #153
paganel wrote: post #115

Earlier quoted context omitted.

Exactly, you weren't going to get talented, committed smart young persons into the solar industry in the late 2000s - early 2010s, all the money was in internet tech. No solar company could have competed with the 600k yearly comps provided by companies like Google to middle-rank engineers. Tesla and everything Musk-associated bucked the trend for a while because of the literal personality cult surrounding him back th…

We have other knobs we could turn. Not every talented engineer is eager for the cut-throat hustle to chase a 600k comp package (which ends up at 70k when the stock implodes). I'd think it might even be slightly less common when you get into research and greenfield stuff-- you've got people motivated by a vision and the opportunity to deliver it. Messaging like "We have the financial and structural backing to keep the…

I agree that there are other knobs to bee turned, but housing will most probably get in the way of that, as the people earning 600k per year will chase out of the housing market the people who will go with their passion.

Similar (and related) discussion when it comes to education, people earning 600k per year will be able to provide better education opportunities to their children compared to the passionate but earning-less-money people, and if you're part of the second group at some point it will become harder and harder to explain to your spouse that your kids won't get the same chances in life compared to your friends' children because you're going for passion over money, unlike said friends.

I know that all this sounds very mundane but it's part of day to day life, maybe the Soviets had a good idea when they basically built scientists-only cities in the middle of Siberia or somewhere like that.

Re: What Happened to GE? (2021)

#159

Post by fmajid »

Gates is flat-out lying, because Microsoft is notorious for managing its earnings, just in the opposite direction of GE:

https://www.cringely.com/2009/01/22/bob-the-impaler/

> The real problem at Microsoft is one that every other public company would love to have – they make too much profit. So unlike every other public company, Microsoft traditionally manages its earnings not by cutting expenses but by increasing spending. It’s a legacy technique invented years ago by legendary CFO Frank Gaudette and embraced by Bill Gates and Jon Shirley because it accomplished the task of meeting Wall Street expectations, allowed the company to hide spectacular true profit margins, while still generally keeping anti-trust officials off Microsoft’s back.

Re: What Happened to GE? (2021)

#160

Post by fmajid »

OldGuyInTheClub wrote: post #50

GE exported a lot of the Welch insanity. Anyone unfortunate enough to be forced into Six Sigma training will attest to the agony. This was through their own and licensed training orgs, their people who left to run other companies, and this guy, a sort-of Erdős-for-business that spread a lot of the frobozztik into other C-level offices. (No idea how much of it he came up with.) https://money.cnn.com/magazines/fortune/…

Here's a great article by NBC journalist John Hockenberry on how Six Sigma was enforced by GE where it didn't make any sense:

https://web.archive.org/web/20120102065056/http://www.techno...

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