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Summary: Power Failure: The Rise and Fall of an American Icon by William D. Cohan

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.

Introduction: 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 summary 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.

Book Summary: Power Failure - The Rise and Fall of an American Icon

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.

Stick to your values

In its early and peak stages, General Electric valued careful financial management that enabled it to survive and grow early on.

Greed and ambition, though, eventually swept that away.

An early leader in GE, Charles Albert Coffin, was a savvy financial manager. He was able to adroitly plug holes and keep the company afloat during the financial panic of 1893, when demand for GE’s products and services plummeted.

The experience made a deep impact on the company’s culture, though. Afterward, Coffin demanded careful financial management, refusing to be overly optimistic or inflate the value of the company’s assets.

By following that plan, when the next financial panic broke out in 1907, GE was so strong it weathered the storm easily and even offered some loans to help others.

Things changed later though. The legendary CEO Jack Welch, who took over in the early 80s, made many savvy moves. But he also made the stock price a major point of pride, and oversaw an accounting department that delivered profits every quarter by clever use of the company’s sprawling assets – a major sale at just the right time to balance out a loss, for example.

Welch also relied heavily on GE Capital, a division of the company that dealt with loans. It delivered vast and seemingly easy wealth, but did so by taking on cheap short term debt and using the money to finance profitable long term loans. It was a classic banking mistake repeated many times over the centuries, and every time, there’s hell to pay. It works until something happens that makes short term loans harder to get, like the 9/11 attacks. Coffin would not have approved.

Welch and others were aware of the weak spots, but forged ahead with dealing in risky assets. Had they stuck with the company’s earlier credo of sound finances and conservative money management, the company’s history may have been far different.

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.

Jack Welch, the last CEO of GE in its glory days, has become part of its lore, partly because his team was adept at playing the business to make GE’s numbers look good, and partly because of his decision-making skills and leadership abilities.

One of his strengths was self-confidence. When he became CEO in 1980, he didn’t play it safe and stick with tradition, afraid to upset people or disrupt the status quo. Even though the company was doing well, he immediately began making changes from his predecessors.

Welch also knew the business thoroughly and did his homework. When his deputies had to give a presentation, they knew Welch would expect them to be on top of their game and ask probing questions. Sloppiness could get you in trouble.

Although Welch occasionally missed on deals, he was known for driving a shrewd bargain and picking winners.

Jeff Immelt, his handpicked successor as CEO, may have been one of his misses. Welch certainly came to believe that. As one of the nation’s most respected companies crumbled, Welch and others blamed Immelt for a series of disastrous decisions and missteps.

One executive put it that Immelt lacked the ability to see the big picture of how the different pieces of the businesses affected each other. He did not do his homework as thoroughly as Welch, and seemed to have trouble building team loyalty.

One key mistake was his decision for GE to invest in a subprime mortgage business, the foolishness of which became apparent when the 2007-2008 financial crisis hit, spurred in large part by bad debt and irresponsible loans. Another was that as the crisis began to unfold, people tried to convince Immelt to start getting rid of GE’s real estate interests, but he wouldn’t listen. He wanted to keep taking the risks (and reaping the rewards).

Immelt survived that crisis, but GE’s fortunes did not turn around in the coming years. Immelt was eventually fired.

To be fair to Immelt, the September 11 attacks and the financial meltdowns were huge disruptions that could, and did, spell doom for more than one company. Immelt felt Welch had left him with big problems to fix, and the evidence bears that out. But it also seems clear that he lacked Welch’s knack for good decisions and leadership, and that this hurt the company’s chances to weather the storm.

Picking the right leader – or developing the skills to be the right leader – can be a crucial part of success.

Listen, even when people disagree

Jeff Immelt did not like pushback.

Jack Welch, by contrast, was known for his sharp criticism, but also for allowing fierce arguments over policies and decisions, and he had the self confidence to allow himself to be persuaded to change his mind.

Immelt’s management team, though, tended more toward flattery than productive conflict. He was less likely than Welch to use gritty discussion to analyze the pros and cons of a decision, or grill subordinates on the merits of proposals. And he did not appreciate hearing bad news about his ideas.

Immelt was also accused of not being a good listener, even in basic conversations.

It’s true that CEOs need to have buy-in and loyalty from their team. Sitting in the executive chair watching riots break out around the table isn’t exactly good leadership. But Welch was reportedly much better at walking that tightrope of leadership and tolerating dissent than Immelt, and that could be seen in his results and decision-making.

Dave Calhoun, one of the top executives under Immelt who left for a leadership position at another company, held that problems that led to GE’s collapse could have been addressed, but were not. He pointed to the way Immelt, unlike Welch, did not use dissent and pushback to his benefit. Thus, people who could have pointed out problems weren’t able to.

Confident leaders can listen to disagreement without being threatened. And that makes them more effective leaders and easier to follow.

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.

Cordiner also put huge pressure on the various divisions to meet numbers goals.

It turned out to be a recipe for corruption. The company preached ethics at the top. But the pressure on top managers gave them incentive to cheat, and cheat they did, illegally colluding with competitors to drive up prices and arrange who would win bids for projects. This was especially notable in the utility sector, where consistently meeting numbers was not easy in the shifting market.

Cordiner’s system worked when it came to meeting goals. Unfortunately, it also incentivized meeting goals however you could do it, no matter the ethics preached at the top. In the resulting pressure cooker environment, corruption took hold and managers with a strong sense of ethics sometimes had to find somewhere else to work.

Because of Cordiner’s decentralization, practices varied across the company and ethical managers at the top (if there were many) were not able to impose their will downward effectively.

Unfortunately for GE and fortunately for its customers, the rigged system began to fall apart around 1960 when a federal investigation began.

GE fired a number of its executives after they were indicted on price fixing charges. Cordiner proclaimed his opposition to the corruption, although in Senate testimony he and other top leaders were implicated as knowing about it years before.

Whatever the case, Cordiner didn’t have to promote corruption to get it. He just had to create a system where it thrived.

Incentives matter, and if you don’t consider human nature when setting them up, the results can be counterproductive.


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.

It’s an obvious pitfall to avoid. No matter how big and tough you are, you aren’t invincible.

And yet, despite perhaps one of the biggest downturns in corporate history, GE’s story is not over yet. The company continues to innovate in the aviation industry, turning out impressive new jet engines and working on ways to power aircraft without fossil fuels. It’s also focusing energy on the promises of 3D printing for industrial applications.

That seems like a good optimistic note to end on. Despite its many mistakes, and its story of arrogance leading to downfall, GE may yet make important contributions to business and to the world. It’s working to pick up the pieces and build again, something we can all do when facing the consequences of our mistakes.


Power Failure chronicles the 75-year history of General Electric (GE), from its founding in 1892 to its struggles in recent decades. Author William D. Cohan, a financial journalist, provides an even-handed and well-researched account of GE’s ascent to becoming one of America’s largest and most influential conglomerates, as well as its gradual decline in the 21st century.

GE was founded by Thomas Edison to commercialize his inventions like the light bulb and the motion picture camera. Under the leadership of legendary CEOs like Charles Coffin and Ralph Cordiner in the early 20th century, GE diversified into many industrial sectors like electricity generation, aviation, healthcare and more. It became a mastodon, pioneering modern management concepts like decentralized business units and executive training programs.

Cohan details how GE excelled at innovation, continually developing groundbreaking technologies and bringing them to market efficiently. This allowed it to dominate industries for decades. By the 1960s, GE was a global powerhouse and a bellwether for the American economy. However, the book argues that later leaders struggled to adapt GE’s strategy to a changing world, overseeing a gradual diminution of its prowess.

A central theme is how GE manipulated its accounting practices to paper over operational issues and prop up its stock price. Cohan explores the role of iconic CEO Jack Welch, who led GE from 1981 to 2001. While Welch accelerated GE’s global expansion and returned it to dominance initially, his relentless focus on short-term results also bred problems. Cohan asserts Welch rid GE of extensive engineering expertise and destabilized its foundations through relentless restructuring for profits.

Under Welch’s successors Jeff Immelt and John Flannery, GE faced the full consequences of its shifting business mix and accounting tactics. The 2008 financial crisis exposed grave weaknesses, and the company embarked on a painful downsizing. Immelt’s strategy of emphasizing service businesses over manufacturing failed to restore dynamism. By 2018, GE’s reputation and value had plummeted to degrees unfathomable in its 20th-century heyday.

Cohan’s reporting paints a vivid picture of how hubris and short-term thinking eroded GE’s strengths. Throughout, he highlights the hub-and-spoke management system pioneered by Cordiner as key to GE’s mid-century success. However, Cohan argues Welch fatally disrupted this decentralized structure by over-centralizing power and metrics. The book suggests GE lost its ability to nurture new products and maintain quality control as it grew overly reliant on acquisitions and financial machinations over engineering excellence.

Power Failure comes across as well-rounded rather than triumphant or condemnatory in its assessment. It traces GE’s rise and perspectives of multiple leaders in a balanced light. Cohan conveys how GE both drove and reflected economic and management trends in the US. While critical of Welch’s legacy, the book acknowledges his initial results and the challenges of leadership at such a sprawling, risk-averse conglomerate.

Any organization studying long-term strategies would gain from Cohan’s detailed insights. However, the book’s acute focus on leaders and organizational shifts somewhat overlooks external forces like technologies, globalization and regulatory changes that also shaped GE’s trajectory. Still, it offers a compelling longitudinal case study in the difficulty of sustaining corporate success over generations in a dynamic world.

In summarizing GE’s history through primary sources and extensive interviews, Cohan has produced an engaging, informative read on one of America’s most influential 20th-century companies. Power Failure serves as a thoughtful cautionary tale for business leaders on the perils of reckless restructuring and deception to cover operational shortcomings. It also stands as a well-researched addition to the ongoing debate on Jack Welch’s management philosophies and their longer-term impact.

Alex Lim is a certified book reviewer and editor with over 10 years of experience in the publishing industry. He has reviewed hundreds of books for reputable magazines and websites, such as The New York Times, The Guardian, and Goodreads. Alex has a master’s degree in comparative literature from Harvard University and a PhD in literary criticism from Oxford University. He is also the author of several acclaimed books on literary theory and analysis, such as The Art of Reading and How to Write a Book Review. Alex lives in London, England with his wife and two children. You can contact him at [email protected] or follow him on Website | Twitter | Facebook

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