Tuesday, August 4, 2009

GE -The Emporor Has No Clothes

The alleged magic of jack Welch looks now to be a lot of smoke and mirrors with the news out today that the company settled for $50 million with the SEC over accounting fraud in 2002 and 2003. The stories of quarter end shenanigans to "make a number" at Welch's GE are legendary. Typical of the way things work, now Jack's on the golf course and at big dollar corporate events while others are left to deal with the problems and soiled reputation that remains. This paragraph from the Financial Times report tells it all:

But the settlement reinforces the notion that GE’s focus on “making the numbers” every quarter – and investors’ penchant for rewarding the company for doing so – was a bull market phenomenon that was unsustainable over the long term

In my business world, I still see way too much emphasis on "making numbers" in the short-run rather than focusing on building long-term sustainability -- I hope this GE experience is a lesson to corporate America. It doesn't work in the long-run. The" make the numbers" mentality is another example of the delusional world we find ourselves circa 2009 America. Fast buck, no money down, bailout nation short cuts aren't going to get the job done and are likely to end in disappointment and disgrace.

1 comment:

John Karling said...

An alert listener in Saratoga Springs agrees with you comments about Jack Welch. Now we have to listen to the Welch's "expert business advice" in their weekly column in Businessweek.