General Electric’s trajectory can be best understood in comparative perspective, alongside other major conglomerates that confronted the same late-twentieth- and early-twenty-first-century economic environment marked by financialization, technological disruption, regulatory change, and intensified global competition. While some conglomerates collapsed under excessive leverage, opaque financial arms, or strategic overreach, others fragmented deliberately, dismantling diversified structures that had lost coherence or market credibility. A smaller number adapted successfully by refocusing on core competencies, simplifying governance, and aligning capital allocation with long-term industrial or technological strengths. Examining GE’s fate in relation to these parallel outcomes highlights how similar external pressures produced divergent results, shaped less by inevitability than by differences in strategic discipline, organizational adaptability, and the timing of managerial decisions.
Conglomerate Decline and Survival: Timing, State Context, and Divergent Failure Modes
General Electric’s long decline is best illuminated through comparison with Westinghouse and, more revealingly, with Huawei as a counterfactual shaped by a different political–economic environment. All three organizations emerged as large, diversified enterprises operating at the technological frontier of their respective eras. Yet their outcomes diverged sharply, not merely because of managerial choices, but because of differences in timing, capital-market discipline, and the role of the state in absorbing or enforcing failure.
Westinghouse was GE’s closest historical peer among American industrial conglomerates. Like GE, it spanned power generation, nuclear technology, manufacturing, and media, and like GE, it struggled with capital-intensive legacy businesses, strategic drift, and declining alignment with evolving capital markets. By the late twentieth century, these pressures proved fatal. Westinghouse collapsed rapidly in the 1990s, divesting its industrial core and ultimately hollowing itself out into a residual media entity, a visible and decisive failure.
GE followed a similar structural path but reached a different short-term outcome. Rather than collapsing outright, GE endured by relying on GE Capital, which masked industrial underperformance and sustained earnings growth. Investor confidence persisted longer, and access to abundant, low-cost credit delayed reckoning. This allowed GE to survive well into the twenty-first century, but at the cost of deeper entanglement with financial risk. In contrast to Westinghouse’s swift disintegration, GE experienced a prolonged, opaque decline—failing slowly rather than visibly.
The distinction between GE and Westinghouse, then, was less about fundamental capability than about timing and financial mediation. Westinghouse failed fast under market discipline; GE deferred failure by exploiting financialization and investor trust. Both outcomes were enforced by liberalized capital markets that ultimately punished prolonged underperformance, whether abruptly or gradually.
Huawei enters this comparison not as a peer in structure, but as a revealing contrast in institutional context. Unlike GE and Westinghouse, Huawei operates within a state-capitalist ecosystem that tolerates extended investment horizons, cyclical losses, and delayed profitability in exchange for strategic technological capacity. When Huawei faced severe external shocks—most notably sanctions and supply-chain cutoffs—it neither collapsed quickly like Westinghouse nor decayed slowly like GE. Instead, it retrenched, reallocated internally, and absorbed losses to preserve core competencies.
This comparison underscores a critical implication for contemporary China–U.S. technological rivalry. American conglomerates historically failed either rapidly or gradually because market mechanisms enforced discipline and timing. Huawei’s resilience reflects a different logic: national strategy substitutes for market timing, enabling directed adaptation even under severe stress. The divergent fates of GE, Westinghouse, and Huawei thus reveal how failure modes are shaped not only by corporate decisions, but by the broader political and financial systems in which firms are embedded.
Simplification Chosen and Simplification Imposed: Divergent Paths of GE, Siemens, and Huawei
The contrasting trajectories of General Electric, Siemens, and Huawei illuminate how timing and institutional context shape corporate survival under systemic pressure. All three confronted complexity, technological disruption, and capital-intensive legacy businesses, yet their responses differed markedly. The comparison highlights a central distinction between early, voluntary simplification and forced, externally driven self-reliance.
GE and Siemens entered the twenty-first century as sprawling industrial conglomerates with deep exposure to power generation, global infrastructure projects, and complex governance structures. Both faced mounting challenges from slowing growth, shifting energy markets, and heightened scrutiny of managerial practices. In structural terms, Siemens was as vulnerable as GE, and in some respects faced even greater reputational risks due to corruption scandals and regulatory penalties.
Siemens avoided GE’s fate by acting earlier and more decisively. It retained stronger industrial cash discipline, resisted extreme financialization, and treated restructuring as a strategic necessity rather than a last resort. Over time, Siemens simplified its portfolio through deliberate spin-offs, most notably Siemens Healthineers and Siemens Energy, allowing each business to pursue clearer strategic and capital-allocation priorities. Simplification, for Siemens, was a controlled and anticipatory process.
GE followed a different path. Rather than downsizing early, it doubled down on complexity, leveraged financial engineering to sustain earnings, and delayed restructuring in order to preserve scale and prestige. This postponement eroded credibility and deepened exposure to cyclical shocks, leaving GE vulnerable when financial conditions tightened. The contrast is stark: Siemens simplified before markets forced a reckoning; GE simplified only after credibility had been lost.
Huawei enters this comparison as a distinct but revealing case. Like Siemens, Huawei demonstrated a willingness to narrow its focus, but under coercion rather than choice. U.S. export controls and supply-chain restrictions forced Huawei to abandon or sharply reduce non-core ambitions, including parts of its global handset business and overseas carrier expansion. Unlike GE’s resistance to contraction, Huawei treated retrenchment as a prerequisite for survival.
Under pressure, Huawei redirected resources toward foundational capabilities—semiconductors, operating systems, cloud infrastructure, and industrial digitalization. In doing so, contraction accelerated learning and capability-building rather than signaling decline. The broader implication is structural: in the U.S. system, simplification is often optional and therefore delayed; in China’s technology confrontation, simplification is forced and strategic, compressing adaptation timelines. Together, the cases of GE, Siemens, and Huawei show that survival hinges less on size than on when, why, and how complexity is reduced.
Earnings Discipline and Organizational Truth: Divergent Cultural Responses at GE, Toshiba, and Huawei
The trajectories of General Electric, Toshiba, and Huawei reveal how internal culture, particularly attitudes toward earnings and truth, can determine corporate resilience under pressure. While GE and Toshiba operated in different national contexts, their failures share a striking cultural similarity rooted in earnings-first mentalities that suppressed candor. Huawei’s contrasting response under existential threat underscores how organizational epistemology—how firms process and act on bad news—can shape survival.
Toshiba provides the closest cultural analogue to GE’s decline. For decades, Toshiba operated under intense earnings pressure reinforced by hierarchical deference and weak board oversight. This environment encouraged systematic accounting manipulation, as managers prioritized meeting targets over accurately reporting performance. Fear-driven internal dynamics discouraged dissent and delayed recognition of structural problems.
When Toshiba’s accounting practices were exposed beginning in 2015, the consequences were swift and severe. The company was forced into asset fire sales, suffered a catastrophic loss of credibility, and became a symbol of corporate failure in Japan. The reckoning was public and scandal-driven, revealing how deeply earnings distortion had become embedded in the firm’s governance and culture.
GE’s outcome differed in form but not in essence. Rather than collapsing through scandal, GE faced mounting financial stress as markets lost confidence in its reported performance and balance-sheet strength. Like Toshiba, GE had cultivated a culture that rewarded earnings smoothing and penalized internal honesty, delaying corrective action. In both cases, an obsession with short-term results crushed transparency and undermined long-term viability.
Huawei diverges sharply from this pattern. Confronted with sanctions and supply-chain disruptions, Huawei did not attempt to smooth results or obscure weakness. Instead, it institutionalized internal truth-seeking through red-team reviews, worst-case planning, and explicit acknowledgment of decline by senior leadership. Bad news was treated as strategic input rather than reputational risk.
The broader implication extends beyond individual firms. The contrast suggests that the China–U.S. rivalry is not only technological or geopolitical, but also organizational. Firms that suppress bad news, as GE and Toshiba did, tend to decay internally until crisis becomes unavoidable. Firms that normalize and operationalize bad news, as Huawei has attempted to do, are better positioned to adapt under existential pressure, even when facing overwhelming external constraints.
Strategic Focus as Advantage: Divergent Paths of GE, UTC, Honeywell, and Huawei
The contrasting fortunes of General Electric, United Technologies (UTC), Honeywell, and Huawei underscore the role of strategic focus in determining corporate survival under structural change. All began, or evolved into, complex organizations with broad technological reach, yet their responses to the erosion of the conglomerate model diverged sharply. The comparison highlights how focus can function not merely as an efficiency measure, but as a strategic weapon.
United Technologies and Honeywell exemplify adaptive responses among American industrial conglomerates. Both recognized early that the conglomerate premium had disappeared and that scale alone no longer guaranteed resilience. Rather than attempting to preserve breadth, they chose to narrow scope and impose clearer strategic boundaries.
UTC pursued simplification through decisive structural change. It spun off Otis and Carrier, shedding non-core businesses, and later consolidated its aerospace capabilities through the merger that created Raytheon Technologies. This sequence clarified capital allocation and aligned managerial attention with high-value, defensible technological domains.
Honeywell followed a parallel, though more incremental, path. It steadily narrowed its portfolio to aerospace, automation, and advanced materials, businesses characterized by high switching costs and durable demand. Crucially, both UTC and Honeywell avoided the creation of large financial arms, insulating themselves from the balance-sheet risks that later destabilized GE.
GE chose the opposite course. It attempted to preserve the conglomerate model and the perceived valuation premium associated with scale and diversification. By maintaining excessive complexity and relying on financial engineering through GE Capital, it delayed adaptation and ultimately lost credibility when the model proved unsustainable.
Huawei represents an even more extreme application of focus, though driven by fundamentally different objectives. Under external pressure, Huawei concentrated resources on a narrow set of strategic technologies—semiconductors, networking, and AI infrastructure—accepting significant short-term inefficiency and uncertain returns. Unlike UTC and Honeywell, which focused to optimize shareholder value, Huawei focuses to preserve capability continuity and organizational survival. The implication is clear: in the current technology rivalry, American firms optimize portfolios, while Huawei optimizes for endurance, revealing fundamentally different strategic logics.
Decentralization Anchored in Capital and Mission: GE, Berkshire Hathaway, and Huawei Compared
General Electric, Berkshire Hathaway, and Huawei all operated as large, diversified organizations in an era hostile to managerial overreach and financial opacity. Yet their outcomes diverged sharply because decentralization alone was not decisive; what mattered was the principle anchoring it. The comparison reveals how similar structural forms can produce radically different results when guided by different coordinating logics.
Berkshire Hathaway represents the most successful expression of decentralized conglomeration in the modern era. It operates with a minimal corporate center, eschews earnings smoothing, and avoids dependence on financial leverage. Subsidiaries are granted extensive autonomy, but accountability is real and unambiguous. Berkshire treats its businesses as permanent holdings rather than portfolio trades, reinforcing long-term capital discipline.
This simplicity stands in direct contrast to GE’s approach. GE also embraced decentralization in form, but layered it with managerial complexity, financial engineering, and performance smoothing designed to manage external perception. Rather than clarifying reality, complexity became a substitute for truth. Decentralization without a clear anchor produced internal drift and obscured deteriorating fundamentals.
The key distinction lies in philosophy rather than structure. Berkshire uses simplicity to manage reality, aligning incentives with cash generation and honest reporting. GE used complexity to manage expectations, allowing weak performance to persist unchallenged. Over time, this eroded trust and left the organization vulnerable when markets demanded transparency.
Huawei shares certain structural similarities with Berkshire, particularly in operational autonomy. Its internal profit centers and rotating “war-room” leadership grant substantial decision-making power to frontline units. However, Huawei’s decentralization is anchored not in capital discipline, but in mission discipline—specifically, the preservation of technological capability under external pressure.
This difference in anchoring reshapes priorities. Where Berkshire subordinates growth and expansion to financial efficiency, Huawei accepts inefficiency and redundancy to secure technological sovereignty. Financial returns are secondary to survival and strategic continuity. GE, by contrast, drifted between these models, lacking both Berkshire’s capital anchor and Huawei’s mission anchor.
The broader implication is that decentralization is not a strategy in itself. It must be grounded in a clear coordinating principle—either capital-based, as in Berkshire, or mission-based, as in Huawei. GE’s failure reflects an inability to commit to either logic, leaving decentralization hollow and ultimately destabilizing.
Learning Organizations and Prestige Traps: GE, Danaher, and Huawei in Contrast
The divergent paths of General Electric, Danaher, and Huawei illustrate how organizational learning, rather than scale or legacy, determines the viability of modern conglomerates. Each operated in complex technological environments, yet their internal systems for feedback and adaptation differed sharply. The comparison reveals a fundamental divide between firms built as learning systems and those sustained by prestige and institutional protection.
Danaher represents the most successful post-GE evolution of the conglomerate form. It maintains a relatively narrow industrial focus, organizes operations into modular business units, and relies on transparent, standardized metrics to evaluate performance. Underperforming units are divested without hesitation, and managerial attention is directed toward continuous improvement rather than preservation of status.
What distinguishes Danaher is not diversification per se, but the operating discipline underlying it. Financial engineering plays a minimal role, accountability is local and uncompromising, and cultural norms prioritize operational truth over narrative management. Conglomeration works in this model only because learning and pruning are institutionalized rather than resisted.
GE embodied the opposite logic. While once celebrated as a management exemplar, it gradually institutionalized prestige, hierarchy, and internal protection. Businesses were shielded from honest evaluation, and underperformance was managed through reputation, scale, and financial smoothing rather than corrective action. Over time, this eroded learning capacity and locked the organization into declining trajectories.
Huawei aligns more closely with Danaher than with GE in its internal mechanics. Its use of intensive internal reviews, rotating leadership structures, and willingness to terminate failing projects reflects a feedback-driven operating system. The stakes, however, are far higher: Huawei’s learning processes unfold under geopolitical pressure and technological blockade rather than normal market competition.
The broader implication is systemic. In an environment of rapid technological change and strategic rivalry, advantage increasingly accrues to organizations that function as learning machines. Prestige-driven giants tend to decay as feedback is suppressed. Feedback-driven organizations—whether market-oriented like Danaher or mission-driven like Huawei—compound advantage by continuously adapting, even under extreme constraint.
Political Capital and Strategic Resilience: GE, Samsung, and Huawei Under Pressure
The contrasting fortunes of General Electric, Samsung, and Huawei highlight how political economy and state support shape corporate endurance, especially under conditions of technological and financial stress. While scale and complexity are common features across these firms, the source of resilience varies dramatically: GE relied for decades on market trust and perceived prestige, Samsung leverages state backing and national-champion status, and Huawei combines political support with extreme internal self-reliance.
Samsung, like GE, operates at immense scale and complexity, spanning semiconductors, consumer electronics, and heavy industry. Unlike GE, however, Samsung thrives within a political ecosystem that tolerates inefficiency in exchange for strategic leverage. Deep state ties and national-champion status provide Samsung with the latitude to pursue long-term technological and geopolitical objectives, even when immediate returns are suboptimal. Resilience, in this model, derives less from managerial precision or capital discipline and more from embedded political and institutional support.
GE once enjoyed quasi-sovereign trust from U.S. markets and regulators, enabling it to defer structural adaptation and absorb inefficiencies temporarily. Over time, this trust eroded as financial and operational stresses accumulated, leaving GE exposed. Samsung, by contrast, continues to enjoy protective political capital, granting it a buffer against market and technological shocks that GE ultimately lacked.
Huawei shares certain structural and strategic features with Samsung, particularly its reliance on political support. However, it faces far greater constraints: exclusion from key international supply chains, sanctions, and geopolitical opposition force Huawei to internalize and secure critical technologies independently. Political capital provides relief but cannot eliminate technological isolation. Success depends on converting that support into operational autonomy and resilient capabilities.
The broader implication is clear: political capital can preserve large firms, but its protective effect is conditional. In contexts of technological decoupling and strategic rivalry, only organizations capable of translating political support into technical independence—like Samsung and Huawei—can endure. Firms that relied solely on market prestige, like GE, ultimately fail when the social contract sustaining that trust erodes.
Structural Missteps and Adaptive Design: Why GE Fell—and Why Huawei Has Not (Yet)
The fate of General Electric, contrasted with Huawei and its global peers, reveals how the combination of cultural, structural, and strategic missteps can accelerate corporate decline. GE was not flawed in a singular way; rather, it accumulated the worst traits observed across other large industrial and technology conglomerates, leaving it uniquely vulnerable in the twenty-first-century capital market.
Culturally, GE resembled Toshiba, where relentless earnings pressure suppressed honesty and internal feedback. Operationally, it mirrored Westinghouse, burdened by capital-intensive legacy businesses that generated declining returns. Structurally, GE diverged from Siemens and Honeywell by postponing necessary restructuring, attempting to maintain prestige and scale rather than simplify and refocus. Finally, unlike Berkshire Hathaway or Danaher, GE allowed financial engineering and the expansion of GE Capital to supplant operational rigor as the organization’s core logic. The result was a complex, fragile system in which perception was prioritized over reality.
The decisive factor in GE’s decline was the attempt to preserve a twentieth-century conglomerate model in an era of accelerated capital-market scrutiny. Reliance on financial manipulation and deferred restructuring temporarily masked weakness but ultimately undermined credibility, leaving the firm exposed to market shocks and investor skepticism.
Huawei, by contrast, demonstrates an alternative approach to survival under extreme pressure. The company acknowledged weaknesses early, embraced forced but decisive contraction, and allocated capital according to mission-critical priorities rather than short-term financial optics. Its organizational design institutionalizes learning, red-team analysis, and iterative adaptation, enabling the firm to respond to shocks without destabilizing its core capabilities.
The broader implication is clear: the China–U.S. technology rivalry favors organizations that treat crisis as a design constraint rather than a reputational threat. Firms like GE, which resist adaptation and prioritize appearance over reality, decay internally. Firms like Huawei, which integrate feedback, focus, and strategic contraction into their operating system, convert external pressure into long-term advantage, demonstrating why GE fell—and why Huawei has not yet.
Summary & Implications
GE did not fail because conglomerates are inherently unsustainable; it failed because it clung to its myth longer than the market—or even reality itself—would allow. By attempting to defend an image of enduring scale, prestige, and managerial mastery, GE delayed confronting structural weaknesses until external pressures made adaptation unavoidable. Huawei, in contrast, has survived not because it is immune to failure, but because it operates within a system that enforces reality internally, allowing weaknesses to be acknowledged and addressed before they become catastrophic. In the long run, the decisive edge in the U.S.–China technology contest will not rest solely on ideology, size, or capital—but on which organizational systems cultivate the capacity to confront uncomfortable truths early and convert them into actionable adaptation.
References
- Lights Out: Pride, Delusion, and the Fall of General Electric. Thomas Gryta, Ted Mann. 2020