business news in context, analysis with attitude

General Electric, the industrial and digital colossus, was dropped yesterday from the Dow Jones Industrial Average, the world’s most widely followed stock index. What made this remarkable, the Boston Globe writes, is that “GE was an original member of this exclusive club, when the industrial average was started in 1896, and is the only one among the original 12 to survive today as an independent company. It has been kicked out of the Dow before but has been a continuous member since 1907.”

The story notes that “in 2017, GE earned the unwelcome moniker ‘the Dog of the Dow,’ for being the worst performing of the 30 stocks in the world’s most widely known index. GE is trading around $13 a share today, less than half its stock price a year ago … The S&P Dow Jones Indices said GE would be replaced by Walgreens Boots Alliance Inc., arguing the pharmacy chain is more representative of the consumer and health care sectors, and would make the index a better measure of the economy and overall stock market.”
KC's View:
The lesson here seems self-evident. No matter how big you get, no matter how successful you are, it is a bad idea to ever get complacent. Because bad things can happen. in fact, bad things probably will happen unless a company finds a way to be smart, nimble, and internally disruptive.

I’m not smart enough about these things to be authoritative, but I wonder what this might say about the reign of Jack Welch, who was celebrated as being one of the great business leaders of his time. Is it possible that he created a company that was unsustainable, or fostered an attitude that focused on the wrong things? We certainly know that a number of his disciples - like Robert Nardelli and Larry Johnston - were unsuccessful, sometimes spectacularly so, one they left GE.