What GE, Boeing and Kodak have in common.
There is a pattern I have come to recognise in the decline of large organisations. It is rarely what it looks like from the outside.
From the outside, collapse tends to appear sudden. A profit warning. A safety scandal. A market position that evaporates faster than anyone anticipated. The financial press looks for a cause, a bad acquisition, a failed strategy, a leadership failure, and usually finds one. That cause becomes the story.
But the story is almost always incomplete.
In each of the cases I want to examine here, GE, Boeing, and Kodak, the visible collapse was preceded by years, sometimes decades, by something murkier and more subtle. Conditions building beneath the surface. Assumptions hardening into orthodoxies. Tacit silences widening into structural blind spots. The organisations were not failing suddenly. They were failing slowly, invisibly, in ways that their own instruments could not detect.
General Electric was, for most of the twentieth century, one of the most admired organisations in the world. By 2018 it had lost roughly three quarters of its market value and was removed from the Dow Jones Industrial Average after more than a century of continuous membership. The conventional explanation centres on financial overextension and the weight of GE Capital. That is accurate, as far as it goes.
What it misses is the cultural and structural deterioration that preceded the financial collapse. A performance culture that had gradually displaced the engineering culture that built the firm. An internal logic that rewarded financial engineering over operational excellence. Decision-making systems that had lost the capacity to surface bad news upward. These conditions were visible in the roots of the organisation long before they appeared in the accounts.
Boeing's story is in some ways more troubling, because the consequences were not financial alone. The 737 MAX crisis did not emerge from a single engineering decision. It emerged from an organisation that had spent years subordinating its engineering culture to financial and schedule pressures, in which the tacit understanding of what could be raised and what could not had shifted profoundly. The silence around safety concerns was not conspiratorial. It was structural. It had been built into the organisation over time, one decision at a time, until raising certain questions felt professionally untenable.
The roots had been eroding for years. The canopy looked fine until it did not.
Kodak invented the digital camera in 1975. The assumption that prevented it from acting on that invention, that its identity and its economics were inseparable from film, was not a strategic error in the conventional sense. It was a filter. A logic so deeply embedded in how the organisation understood itself that it could not perceive the threat its own technology represented until the threat had become existential.
This is what the friction zone does at its most consequential. It does not prevent organisations from seeing the future. It prevents them from acting on what they see, because the accumulated assumptions and tacit silences make certain responses feel impossible from the inside.
What these three organisations share is not bad leadership or bad strategy, though both played a role. What they share is a gap between what their internal conditions were signalling and what their measurement systems could see. By the time the signal reached the canopy, the cost of addressing it had multiplied many times over.
The question this raises is not whether your organisation could follow the same path. Most can. The question is whether the instruments you are using to understand it would tell you if it were already doing so.
In almost every case I have studied, the answer is that they would not. Not because the information was unavailable, but because no one was measuring in the right place.
In the next piece, I look at what it would mean to measure in the right place, and what that reveals about the number that does not appear in any set of accounts.