General Electric (GE)

GE was the world's most valuable company in 2000 - $500 billion market cap, Jack Welch on magazine covers, diversified across jet engines, power turbines, medical devices, financial services, and NBC Universal. Eighteen years later: $65 billion market cap, $115 billion in debt, forced breakup. The conglomerate that defined American industrial might spent two decades destroying value at scale.

What killed GE was the illusion of diversification. The portfolio created no real synergies - jet engines and financial services didn't complement each other, they just coexisted under one logo. Worse, they created hidden correlations: GE Capital and industrial businesses both collapsed in 2008, eliminating diversification benefits precisely when they mattered most. The company concentrated risk by letting GE Capital grow from 30% to 60% of profits - single-cycle optimization into financial markets. When 2008 hit, GE Capital's $32 billion in losses triggered 84% stock collapse and required Warren Buffett's emergency $3 billion rescue.

The real failure was structure. GE's densely coupled divisions shared financing and capital, so GE Capital's near-death experience threatened healthy businesses. Controlled separation in 2010-2012 could have preserved value; instead, crisis forced fire-sale breakup in 2024. The lesson: portfolio diversity is overhead when synergies are imaginary. Optimization for one cycle creates brittleness when conditions shift. And companies that are 'too complex to manage' eventually become 'too distressed to save.'