A closer look at what drove GE's decision to breakup:
Yet management experts say bringing in an outside CEO usually does lead to bigger strategic changes—even if it’s often hard to tease apart cause and effect.
In GE’s case, it was likely a little of both. The maker of jet engines, healthcare devices and steam turbines was in big trouble when Culp came onboard in 2018. The company faced warnings about missed profit and cash-flow goals, a write-down as large as $23 billion for its power business and a probe by theinto its accounting practices. The board, turning to Culp, a recent addition to its ranks, likely knew it needed a changemaker.
Insiders, says Tim Quigley, who studies CEO succession at the University of Georgia’s business school, are often groomed by their predecessors, and “have had a hand in shaping and implementing that strategy. It’s their baby. It’s their thing.” Breakups also go against many executives’ instincts. “CEOs are not wired to want to control smaller things.”