GE’s breakup marks the end of an era in American corporate history
GE
reckons already power two-thirds of all commercial flights. Its power business will provide the systems and turbines generating one-third of the world’s electricity. The health-care division will continue to be the backbone of modern hospitals. Yet it speaks to’s remarkable role that this is a modest reach given its past sprawl.
The ambition to be everything was enabled by the perception that it could manage anything. The 21st century punctured that perception. Jack Welch, an acquisitive chief executive reputed to be a managerial genius, retired in 2001 after receiving a mind-boggling $417m severance package. Ever-better results during his tenure beguiled investors and sent the share price soaring. But problems soon arose. The structure Welch left behind was in effect bailed out during the financial crisis.
Recent years have been spent spitting out one notable business after another. The timing of the break-up announcement was determined by the sale of a large aircraft-financing unit. The transaction reduced debt by enough to provide the three soon-to-be independent companies with an investment-grade credit rating. Mr Culp, the firm’s boss since 2018, speaks of the “illusory benefits of synergy” to be traded for the certain benefits of focus.
Having boasted of its management nous, it now seems that poor management is what did it for a unifiedThe contest to replace Welch was widely seen as pitting the best global executives against one another, with the losers hired to run other big firms. But his successors struggled. Jeffrey Immelt, Welch’s hand-picked replacement, retired under a cloud in 2017. John Flannery, once seen as a wizard behind the rise of the health-care division, took over but was fired after little more than a year.
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