General Electric – New Structure

General Electric – The New Structure

2015: GE until 2014 was defying any theoretical tenets of organizational structures. It was a conglomerate corporation with a wide range of businesses. Its divisions included on one side industrial fields as e.g. aviation, power and water, transportation and on the other side services, e.g. financial services, lending and leasing, media, entertainment and others – indeed very divers business fields.

Since this big conglomerate company was managed successfully, questions were even raised on how good the theory actually was.

But that was the past. GE now, as of April 2015, will be restructured and a pure industrial corporation will emerge, all service divisions are being shed. In the future GE will concentrate on technical knowledge as many of its competitors do. And even the technical knowledge will be restricted to the know-how of industrial operations for industrial customers – consumer goods will not be in the portfolio any more.

Apart from the actual causes, they were forwarded to the public, the range of knowledge in the conglomerate company had become so wide that successful managing after all deemed endangered. That aspect was disguised in easier business times. In periods of more complex markets it became obvious that managing risks have grown to a dangerous level. Analog to the steadily increasing number of occupations – as historical data depicts – companies too become more and more specialists with a smaller portfolio of more complex products. A logical consequence is at the same time the number of company types is too constantly increasing. GE after all couldn’t dodge this historical trend. In 2015 time had come to restructure the company. Now GE is in line with theoretical and historical views.

2017: With John L. Flannery as new CEO the strategy of concentrating on fewer major business fields has been reiterated. GE in the future will be a smaller and more focused company. For the management the company will be wieldier and more manageable.
In 2018 aviation, power and health will be the three businesses of GE, all others will be shed.

Theoretical background: The new IT-based, digital and technological developments worldwide are causing new huge problems in product design, manufacturing and installing. The amount of information management has to process mentally has grown to such a degree that only the strategy of reducing the number of business fields is an adequate answer. The challenge of the new problems forces GE into a smaller outfit, it can’t be managed properly otherwise. That proves managing has its limits in regard to many different products or product lines.

Part of these problems is research & development. Developing new products can’t be done only inside the organizations. Very often the company staff can’t have all the knowledge for solving the problems. E. g. in health, GE will cooperate with outside institutions, leading US hospitals.

P. S. These considerations are based on public information in the media. They are to illustrate theoretical findings. If the used assumptions prove to be different, different conclusions might possibly to be taken. – Comments welcome, see impressum.